President Signs Gulf Bailout Bill
President Bush has signed the Gulf Opportunity Zone Act of 2005 into law:
The tax breaks for business investment are aimed at luring companies into the region and keeping those that are already there. Companies can use a tax credit to defray salaries if they kept employees on the payroll even while shut down due to storm damage.
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[T]he Gulf Opportunity Zone Act will help small businesses in the affected area by doubling the expensing for investments in new equipment from $100,000 to $200,000. The bill also provides a 50 percent bonus depreciation, which Bush said means tax relief for small businesses and businesses that purchase new equipment and build new structures.
Here’s my question: How is giving $8.7 billion in special tax breaks to Gulf State businesses and individuals any different conceptually from levying $8.7 billion in special tax surcharges on everyone else?
I’m all for lower taxes, but special tax breaks aren’t really “lower taxes.” They’re merely redistributed taxes to a politically favored group from politically non-favored groups.
The net impact on the federal budget is irrelevant (i.e., it doesn’t matter whether these “tax breaks for some” translate, nominally, into higher taxes for others, lower government spending elsewhere or higher federal budget deficits). The Politics of Pull and the Politics of the Warm Fuzzy Feeling are no less nefarious when they take the form of lower taxes for some at the expense of others than when they result in “Bridges to Nowhere.”
“Lower taxes” only deserve libertarian praise when they are ubiquitous and non-discriminatory (and, hopefully, offset by lower government spending). Otherwise they amount to little more than another Keynesian boondoggle.
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