Martin County voters will be asked on the August 24 ballot to approve or disapprove a measure entitled:
"Economic Development Incentive Ad Valorem Tax Exemption."

The title should be:
"Tax Giveaway Program for Favored Businesses."

Although the plan has been presented as a tax abatement scheme, it's actually a tax exemption.

Here's the difference: An abatement defers payment until a later date; an exemption completely relieves the property owner from any obligation to pay tax.

Like the title, the ballot explanation is misleading. The ballot asks whether the County should grant "property tax exemptions to new businesses and expansions of existing businesses?"

It makes sense that if the purpose of the tax exemption is to incentivize businesses to provide more jobs, then all businesses that hire employees would be eligible for the exemption. That's not the case, though.

The Martin County referendum proposal does not apply to all new or expanding businesses. Retail or service businesses (stores, restaurants, etc.) are ineligible. Only certain businesses (such as marinas and manufacturing plants) approved on a case-by-case basis by the Board of County Commissioners are eligible. And approval is entirely at the whim of campaign contribution-driven commissioners. There is no entitlement to an exemption for a business that otherwise meets all the criteria.

The ballot claims the plan will "allow Martin County to encourage job creation by granting property tax exemptions on assessed value of new improvements and personal property for eligible businesses." Available research does not support this claim. Studies show that tax abatement programs cost local residents more than they generate.

Here are some materials for those who wish to delve into the dry details of economic development schemes.

Here's the short version:

Tax abatement programs were developed in the 1930s to draw manufacturing plants from the north to southern communities where there was an abundance of cheap land and cheap labor. Tax abatement programs have never generated long-term economic growth and stability. This is partly because now that tax abatements are common, businesses set up where there is a good abatement plan and then move out as soon as the program expires or even sooner if there's a better abatement plan elsewhere. Exemptions from personal property taxes as well as real property taxes -- like the program on the August 24 ballot -- are especially frowned upon since personal property (computers, office furnishings and equipment, business vehicles, etc.) depreciates in value and may have little or no worth by the time the tax exemption expires.

Research also shows a lack of enforcement or oversight of tax abatement programs. And there is no way to tell whether businesses would have set up in a particular location even without a tax abatement because of other factors, such as environment or quality of life considerations.

The Encyclopedia of Taxation and Tax Policy (Urban Institute Press, Second Edition, 2005) concludes:
"In general, the empirical analyses of tax abatement programs for economic development purposes show negative results."

Likewise, from the Journal of Regional Analysis & Policy (vol. 37, No. 1, 2007):
"Economists are overwhelmingly against tax abatements as incentives for investment."

The Economic Development Quarterly reports that the majority of tax abatement programs offered by local governments to stimulate economic growth generate costs that outweigh their benefits to communities.

Please help spread the word about the tax abatement referendum.
Empty promises of quality, high-paying jobs with health care benefits are just that: empty promises.
The referendum proposal does not require businesses to provide high-paying jobs or health care benefits.
And it doesn't require that Martin County residents be hired to fill new jobs.

In the meantime, existing businesses and new businesses that don't pay to play will pay higher taxes to support a lower level of services (the Acting County Administrator has proposed cuts of $8 million from the budget via employee furloughs and reduction in staff and services while raising taxes an average of $68 a year for County residents).

Please encourage all on your circulation lists to educate themselves about the proposal and vote NO on the tax exemption referendum August 24.