Americanly Yours

I wrote the following article which has since been published in newspapers through the State:

Commentary

State Tax Incentives a Bad Business

By Phred Barnet

Giving a tax incentive to a business to encourage economic development sounds like a great idea, but it is not. Tax breaks for businesses are little more than corporate welfare at the expense of hard-working Georgians. They amount to subsidies favoring a select few businesses over Georgia’s residents and existing businesses.

Proponents of tax breaks for new businesses argue the increase in jobs will make up for the reduction in revenue, but tax breaks for businesses rarely pay for themselves and often end up costing the state a great deal of money. That shortfall must be paid for by Georgia’s taxpaying citizens and business, which don’t have the benefit of that break.

Giving a business a tax incentive to move here may help that business in the short term, but in the long term the people who pay for that tax break also happen to be the employees and the customers of that company. Plus, it sends the wrong message to existing Georgia businesses: “If you stay in the state, we will use your tax dollars to subsidize your competitors.”

In June, after the North Carolina Legislature approved a $46 million tax break designed to induce Apple, Inc. to build data warehouses in the Tar Heel State, Scott Hodge, president of the Washington, D.C.-based Tax Foundation, had this response: “Too many legislators confuse targeted business incentives with policies that truly create a better business climate.”

“They are not. They only provide an excuse for lawmakers to avoid real tax reform. Targeted incentives are to a state’s economy what steroids are to the human body – short-term results that eventually weaken the bones, cause heart failure, or worse, impotency. Tax systems should not be used to pick winners and losers or micromanage the economy. Data farms in North Carolina might be a good thing, but it is much better for the marketplace to decide that, not government. The key to a prosperous economy is a tax system that provides a level playing field for all businesses and all industries.”

In Georgia, a new law gives the entertainment industry tax credits for up to 30 percent of production and post-production expenditures. Proponents argue that if Georgia does not do so, it will lose out to other states. This mentality leads to bidding wars that end up offering more and more incentives to the entertainment industry.

Former North Carolina Supreme Court Justice Bob Orr recently complained that “the industry has been able to play off North Carolina against South Carolina against Louisiana against Georgia. Louisiana raises its incentives, and it puts pressure on South Carolina, North Carolina and other states to do likewise.” In fact, only weeks after losing the new Miley Cyrus film to Georgia, North Carolina’s State Senate moved to increase their tax breaks for entertainers from 15 percent to 25 percent.

The chief economist for Louisiana’s legislative fiscal office, Greg Albrecht, estimates that in 2006, Louisiana gave the entertainment industry about $121 million in tax credits, but that only around 18 percent of that money was ever recovered in economic activity and taxes. He denounced the programs as “an expensive way to create jobs,” maintaining that “there’s no way you can say this makes money for the public.”

At best, these incentives can create temporary increases in economic activity. Yet these temporary increases do not pay for the costs of the programs themselves. There is no logic in Georgia subsidizing the enormous salaries of Hollywood actors, directors and producers while many of our own residents struggle to get by in this tough economy.

The most equitable tax incentive that Georgia could offer would be to cut taxes on individuals as well as corporations to make Georgia more attractive to individuals and businesses – both old and new. This would lead to investment and job creation, encourage more businesses to move to Georgia and send the correct message to Georgia’s current businesses.

Americanly Yours,

Phred Barnet

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This is an interesting and humerus video on health care.  It compares the health care systems in the State of Georgia and Massachusetts.

You may recall that the health care plans being pushed by the Administration and Democrats in Congress are very similar to the provisions passed in Massachusetts’ 2006 health care reform bill.

While it may sound good to pass a bill that will subsidize a scarce resource (in this case health care), doing so always has consequences.  In this case, dropping the price of health care has led to an increase in the number of people taking advantage of these services, resulting in a massive shortage in services.  This in turn results in an increase in the price of services for those who are notable to take advantage of the government subsidy.  Watch:

What a great video!  Please pass that along to your friends.

Americanly Yours,

Phred Barnet

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Here is a story that you most likely missed.  There wasnt a single mention of it in the media (any media outlets) until two weeks after it happened.

Earlier this month, the Georgia State Senate voted 43-1 in favor of a bill that would have had major consequences if it had also been passed by the State House.

The bill mentioned the 9th and 10th Amendments frequently and explained they many ways in which the Federal government has ignored those Amendments and userped State power.

But this wasnt just your typical States Rights resoultion.  The second section of the bill reads in part:

“BE IT FURTHER RESOLVED that any Act by the Congress of the United States, Executive Order of the President of the United States of America or Judicial Order by the Judicatories of the United States of America which assumes a power not delegated to the government of the United States of America by the Constitution for the United States of America and which serves to diminish the liberty of the any of the several States or their citizens shall constitute a nullification of the Constitution for the United States of America by the government of the United States of America.”

Yeah.  This bill wasnt just “affirming States Rights.”  It wasnt just threatening secession.  It was asserting that any act perceived to be an unconstitutional intrusion on the rights of States or citizens would constitute a dissolving on the Union.

It then listed several offenses as examples of what could trigger the dissolution of the Nation, including:

IV. Surrendering any power delegated or not delegated to any corporation or foreign government.

and
VI. Further infringements on the right to keep and bear arms including prohibitions of type or quantity of arms or ammunition

Ill remind you that this resolution passed by a vote of 43-1.

Number IV is already being violated by the continued existence of the Federal Reserve which is a private corporation.  In other words, the passage of this bill into law would have meant that the State would be giving itself the legal right to secede–or more accurately to declare that the United States government no longer existed.  Of course, no President including Mr. Obama would ever agree that an act such as limiting the number of guns one could own would trigger the death of the Union.  And of course, it is unclear whether or not Georgia would actually follow through with their threat to secede.

This seems to be an idea which is gaining more steam in the South.  This was 2 weeks before Texas Governor Perry brought up secession at a Tea Party.  I am in the process of conducting an interview with a Republican candidate for Governor of Texas in 2010 named Larry Kilgore who is running as a secessionist.  He ran in the primary last year for Senator and won about 225,000 voted and 18.5% of the vote against a Republican incumbant.  A recent poll showed that 48% of Texas Republicans  and about 15% of Texas Democrats favor secession.  This could be an interesting race to keep an eye on.

Here in Georgia, however, I have hardly heard a word about it.  Certainly not a word from any prominant State officials.  I had no idea that the State Senate was so overwhelmingly in favor of secession.  My guess is that many of those who voted in favor of the bill, entitled “Affirming states’ rights based on Jeffersonian principles; and for other purposes” did not read the bill.  This is why you read the bill before voting on it.  Bills often have titles that dont fully explain what they are about.  The title of this bill made no reference to secession of dissolving the Union.  This bill really wasnt that long.  You can find it here.

These certainly are interesting times we live in…

Americanly Yours,

Phred Barnet

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I have already mentioned that on April 15th, there will be “Tea Parties” across the country to protest things like the bailouts and so-called stimulus packages.  Other people will be protesting federal income taxes and the federal governments intrusion of States rights.

I will be attending the protest at the Georgia State Capitol Building.  There are hundreds of such protests across the country.  As I said earlier, organizers are expecting to have at least 5,000-10,000 people at the Atlanta protest meaning that there could be hundreds of thousands–if not more people attending these protests nationwide.

Some people may not be able to attend the protests for whatever reason.  I have come up with an idea that will still allow you to participate.  My idea is simple:  I urge everyone who banks at a government owned bank to remove your money from that bank–ask for cash–on or slightly before April 15th.  The banks owned by our government are listed here.

Withdrawing money from these banks, at least temporarily, will show the government how powerful the anti-socialism movement is.  No, this wont collapse the banking system, but it will send a strong message.  For each dollar taken out of banks, roughly 12 dollars is removed from the system.  According to FDIC guidelines, a bank is considered to be “adequately capitalized” if it has only 8% of its deposits on hand.  A massive withdrawal of money from government owned banks could cause many of these government owned banks to fall below this 8% threshold, causing great embarrassment to the administration, while demonstrating our power to those in charge.

Its just an idea, but I hope that you’ll pass it on.

It is time that we stand up and take our country back.

Americanly Yours,

Phred Barnet

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If you live in Georgia like I do, dont forget to stock up on beer.  Our government says that we cant buy alcohol of any sort, including beer on Sundays at stores and then take the drinks home to consume them.  Of course, we are allowed to pay several times more and purchase our drinks at a restaurant or bar, allowing for a situation where someone could get behind the wheel of  their car and hurt someone.

I dont understand why the government will not allow people to purchase a product that is legal on select days of the week.  It makes no sense.  A great man once told me that “any business outta be able to sell any product that is legal to anyone of legal age at any time that they want.”

Our governor says that Georgians should “plan ahead” and buy beer on Saturdays.  This is absurd.  If we followed his logic, then someone could argue that alcohol should only be sold one day of the week (or even one day of the year). I do not understand why the government still has the blue laws on the books. Apparently Georgia’s state legislature is about to vote on a measure that would allow voters in individual counties to decide whether or not it should be legal to sell alcohol on Sundays.  Lets hope they give** us the freedom to purchase legal products any day that we choose.

**Governments do not “give” freedoms.  They can only take away freedoms.  They do this often in the name of the “public good” or in the name of “protecting the citizens.”

Americanly Yours,

Phred Barnet

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