By S.D. Plissken | August 31, 2018
Milton has a very peculiar notion about businesses and its own “need” for them.
In short, the idea is that Milton needs businesses – so that it might tax them – so that it can alleviate its high residential property taxes.
This notion is ubiquitous. You hear it from elected officials, town committees, town employees, town meetings, newspapers, and from the townspeople. It is on everyone’s lips and has been for years. One might say even that it is an idée fixe (an idea that dominates one’s mind, especially for a prolonged period). Milton has long-standing town committees devoted either partly or largely to forwarding this notion.
When hearing it for the first time, it has a sort of superficial plausibility. But somewhere, in the back of your mind, you may sense vaguely that something is not quite right with this proposition. Something about it doesn’t quite “hang together.”
Stop for a moment. Clear your mind. Examine it more closely.
Aah, you see it now, don’t you? There is a flaw in the chain of reasoning. They have it exactly backwards.
Few, if any, businesses would ever enter voluntarily into Milton’s high-tax environment. At least not without some strong countervailing incentive. By their very nature, businesses strive always to reduce their overhead costs. But in this proposition, business is thought likely to choose the higher overhead option – Milton and its high taxes – over lower-tax communities that may be found elsewhere. Even elsewhere nearby.
Milton believes in the story of the boiling frog:
The boiling frog is a fable describing a frog being slowly boiled alive. The premise is that if a frog is put suddenly into boiling water, it will jump out, but if the frog is put in tepid water which is then brought to a boil slowly, it will not perceive the danger and will be cooked to death. The story is often used as a metaphor for the inability or unwillingness of people to react to or be aware of sinister threats that arise gradually rather than suddenly.
This is what Milton hopes will happen – that new businesses will come into its tepid waters and sit still while they are slowly boiled. However, the old fable is not true. The frogs do jump out if they possibly can. Wouldn’t you?
For example, Amazon’s recent search for a city in which to establish its secondary headquarters (HQ2) has been much in the news this year. Why not expand where they are in Seattle? Because the waters are getting warmer there. They are jumping out, so to speak, at least partially.
In a uniquely public competition, the [Amazon] company asked cities to highlight several local assets: the education and skills of their workforce, the quality of their transit and built environment, the strength of their schools and universities, and the livability of their communities. Amazon also requested each jurisdiction to describe what level of tax incentives they would provide so that the company could understand how tax breaks would help defray the initial cost of its proposed $5 billion investment.
Tax breaks? That means lower taxes. That means a community would have to lower its taxes to “encourage” businesses to move there. Well, lower them for the business being encouraged, while everyone else’s taxes would have to be raised.
But they could raise the tax temperature back up later? You know, slowly, so as not to alarm the businesses. Well, no, not really. As the tax temperature rises, the businesses will decide at some point that taxation has become too hot. When that happens, they can just “jump out.” Just like the frogs, and just like Amazon. But jump out to where?
Not to Milton. The temperatures are past tepid here. You can see the bubbles beginning to rise. Its taxes will soon be boiling over. (It might be time to jump out if you can).
But what if Milton really wanted businesses for some other reason? Say, increased employment, general prosperity, etc.. It could reverse direction and reduce its taxes and regulations to achieve that?
No, that would be just crazy. Milton has committees seeking actively to “encourage” businesses – so that they might be taxed – in order to alleviate high residential property taxes.
Everybody knows that will work. They have known it for a long time now.
Brookings Institution. (2018, August 28). Amazon HQ2: How did we get here? What comes next? Retrieved from www.brookings.edu/research/amazon-hq2-how-did-we-get-here-what-comes-next/
Meriam-Webster Dictionary. (n.d.). Idée Fixe. Retrieved from www.merriam-webster.com/dictionary/idée%20fixe
Reuters News Service. (2017, October 19). Billions in tax breaks offered to Amazon for second headquarters. Retrieved from www.reuters.com/article/us-amazon-com-headquarters/billions-in-tax-breaks-offered-to-amazon-for-second-headquarters-idUSKBN1CO1IP
Wikipedia. (2018, July 26). Boiling Frog. Retrieved from en.wikipedia.org/wiki/Boiling_frog
Wikipedia. (2018, May 20). Extraordinary Popular Delusions and the Madness of Crowds. Retrieved from en.wikipedia.org/wiki/Extraordinary_Popular_Delusions_and_the_Madness_of_Crowds