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Friday, January 10, 2014

Free States Compact Needed To Bolster Business, Free Markets and Protect Taxpayers

* Updated Nov. 2, 2015 *

How many people lost their jobs in Wisconsin for no other reason than because another state bribed their employer with cash, tax credits and other freebies into moving out of Wisconsin? When does anybody think that charade is going to end - if ever? How about other states losing their businesses? Is there any empathy? Do you think that is the right course to create jobs and move communities forward? I don't.

I haven't found anything about this after searching the Web, but it's a pretty big world out there so it is possible a group or individual may have developed something similar before. Again, I haven't seen it at the time (1/10/2014) of this posting.

In the meantime, here is a suggestion that I strongly believe would protect state and local taxpayers, end at least one major element driving the corrosive "picking winners and losers" mentality of crony capitalism, and help restore free market based decision making for business expansion and relocation.

This suggestion is essentially a compact agreement (economic treaty?) between individual states, not one imposed by the Federal government, that would prohibit participating member state governments including their counties, municipalities, school districts or any other taxing body within that state, from using their public treasury, collective power or taxing authority for bidding purposes (incentives) offering exemptions or capital, tax credits or property free or below market value, that could effect a private business or corporation in another compact participating state. We could call this the "Free States For Business Compact" for now.

This compact has several obvious positive effects for its members and in actuality, the number of positive effects just might be incalculable.

Participating states and local tax treasuries combined would save hundreds of millions each, if not billions annually by no longer playing in the charade handing out publicly funded capital incentives and property to enrich politically connected cronies and other individual private entities while providing zero net new jobs nationally. These freed-up savings can then be used to empower home-grown entrepreneurs, lower state and local tax rates and help fund advanced education for emerging industries.

It also can be said that the constant reliance of states and communities on poaching jobs and businesses state-to-state has created a dumbed-down lazy sense of easy economic development. So, who needs to think up new industries or invent business ideas when the status quo solution for economic development is to constantly throw money at the top, whether in tax credits, free capital or other entitlements? All this does is create a greater wealth disparity, increase dependency on government and drain local assets.

This Compact is a fairly simple agreement that could be drawn in one state's legislature and signed into law by its governor. Of course one state acting alone won't do, the Compact needs reciprocity to work, but I certainly would like to see one of our more progressive states take this up and sign it into law. Again, it's meaningless until a second state and others get on board, so the first state to develop the compact would be under no obligation to carry out provisions of the compact unilaterally. But it can't succeed if it isn't tried.

I also realize that Article I, Section 10 of the United States Constitution provides that "no state shall enter into an agreement or compact with another state" without the consent of Congress. But that doesn't stop any one state from drafting the compact and hanging it out there for interested participants. They can always seek Congressional approval later.

In fact, the former House Ways and Means Chairman and now Speaker of the House, Paul Ryan, makes a distinction between what is appropriate for the federal and state governments. A Ryan aide, who asked for anonymity because he was not authorized to discuss the issue said Ryan believes states are free to compete for business as they see fit.

So, I can see 5 or 10 states might be willing to sign up to an agreement like this, as they see fit. Of course the goal is to have all 50 states under the compact. But as you know, I am a dreamer. This agreement would also serve as a unifying message for the rest of the country that we are all in this together. It's like saying to one another, let's create a vibrant economy with sustainable industries and jobs by first doing no harm to one another.

Who would be against that?

If you agree, please contact your state legislators and tell them about Free States. Nothing is impossible.


Citizens Action Wisconsin - WEDC Pursues Economically Bankrupt Job Poaching Strategy (March, 18, 2015)

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