Going Galt

I really can’t wait until people start:

Oak Lawn and Target originally approved their incentive agreement in 2005 while Target was preparing to build a store at 95th Street and Keeler Avenue. The agreement called for the village to take out a $4 million loan to buy a parking lot at Target’s new store and use it as a municipal lot. That loan was to be paid back through a special half-cent tax on the new store’s sales.

But although Oak Lawn took out the loan three years ago, Target’s special sales tax payments were never collected after its Oak Lawn store opened in 2007.

Target plans to start collecting the tax Oct. 1, and alternative arrangements will be worked out for this month’s payment, village finance director Brian Hanigan said.

Still, the mix-up may serve as a starting point to revise the incentive agreement, which was highly controversial when it was approved by a lame-duck session of the village board in 2005. Deetjen has called the agreement bad public policy and said it needs to be amended.

Back when I was covering land-use issues, tax incentive agreements like this were common. Companies would come in and say, we’ll come to your shithole town and bring our jobs and cheap crap for sale, but you have to promise not to make us pay the full amount of the sales tax revenue that is the main reason you want us here in the first place. That way, we’ll stay rich, your schools and roads and cops stay lousy, and everybody wins!

But nobody ever had the balls to say no, because there was always another town that is a slightly bigger shithole six miles over that is willing to agree.


5 thoughts on “Going Galt

  1. We’re twice as smart as the people of Shelbyville.
    Just tell us your idea, and we’ll vote for it!
    — Mayor Quimby, “Marge vs. the Monorail”
    Yep, that’s how it worked where I grew up (Iowa City vs. Coralville) as well as here in Minnesota (Minneapolis vs. St. Paul vs. the rest of the state.)

  2. Ah, just read David Cay Johnston’sFree Lunch to get a thorough explanation of how this little scam works. Many of the newer WalMarts use a similar scheme–the state and local governments agree to let WalMart collect sales taxes on sales, but keep the proceeds as a way of defraying construction costs, and the municipalities still pick up the costs of sewage, water, access roads and, sometimes, land purchases and provide additional abatements on property taxes.
    So much for the “free market.” These guys get what they want by promising jobs (which are, most often, just a transfer of jobs from local businesses to the big-box store, with a loss of wage value in the process), and the municipalities’ officials are always just stupid enough–or corrupt enough–to buy into the fraud.

  3. I like the way the story uses the word “mixup” to describe the failure to collect the tax. Not “failure” or “shortfall” or “fraud” or “embezzlement”. And of course Target’s number’s for how much tax it owed will go unquestioned, and the makeup payment gets accepted without penalty…

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