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Reality Sets In

By Jim Sack

Fort Wayne Reader

2016-10-09


On the surface it looked like a smashing good idea, to end a tax that has been embroiled in controversy, and that the critics promised stifles economic development.

Councilman Jason Arp proposed to end the corporate personal property tax paid on computers and presses, pumps and other production equipment. His effort failed. Here are a couple of reasons.

Examine the optics.

First, the proponents suggested giving business investors a handsome tax break by shifting those taxes to wage earners and property owners. Given the regular stream of news about corporate cheating, candidates who pride themselves in paying no taxes, about the Wells Fargo rip off, and rising income inequity, the proposal looked grossly unfair.

Examine the realities.

“Trickle down economics,” was the underpinning theory supporting the proposal. In short, trickle down promises that if we give more profits to the owners of businesses their new wealth will trickle down to the rest of us. Mr. Arp, however, could only theorize broader benefit.

Whether the dollars saved by the corporations would have been reinvested here, not in Detroit or New Delhi, was also unknown. Additionally, if the tax savings were reinvested in robots and computers, history suggests jobs would be eliminated.

Enter Hegelian logic that contends that thesis prompts antithesis and the combination results in synthesis, and the cycle repeats. In this case the synthesis was Dr. John Crawford’s promise to organize a Fifth Tuesday Convocation in late January where all the effected taxing districts of Allen County would be invited to discuss local tax reform.

Do we hear an echo?

To be clear, we have done this before, and very recently. About three years ago, when government reserves were running on fumes, Mayor Henry and his controller, Pat Roller, convened and directed a blue-ribbon task force to analyze the various streams of income the city uses to fix roads, etc. Recommended revenue adjustments were made, including the introduction of a local option income tax, that shifted more of the burden of supporting roads, parks and public safety to wage earners.

Mr. Arp’s failed proposal would have shifted yet more of the burden to the average wage slave, which was just a bit too much for council to swallow.

Fundamentally, little has changed over the past three years, so Dr. Crawford’s proposal is mostly a sop to the losing three councilmen and their supporters, but it may help the newcomers on council, as well as we taxpayers, better understand the taxing mix, and in that regard it may add some value to the annual budget process.


Abatement Game Reform

With that in mind, the abatement game was played once more at council, but with different results. Reformers like labor leaders Tom Lewandowski and Cheryl Hitzemann, current Councilmen Paddock and Russ Jehl, as well as former councilman Mitch Harper watched as a company that repeatedly failed to uphold its end of the bargain, namely to create jobs, and had failed even to submit basic reports, was stripped of its abatement. Council, long the rubber stamp, has been chastised by labor and the public so frequently that they are now actually watching out for your tax dollars. When properly designed, well-managed and assiduously enforced the use of abatements can help deserving companies become more competitive nationally and produce jobs locally.


Speaking of Government Waste…

The numbers are staggering: $40,000 to buy a dilapidated house, $243,000 to renovate, but only $110,00 recouped on sale. The house in question is a 100-year old dowager on Fulton Street downtown, and the numbers add up to a $200,000 taxpayer subsidy. No business could last long buying high and selling low. But this is no private contractor, this is your tax money at work, hard earned tax dollars that planners and officials felt could make a big difference for our community.

Here’s their rationale: Fulton, where I too own a property, had been in slow decay for fifty years, but not far in every other direction stand renovated mansions, historic churches, thriving businesses, and Parkview Field. The philosophy reflects the two-word underpinning of the Legacy grant process: transformational and catalytic. The goal, according to city officials, was to stabilize the surrounding sixty houses and encourage even faster investment in the area. They rationalized the $300,000 cost as widely beneficial. As for the whopping rehab costs, lead paint, asbestos and other “historic” carcinogens just can’t be tossed in the garbage anymore. The rehab has been catalytic: property owners on the street happily eye rising sale prices with higher property tax bills soon to follow. The few tawdry homes on the block will either upgrade or be sold to those who see diamonds in the rough. Had the dowager been done by a private developer the costs would have been much lower, but none stepped forward, we are told, so the house, instead, would have remained a drag on the city until it collapsed and would have cost us all more than the $200k, so the theory goes.

Legacy Waste

You may remember a couple years ago the Legacy was poached for a few hundred thousand dollars to subsidize a Fort Wayne to Philadelphia flight. It was more a subsidy for a certain company in town, one with a large statue of the author of the Gettysburg Address and the one once led by Ian Rolland, before his less-than-honest successor moved Lincoln’s national headquarters from Harrison Street to Philadelphia.

Fliers loved the chance to avoid delay-prone Chicago O’Hare, but too few of us flew the route, and without ridership the service was cancelled…only to be quickly replaced by an unsubsidized flight to Newark where similarly good connections to Europe, east coast businesses, plays, monuments, memorials and musea, can be had.

The Lincoln is important to Fort Wayne, thus the stimulus grant; and O’Hare delays probably cost us more than did the subsidy, so it was a good try. But, it points up not all Legacy infusions will succeed and explains why, as one councilman noted, more stringent rules now shepherd the inheritance.



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