Times Record: Bath needs its tax dollars kept here (Aug. 16, 2013)

We know the importance of national defense, and we know well the city of Bath’s proud shipbuilding heritage.

We also know the city has huge capital needs, for infrastructure, housing, tax relief for the elderly, code enforcement, parks — you name it.

So, regarding General Dynamics’ imminent request for a local tax break, if you balance the need for a class of overpriced submarines — which even analysts say are of limited use to national security — against a variety of pressing local needs, we’d take the money and re-do the viaduct area, open new areas for public recreation, refurbish or relocate Morse High School, and a host of other local projects that could put local people to work.

Yes, we are aware that BIW is one of the largest private employers in the state, paying above average wages. The Mid-coast economy leans heavily on its success. And using tax dollars to lure or retain solid companies can be good policy when used with precision.

The problem is — as was the hallmark of our national economic policy during the George W. Bush administration — tax breaks have not been shown to create jobs. Rather, there is significant evidence to the contrary. Tax breaks have been lavished on BIW even as the labor force there dropped and executive compensation jumped. Nationally, the evidence is even clearer: Jobs suffered even as corporate tax rates were cut.

So it’s a stretch — if not outright ludicrous — to say BIW jobs rely on the contributions of local tax dollars. It’s even possible an equivalent number of jobs can be created using the local tax base to fund local projects — not bonuses for out-of-state executives.

Bath’s entire municipal budget in 2013 is not quite $15 million. Compare that to former General Dynamics CEO Jay Johnson, who was paid $16.1 million in 2011 and $18 million in 2012.

It’s true that, at 35 percent, the United States has the highest nominal corporate tax of any of the world’s developed economies. But the effective corporate tax rate — what companies actually pay after credits, exemptions and loopholes — actually fell to 12 percent in 2011, the lowest since before World War I.

Compare that to how Bath’s local property tax rate has performed: From 1999 to 2005, it rose from $20.60 to $25.75 per $1,000 valuation — up 25 percent.

Liberals want to demilitarize our nation to generate a peace dividend. Conservatives bristle against pork and federal usurpation of local control. Everyone in the center wonders why corporations get big tax breaks while making false economic promises as aid to the poor is slashed and the rest of us pay more in local tax.

Given the tight-knit links between city and shipyard, it’s very likely Bath residents will end up opening their wallets to pay a multinational corporation for costly warships no one is sure we need, forgetting the possibility of fixing more shattered roads or providing food to more of their low-income neighbors.

A false choice — but one the city seems happy to make, unfortunately.

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