Free-Market Case Study: Who's Entitled to a Tax Subsidy for Big Developers, and Who Benefits?
Well, we're living here in Allentown.
And they're tearing all the old buildings down
But a guy who wants to save a hotel
Can't get the cash from
the taxpayer well.
(with apologies to Billy Joel, and the people of Allentown, Pa.)
When funded by taxpayer money, is a developer entitled to a subsidy if he merely meets the basic requirements of the state program, or are civic leaders on the local subsidy Board compelled to apply extra scrutiny exactly because it's public money.
That's the fight in Allentown, Pennsylvania, right now, where a so-called "Neighborhood Improvement Zone" (NIZ) redirects tax dollars into developer projects -- a hockey arena, hotels, office, retail and residential space -- in the hopes that the investments in downtown will eventually pay off in bigger tax receipts for government, and in a revitalized city. This "local story" has broad implications for your community, state, nation and world. I'll offer four reasons (below) why such arrangements, and the politicians who push them, deserve extraordinary scrutiny from taxpayers and voters.
It's a special developer-entitlement zone for Allentown-only set up by the state legislature, thanks to the vigorous efforts of Allentown's state senator, who counts the major developers among his top campaign donors, and whose wife got a job with a lobbying firm that has clients who benefit from the special tax-subsidy district. (Conflict of interest allegations have been denied all around.) The lead developers have just set up a political action committee to support candidates who support the NIZ, without regard to political party affiliation.*
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