Consumption, Production, and Economic Growth
Association President Howard Stephenson was on the Doug Wright Show on KSL this morning. Doug disagrees with the Utah Taxpayers Association regarding economic development. Doug argued that Utah’s population is growing and therefore subsidizing retail and entertainment with tax dollars makes sense. The association argues that subsidizing locally driven retail (and entertainment) is a wasteful use of tax dollars because retailers and entertainment venues will come to Utah on their own without subsidy or incentives as long as there are people who are willing to buy their products.
Government can’t get people to spend more money by subsidizing local retail and entertainment. Retail expenditures occur on their own. If government wants its citizens to spend more money, it should cut taxes which gives consumers more money to spend, and it should create a climate that attracts high wage businesses.
Besides, the real key to economic development is not consumption but production. Nations, states, and households that focus on production instead of consumption end up making more money in the long run which allows them to consume more while increasing their savings rates at the same time. Utah should focus on ways to improve its productivity. That includes an education system that is improved through choice and competition and a tax structure that encourages investment in businesses that export goods and services or improve productivity (telecommunications, for example).
Economists are in general agreement that stadiums are not the engines of economic development that stadium proponents claim they are, mainly because most of the economic activity the occurs at or around the stadium is economic activity that is already in the state economy or would naturally occur in the state economy due to population growth. While stadiums attract some money from outside the economy that wouldn’t come to Utah otherwise – like an occasional Real Madrid game that will not be played in the new Real stadium anyway because the new stadium will not be big enough -- subsidizing stadiums is still a very low bang for the buck.
Doug also argued that using hotel taxes for Real’s soccer stadium is OK because out-of-state tourists, not Utahns, are paying this tax. The association maintains that hotel tax dollars are still our tax dollars – even if they are paid by outsiders -- and need to be spent appropriately. Just because non-Utahns are paying this tax doesn’t mean we should accept a lower standard as to how these dollars are spent. In fact, if politicians recommend funding something with taxes on tourists instead of funding the same project with property taxes, you can usually be sure that the project is not worth funding at all.
Too bad Huntsman, Valentine, Bramble, Curtis, Dolan, Corroon, Hatch, Wilson, Jensen, Horiuchi, Ashton, most legislators etc. etc. don't see it that way.
You keep saying that Huntsman is the economic development governor even though Huntsman pushes for stadium subsidies.
Posted by
Anonymous |
4:28 PM
Tourists from other states and countries pumped money into our economy during the Real Madrid game. That benefits our economy, but how many times can we expect Real Madrid to play here and will the novelty wear off?
Posted by
Anonymous |
5:03 PM
The tourists pumped money into our economy but how does that benefit compare to the RSL subsidy? Could we get more economic development by spending the TRT dollars elsewhere?
Posted by
Anonymous |
7:37 PM
My big problem with this Soccer REAL giveaway is that blight was used as an excuse to give tax increment away.
It is obvious that there was no blight involved and the tax increment giveaway comes directly out of taxpayers' pockets.
Tourists do not pay for tax increment giveaway.
This is still a ploy to make the soccer team owners as wealthy as Larry Miller has become with the TIF giveaway years ago in the Delta Center.
The purpose of government is not to create wealth for a privileged few by taking away from the rest of the taxpayers.
There is a name for this government intervention. I think it is called facism.
Posted by
Anonymous |
10:18 AM
Minus is right about the tax increment giveaway. This is being paid by the rest of us.
Does Sandy give tax increment financing to ALL new businesses? Should all cities and local governments look at tax increment from all new businesses as "free money"?
Posted by
Anonymous |
11:17 AM
I have to agree with Doug Wrights general acronym. CAVE people. Citizens Against Virtually Everything.
Posted by
Anonymous |
11:53 AM
Doug Wright only restates what was printed in the paper,no original ideas. You are in big trouble if you rely on him for your opinions.
Posted by
Anonymous |
2:29 PM