I fully intended on making these thoughts the topic of today’s The Daily Short(s), but try as I might, I couldn’t condense it down to five minutes of auditory clarity. I actually recorded it and hit delete. Some things are so enraging that they must be filtered through a keyboard for precision.
The Missouri legislature has been called into special session this week. Special session is exactly what it sounds like – an unscheduled session of the state governing bodies, usually reserved for emergencies like natural disasters, budget crisis’ or the renewed fear that we may be invaded by Arkansas. Not this time, though. What brings everyone back to Jefferson City?
Jobs. The governor is calling the State Senate and Legislature back from their jobs and lives to the Capitol because the good people of Missouri need jobs and need them now. The fact that the jobless rate also receives more press than any other issue is merely coincidental.
Couched as a jobs bill, the legislation at hand involves $360,000,000. I started to write $360 million, but looking at all those zeros means something. Look again. $360,000,000. How many zeros in what you made last year? Less I bet. A lot less…but you don’t have your own aerotropolis.
The idea is to turn Lambert Field into a major shipping destination for China. In theory, they will fly all sorts of things…Chinese things, we’re told….into the US via St Louis. Then, there will be a lot of empty Chinese planes on the tarmac in St Louis and those pilots will need to get home, so they’ll fill the planes with American Red Meat because everyone who’s ever been to a Chinese restaurant knows they eat a lot of Mongolian Beef and need our beef to supplement, I suppose. Remember this beef I have with the beef part for later.
$300 million – that’s $300,000,000 to you and me – has been earmarked for tax credits for people who build warehouses within a close proximity of the airport. Keep in mind that there are empty warehouses near the airport now. Never the less, we will need many, many more warehouses for all our Chinese things (I’d be more specific but even the supporters of the bill don’t really know what the Chinese might want to ship us. We do know, however, that they’ll want to ship beef back).
We want this to happen – and we want jobs – so if you build a warehouse in this zone, we will give you a tax credit commensurate with the amount you spend on warehouse. For example, if you build a $5,000,000 warehouse, you get a $5,000,000 tax credit. These is not a tax deduction – this is a credit. If you don’t know the difference, you certainly won’t build a warehouse. Trust me, you want the credit, because if you can’t use the credit (and who can really use a $5,000,000 credit?) you can SELL the credit at a discount to some major corporation who can use it. So let’s say you discount it by ten percent and get $4,500,000 for it.
You now own a warehouse worth $5,000,000 and you have 90 percent of your investment back. Oh, and you don’t need to keep the warehouse. You can sell it. Even if you discount it by 10 percent, you can make $4,000,000 in profit on a $5,000,000 building (taking into account you still owed a half million after the tax credit sale).
What about the jobs?
Oh yes, the jobs. You got the tax credit because you promised that you believed this would create jobs. That’s it. You didn’t need to promise you would deliver jobs – only that you thought it would work. Since when is “I thought it would work” an allowable defense in a court of law?
So if you do keep the warehouse and employ people – here’s a bonus for you. Those employees don’t need to pay St Louis’ earning tax so long as they work there. Neither do you. And you can lease up to ten percent of the space as office space, and anyone directed from that office space is exempt as well. How long do you think it would be before a major firm in downtown St Louis moved one executive office to a 10×10 space in your warehouse in order to except their thousands of employees from the St Louis earnings tax? It would happen quicker than you could say George Jetson.
One more thing – if you operate your warehouse, you’re excepting your employees from the state income tax…and the half that you normally pay? You keep that.
Where’s the beef?
Here’s the kicker – Remember the backload of all those Chinese cargo planes?
Per the US Government’s information sheet, China won’t accept US beef. Apparently they’re going to jettison the cargo somewhere over the Pacific, reigning down ribs and chuck roast on the islands before setting down with an empty plane on the tarmac of Bejing, because they can’t bring our beef home.
Remember Alaska’s bridge to nowhere? These are Missouri’s warehouses for nothing.
Why Why Why?
It’s interesting that in 1000 words, I can shoot more holes in this than the FBI shot in John Dillinger, yet the bill has the support of the governor and both parties. When I see one party enthused about legislation, I get concerned. When I see them both enthused, I get very, very worried.
The bulk of this jobs bill is about issuing profits to a few cronies. The bulldozers are standing by. The union workers are waiting. I’m confident the contracts are already written up and waiting to be signed minutes after this bill is signed.
And jobs will be created…for a short period.
Until the warehouses are built.
And then, perhaps in mothballing warehouses when they discover they’ve inflated their value based on tax credits and now don’t know what to do with them.
This is not everything wrong with the bill. Honestly, this post could be twice as long as it is and mention things like stem cell research and the ignored Hancock Amendment, but I’m already losing some of you. I wanted to remind you to call your representative before you fell asleep entirely.
Do you understand now why I didn’t podcast this? The sound of me beating my head against my desk would have been deafening.
REMINDER: I’ve started podcasting The Daily Short(s), Monday through Friday, five minutes of thought for your day. Today I riffed on the idea of who creates jobs to begin with…
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