Although there are MANY reasons for Detroit's issues, I wanted to discuss one reason that may get overlooked all too often...
Inner cities throughout the USA are being used up and thrown away like every other American consumable. That is a fact. Inner cities lose out to the first-ring of suburbs, which then themselves lose out to a second ring further out, leaving behind a trail of despair that could be, and should be, avoided. One city or region of the country loses out to another... the cycle continues.
MUCH of this has to do with how corporations are playing the "we'll bring jobs here" card in order to land substantial and lucrative tax-abatements and/or other financial incentives to deliver those all important jobs to a region; do not mind that those "jobs" are quite often "created" in one area by removing jobs from somewhere else. And, once those "new jobs" are in your region, be prepared for the day when the same company that "created" them decides to play the same card again and move on out to greener (more lucrative) pastures where another city will gladly extend a tax-credit when the time is right (i.e., the time when your region no longer gives them more than they give in return).
And, it is not the little, mom-and-pop small businesses doing this (they do not carry the clout to grab large tax abatements), but instead it is the larger firms that have already grown to maturity and quite often offer near-zero up-side for overall jobs growth (more likely, they offer endless down-sizing during various reorganizations and "efficiency-improvement" maneuvers and outsourcing measures). Why does it continue? There is no net gain for us - America as a whole - yet this practice persists. Simply put: there is always someone (read: politicians and their corporate counterparts) willing to sell out one region of the country to help another.
I personally think that all regional tax-abatements should be eliminated. Period. Any incentives to invest in a business should be dictated by consistent tax-code at the Federal level. Having States and their communities battling each other for "jobs" is exactly what corporations want. How else can they get all these massive benefits? Get the public to do their bidding... get one region of the same country to fight another for the same jobs, by upping the ante of what one region will GIVE for those jobs vs. another. Declaring areas "economic development zones" and the like is absurd! Where do we NOT want economic development?
I do not care what political affiliations you have... if you are an AMERICAN, you should be supremely miffed at the fact that, within these "United" States, the one thing that unites us is the consistency with which our local and regional politicians willingly enable corporations to pit one State/region against another in a bidding-war that is all about their bottom-lines and has very little to do with the "jobs" or "investments" in a region. As a small-business owner, you should be extremely upset by the fact that, although you do not have the economy-of-scale that larger firms do, unlike those larger firms, you have to get by without all sorts of large-scale tax-breaks and the like that such firms can engineer during these proxy wars for "jobs".
Oh, wait... as a small-business you DO get some tax-credit opportunities, like the Section-179 election to expense certain investments. This is a Federal program that is in place to incentivise investment in your business. There are other varied programs for small-businesses to take advantage of too, when creating new jobs. And, these programs generally do not pit one region of the country against another, nor do they pit downtown against suburbs. I do believe the Federal tax-credits for business-investment should be expanded though, so as to extend things like the Section-179 to levels that could even help mid-sized businesses grow if they feel investment is merited. Actually, I'd go further and say: kill depreciation, as a concept... just make everything an expense if the business *chooses* to do so, and has the cash-flow to do so. This is how it SHOULD be done - to prevent the decay left behind by businesses moving sheerly for the sake of *regional* tax-incentives.
But, where does one draw the line?
Should State's corporate-taxation-rates be equalized for similar reasons? I can certainly argue the point.
Actually, I would go as far as to say that there should be zero income tax on corporate profits (State OR Local) : but, when any profits are *distributed* to an individual recipient, they should be taxed as that recipients income, at the applicable income-tax rate based on that individuals total income. This removes the "double taxation" debate from discussion and taxes corporate profits FAIRLY - at the rate of the recipient; thus making the tax "fair" in accordance with our commonly accepted progressive tax structure (where the wealthier, higher-earners, pay a higher percentage of taxes due the the higher disposable income they command relative to fixed living expenses). On a side-note, I also think corporations should be able to retain earnings - tax-free - for up to a 3 year period, so that they are not forced to distribute cash that they may need to weather financial storms.... a three-year rolling-window should be plenty for "smoothing" out bumps.
What about corporate property-taxes, assuming that abatements are banned?
This one is tougher to address, but certainly something could be done to better equalize the playing field across all States so that property-taxes are a rather consistent burden regardless of where a company locates. Sure, some States offer better services than others, and presumable that is why property-taxes would be much higher in one region than another - so, that alone should not be too much of an influencing factor. Again, the goal is to further remove the apparent "need" for States to compete with each other.
We need to compete against the WORLD everyone; and, we can much better do that if we quit wasting our valuable resources competing with ourselves - the USA. Our current actions lead to cities like Detroit. Sure, there is MUCH more to blame for Detroit's miseries than just a broken business-tax-incentive system, but it is one reason that needs to be looked at.
We need to stop the cycle of inner-city decay: it is costly, and it will eventually grow to become a severe threat to the entire country's prosperity due to the cost of what I will call "containment". We are leaving in our wake a mass of despair that is certain to raise costs for all of us in the long run.
So, is Detroit perhaps an economic-development opportunity? Sure!
What did YOU see during the show?
I saw a mass of potential workers, that although lacking education (in large part) and other potentially desirable skills, are available for rock-bottom wages for what may be considered by many of us to be "boring jobs" doing simple assembly work and other repetitious and perhaps simplistic tasks. There is a labor pool available in Detroit (and other cities in similar situations) that should certainly be able to allow US-based manufacturers to compete globally thanks to low-costs (wages, property, etc). Figure out how to put these people to work for you, and they will be thankful to have a job while at the same time you will have an affordable labor-pool. I am over-simplifying things a bit, since my own largest concern with Detroit is the crime, which makes doing business more costly. But, I see potential. In fact, I see potential everywhere, as there is opportunity all over this great country of ours to tap into economically-distressed regions for affordable labor and property, even without tax-incentives. Detroit may well be one of those regions.
When the current mayor (a former basketball player taking essentially zero pay for being mayor) was talking about shrinking Detroit and bulldozing entire square-miles, I could also immediately see the opportunity for large-land-requirement-businesses to move in behind that effort. This mayor seems like a winner - and Detroit needs one! He is thinking big, and seems to have the positive attitude to get things done (though, he has a challege dealing with corruption all around the city).
How about having the newly reclaimed wide-open area within Detroit house a new REFINERY to process Canadian tar-sands-crude and get it to Chicago and the midwest? Or, if you are not for big-oil, how about a new, safe, nuclear plant (they really can be quite safe, and clean, if built like French ones from what I have read) to power some of the region? Or, better yet, maybe just a world-class inner-city Park, like Central Park (NYC)! The land price should be cheap - making tax-incentives a moot point. Value the land for what it is currently worth, and let investment take its course.
There is definitely opportunity in Detroit; here's hoping someone makes good use of it!
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