In today’s morning reads, I noted a Tax Foundation study on the state business climates. Mike Klein notes over at the Georgia Public Policy Foundation that Georgia comes in at a depressing ranking, 37th overall. Klein contends that this a sign that Georgia needs a tax code overhaul to make it more attractive to businesses and industries.
He’s absolutely right. But there is there is a right way and a wrong way to go about it. Many states have resorted to offering up tax credits for various industries as a way to bring business to their economies. Georgia is no different. Many legislators have pointed to the boom in filming in the state thanks to tax credits, often citing AMC’s popular show, The Walking Dead, as an example of their success.
State Rep. Ron Stephens, who has apparently never met a tax credit he didn’t like, is pushing now for similar treatment for the music industry (I can’t find a story on it, but heard the story on WSB Radio during my drive into work this morning). He believes that by providing incentives to the industry that Atlanta could become the “new Nashville.”
My wife is involved in the local music scene, booking shows for bands that come through the area, and I played in a band for six years. I’ll catch the occasional local show with her, whether it’s one she has booked or to see an act that I like. So I’m sympathetic to the idea of seeing Atlanta’s influence grow in the music industry. But if you want to make Georgia’s economy more competitive, the last thing you should be doing is picking what industries are going to be winners and losers by distorting the market with tax credits, which is ostensibly an admission that we don’t already have a business friendly climate.
The legislature should, as Klein so rightly explains, focus on a tax structure that make any industry or business considering relocation believe that they can come to Georgia and prosper. This is the difference in being “pro-market” and “pro-business,” a distinction many legislators don’t seem to understand.