Myths, legends and old wives tales abound when it comes to discussing economic growth in a community or region. Some of these apply to Marion County.
These top 10 myths should be discussed and debated.
Low taxes promote economic growth. I wish this myth were true. But with a few exceptions—Nevada is the major exception—growing and prosperous communities have fairly high tax rates. Among other things, they are paying for infrastructure such as new schools and streets to keep up with the growth.
If you want low taxes, move to Mississippi or Alabama. But you will get what you pay for.
Industries will relocate to rejuvenate the local economy. Chasing smokestacks with the hope that some Fortune 500 company will build a local plant and pay good wages is a wonderful fantasy. Tax incentives and industrial parks do not generally attract these folks—or if they do, their stay is often short lived.
Local entrepreneurs who start small and grow slowly stay longer and are the real engine of growth.
Low wages promote economic growth. This is a half-truth. But given a choice between skilled workers and low-paid workers, most companies will chose literate and motivated workers over cheap help.
Being centrally located is a good thing. The cliche can be heard in promoting Kansas or Marion County. In fact, Kansas by virtue of being in the center of the continental United States is also the most distant point from the major North American population centers and markets.
Nice people are the key to growth. Well-kept farms, nicely manicured lawns, dynamic churches and civic organizations and friendly, salt-of-the-earth citizens accurately describes Marion County.
But ask yourself honestly, isn’t this true, or at least the self-perception, of folks in most counties in America?
Fast-food franchises can make an area seem modern and progressive. Look, everybody in America has an Applebee’s, Subway and Bennigan’s restaurant. Glowing neon signs along a franchise strip are not a sign of either modernity or progress.
Local restaurants and shops are more crucial for creating a regional identity.
Local growth trumps regional growth. Neither Marion County or Kansas can grow in isolation. Shifting business and population between a competing Hillsboro and Marion is merely rearranging the deck chairs on the Titanic.
Marion County also benefits from healthy growth in Chase County, Newton and Wichita.
Tourists and immigrants are a nuisance and inconsequential. Outsiders go with the flow. Tourists will spend a few extra hours—and dollars—for an interesting museum, shop, restaurant or scenic drive.
Oddly, economic immigrants—particularly Hispanic immigrants—make a similar decision. They instinctively pick areas where they sense the potential for growth and vitality.
The cities and regions experiencing the most dynamic growth in America are also the areas with the largest number of Hispanic immigrants—legal and illegal.
Slogans promote growth. I grew up with Hillsboro as the “Land of Milk and Honey” and Kansas as the “Wheat State.” These at least had the merit of being specific—even if no longer true.
The current Kansas slogan, “As big as you can think” is an admission of failure. We give up—you think for a while. We have absolutely no idea how to promote this barren strip of interstate highway.
Maybe an alternative would be to promote smallness: “Tiny shops and tiny minds.” Highway markers could direct tourists to Fred Phelps’ church and home in Topeka as well as pottery shops.
Economic growth can be rational and orderly. The truth is population and economic growths are often both serendipitous and chaotic. Nobody can perfectly predict economic trends and population shifts.
The key is being alert and open to the tides of change rather than trying to control them.
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Comments (1)
1. 04-12-2007 09:53
A Few Facts About Economic Growth and Ta
Lower taxes increases incentive for investment, savings and work which ultimately drive economic growth. In fact, a study by the National Bureau of Economic Research found that nations with low tax rates have statistically significant higher rates of new business formation, investment and income. Another study by the American Enterprise Institue found that higher taxes result in lower wages for workers driven by lower levels of capital investment which result in workers being less productive. In the 1990s Ireland lowered its 48% corporate tax rate to12.5%, as a result the economy grew by more than 80%, unemployment fell from 18% to 5%, productivity tripled and Ireland become the second most prosperous country in Europe as companies and individuals invested in Ireland. The NBER research found that a 10% point raise in effective tax rates reduces the number of business by 36%.
Recent reductions in taxes by other developed countries has resulted in U.S. taxes being the second highest among developed countries. An index of taxes in developed countries indicates that U.S. taxes are well above the 25% average of industrialized countries. High U.S. tax rates will begin erode a number some American advantages.
High marginal tax rates generate great incentives to find ways to avoid punitive taxes. These incentives cause mischief, Lawyers, accountants and lobbyists are paid large fees to create loopholes so that the punitive taxes can be avoided. Businesses direct their investment and operations to minimize taxes, relocating to low tax states like Texas or low federal tax rate countries like Ireland or Switzerland. Investors/Wall Street focuses on tax avoidance rather than responsible investment.
Derek Jeter the all-star shortstop and captian of the New York Yankees is being called a tax cheat for claiming his primary residence is in the state of Florida where there is no personal income taxes. New York City's rate for the top income bracket is 12.15%, at Jeter's $18.9 million annual salary he saves $2.3 million a year, by having his primary residance in Florida rather than New York City. Florida like Texas, Nevada and other growing prosperus states attract investments from Derek Jeter, corporations and other individuals due to their low tax status. Nationwide the average state income tax rate is 5%, in line with Alabama and Mississippi's 5% rate, Kansas' income tax rates are already above the national average at 6.45%.
The clear implication is that higher taxes for Marion County could: stunt local entrepreneurs from developing and growing locally, while depressing wages as a result of lower productivity. Higher taxes are not a cure for Marion County, Kansas or the U.S. to maintain or enhance its competitive position in the regional or global environment.
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