The Palmetto Insider

The blog of the South Carolina Policy Council

At the Bottom of the Incentives Slippery Slope

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It should come as no surprise that the House easily let pass a new budget proviso (89.112) that takes $15 million from the Insurance Reserve Fund to pay for a new economic incentives plan for the airline industry … that is, via regional economic development entities.

After all, the plan (H 4343) has already passed the House – on an unrecorded vote – and is currently awaiting review by the Senate Transportation Committee.

In fact, Ways & Means Committee Chairman Dan Cooper insured passage of the proviso by separating it from a much more controversial proposal to also take $10 million from the Insurance Fund to pay for tourism promotion (read: “The Heritage Golf Tournament”) in Beaufort County.

Legislators hotly debated that giveaway – because, to paraphrase Rep. Ralph Norman, they might not want to see newspaper headlines asking how lawmakers could cut education funding, but still use state insurance funds to back a golf tournament. In the end, though, lawmakers overcame their fear and the proviso passed anyway by a vote of 69 to 43.

No doubt, Norman is right that it’s not the state’s role to bail out a golf tournament.

So how about the airline industry? Why not a peep asking whether it is the state’s role to “provide more flight options, more competition for air travel, and more affordable air fares for the State of South Carolina”?

Consider that 16 percent of South Carolinians live in poverty – that’s about 716,000 people.  Let’s ask these folks – as well as the taxpayers bankrolling the Insurance Reserve Fund – how they’d like to use this money? How about to fund more charter schools? Or to lower taxes on the working poor? Or to lower taxes for everyone?

It is doubtful that many South Carolinians agree with using taxpayer funds to prop up the airline industry.

But if we’re going to pay for a golf tournament, the same logic dictates that we subsidize the airfare for folks to attend.  And that we also subsidize the planes they fly in (Boeing); as well as the places where they shop (Sembler and Bass Pro Shops).

It seems there is no economic activity – and recent legislation passed by the House may well insure that fact – that is not subsidized by the state government.

State government, though, is not an entity unto itself; it’s not a productive enterprise. So, if everything we do is already being subsidized, why not just cut taxes for everyone and take the politicians out of it?

More to the point, a government with the power to subsidize every economic activity also has the power to tax and license every economic activity (more on that, here). In short, it is a government with the power to control all economic activity.

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Written by Jameson Taylor

March 17, 2010 at 4:04 pm

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