Maybe Oregon is better off without a sales tax. Or let's not get into TIF.

Oregon's lack of a sales tax may be a factor in Portland's ability to encourage ownership of locally owned businesses and avoid being overrun by big box retailers. Tax Increment Financing ("TIF") through a sales tax makes it easier for government to give away public assets, especially to baddies like Wal-Mart.

In short, a municipality desperate for economic development allows a large retailer to keep the sales tax it collects because the municipality hopes that the economic benefit to the community will outweigh the tax revenues it is giving away. This hope is probably misplaced.

A general definition for TIF:

A financing method which uses the additional taxes generated by a completed development to pay for development costs such as land acquisition and site improvements. The difference between the taxes before the development occurs and after its completion is referred to as the "increment".

In the context of a sales tax, though, the state of Illinois provides a better definition:

The department distributes state sales tax collections to municipalities that have tax increment financing (TIF) districts for either state sales tax, state utility tax, or both that produced an incremental growth in retail sales, or gas and electricity consumption. Funds are prorated to each municipality based on its share of the overall TIF net state increment.

David Cay Johnson's recent book, "Free Lunch" has case studies where private companies abused TIF.

Well, in many of the big new box stores, when you walk to the cash register to pay for your purchase, you’re required to pay sales tax. But the government never gets that money. Instead, those sales taxes are used to pay for the cost of the store. Now, on one level this means that your community’s police department, fire department and schools and libraries aren’t getting those sales taxes. But imagine for a moment that you own the retail store down the street that’s been there for years. You’re competing against this enormous subsidy that’s going to drive you out of business. In a small town in the Poconos in Pennsylvania, a fellow named Jim Weaknecht ran a little fin, feather, and fur outfitting club. He sold hunting bows and fishing tackle and things like that. One day a big company named Cabela’s came to town. This little town – 4,100 people – agreed to give Cabela’s $36 million to build the world’s largest outdoor goods store. That’s over $8,000 for every man, woman and child in Hamburg, more than the entire city budget for everything -- police patrols, road repair – for more than a decade. Jim Weaknecht charged lower prices. He was run out of business. While he thinks he might have been run out of business anyway, he also says that this isn’t fair. This is not business. This is the government helping the politically connected. I think most people walking into a WalMart, Cabela’s, … a lot of other stores have absolutely no idea that the sales tax money is going to the owners of the store.

It is worth noting that TIF can involve income, property or other types of taxes. The key difference with a sales tax, though, is the "free money" aspect: government leaders are likely to view all the sales tax revenue from the new retailer as coming wholly from the new business generated when it is likely that the bulk of the sales tax revenue would have occurred from the current businesses in that sector. In other words, the Wal-Mart or Home Depot is cannibalizing the locally owned businesses.

Furthermore, use of TIF is not limited to big box retailers. Sports teams and baseball stadium fans will use them, too.

In closing, it would be useful for any sales tax proposal to include very strict guidelines when TIF can be used with a sales tax.

Further reading on TIF.

30 second summary why the FISA bill matters

He deserves a kick in the groin

U.S. Attorney General Michael Mukasey's conclusion that the costs and benefits must be weighed to determine whether some conduct is torture.

Portland Improvement

Robert Moses was a post World War II planner that saw a future where everyone drove cars, no one used transit and most of your life was spent indoors. Just after World War II, the city of Portland asked him what he saw for our city. Thankfully, the voters decided against funding his ideas. Still, Mr. Moses probably deserves a good kick in the groin.

He is generally known as the man that made the New York City we know today. The plan he had for Portland involved removing Union Station, expanding Harbor Highway (where we currently find Tom McCall Waterfront Park), and decimating transit.

This is a summary of a very thoughtful story about Portland's development history found here. It has some great photos, too.

ht: Stumptown Confidential

So I got this going for me.

For those not too familiar with American pop culture (Sam!), this is from Caddyshack.

More reasons to like John Edwards

The more I hear about John Edwards' campaign, the clearer it is that America would strongly benefit from him being president. His campaign has become a populist mission to assert control over corporate control--halt the relaxing of regulatory control that harms consumers and blunt the greed that destroys human lives.

His book, "Four Trials," documents the kind of greed he saw and fought in his law practice. Perhaps the hardest example is the company that made a children's pool drain pump strong enough to suck the intestines out of a 5 year old child--which it did. Of course, the corporation knew about this risk but ignored it because it did not want to spend money making it safer.

And corporate lobbyists know about his career and apparently fear his presidency.

Ask corporate lobbyists which presidential contender is most feared by their clients and the answer is almost always the same -- Democrat John Edwards.

The former North Carolina senator's chosen profession alone raises the hackles of business people. Before entering politics, he made a fortune as a trial lawyer.

As an aside, note how the Reuters article refers to "winning" settlements when settlements are, by definition, mutually agreed to by the parties and cannot be "won." The media very frequently makes mistakes in their writing about legal concepts.

One more detail is the reference to "litigious" America without any discussion of what that means. I suppose the writer could mean that we as Americans are argumentative, but I doubt it. If you are not a corporation and assert your rights in court, you are litigious, apparently.

Ambivalence

I think right about now it is OK to be ambivalent about this great country of ours.

An unfortunate illustration of Indiana as craphole

The state of Indiana requires voters to present photographic identification before they can vote. The law's obvious purpose is to discourage voting by poor and minority voters. Thankfully, the voter ID law has been challenged and has a theoretic chance to be overturned. However, given our US Supreme Court that seems unlikely.

This law is one in a long history conservatives and other reactionaries have enacted to prevent voting by minorities and others they consider undeserving of the right to vote. Poll taxes and literacy or civic tests are some of the more common ones from our recent past.

At least as far back as 1996, while I working for lobbyists in the Indiana legislature, this voter ID law was being thrown-- around even though it has no ostensible or legitimate reason.

Before the voter ID law, Indiana came up with a clever way to dilute the votes of those most likely to vote for Democrats. Unigov. As clever as it was simple, the Republic voting suburbs were consolidated into Democratic voting city of Indianapolis in order to ensure Republic hegemony. And it worked: from its creation in 1969 until the late 1998 Indianapolis' mayor was Republican. (as a neat aside, Senator Dick Lugar was the mayor of Indianapolis at the time of Unigov).