Thursday, September 27, 2007

Small loans, big ideas

So there is a DeSantis economic plan out. And by the way, a quick look at the Mayor’s campaign website reveals that the last piece of interesting news was in January, shortly before Bill Peduto quit. And according to his website, May 15th is still fast approaching. By the way, is anyone esle insulted at the name of the website "lukeformayor"? What, can't we spell Raven ... er.. stahl?

Of course, there is a new Mayoral budget out, available for the media, but not on the City website (or his campaign website). But this post is not about that, I’ll start again…

So there is a DeSantis economic plan out. No details really, but as I write this at 6:45 in the morning, I don’t think I could handle details. Still, there are nuggets of interest in the broad description.

It starts slow, de-politicize the URA, get abandoned and now city owned properties back on tax rolls, buy from local startups (we probably buy local now, although the North Hills Office Depot might not count), etc, etc, yada, yada. Some of the proposals might seem like they are catering to more affluent people, like the suggestion to develop housing suited to mobile tech workers, but that is a suggestion aimed straight at improving the city’s tax base. I’ll skip over some of the other proposals, interesting though they may be (Live/Work/Learn/Play zones: Lawrenceville? Live in a house with no yard, work at Red Zone or Red Ball or Red whatever, then after work go over to the friendly neighborhood crack house, and take the free Jackson Hewitt tax cheat class?).

The clearly interesting proposals are the three year tax abatement for new companies and the Micro Loan proposal. The three year abatement plan is quite interesting. Employees of start up companies might have to take a wage freeze after three years (assuming climbing profits), but let’s face it, if anew company is going to fail, it will likely be in the first three years. Pittsburgh might never see any business taxes paid. USX might re-name itself USZ and claim to be a new startup. Heh. Actually, this is a pretty good idea. I guess the state can’t tell the city to collect all its taxes, so we can actually control this. And taxes in three years is light years better than no taxes at all, from everyone’s perspective (even the State’s).

The Micro Loan thing, didn’t that Indian guy win a Nobel Prize in Peace or Economics or Literature or Chemistry or Sumpin’ for that? It’s got to be a great idea! Even if they are doing it in Philladelphia (McNabb!). Actually, that this is an idea modeled on a Philly plan is a good thing. Philly is in a similar financial mess/state oversight thing as us, so if this institution passed muster with the state legislature, it must be OK. Now, Vinnie and Guido might have to come over to the Mayor’s office and complain about demarcation (yes, that is really is all I have; bad mob jokes – in fact, I was going to have DeSantis hire Vinnie and Guido, since they know how to run a business).

There’s a lot of reliance on public/private partnerships here. It feels a little like the faith based initiatives of the current federal administration, although I say that partly because I have nothing else to compare it to. These are ambitious suggestions, but on the other hand we need some ambition in this failing city. The Mayor has us getting by in his budget, DeSantis might help us pull ahead.

By the way, good luck finding this story on the PG website. I literally had to search on "DeSantis" to find the story with today's date. They changed their website again, and the was a story about a nutso proposal by a state legislator about killing property taxes and raising the sales tax to 9 percent (10 here).

The trib at first simply refused to open at 8:15, butthen revealed a fairly easily accessed story.


Adam said...

I'm not big on the tax abatement plan for reasons mentioned above and the fact that in three years a company can just move somewhere else.

I was just in Delaware recently. Delaware has the highest rate of business headquarters per capita of any state. A Pittsburgh politician would probably think to himself "they must have really cool professional sports stadiums!" (actually, they have none). They do this by having some of the lowest business taxes in the country.

I know this is EXTREMELY complex economics for a city that's been run by a party that has taxed us into bankruptcy over the past 50 years, but try to stay with me.

More businesses * lower tax rate > very small amount of businesses * high tax rate (except for very extreme cases on either end of the spectrum obviously)

EdHeath said...

So you are not in favor of temporary targeted tax abatements (which I'm not sure is even the right word), you'd rather have lower business taxes for everyone. But I suspect the Desantis plan would be more acceptable to all because, quite frankly, if we have a budget shortfall the state will not want to bail us out.
Ideally we should move towards lower taxes, business and otherwise, to generate a more business friendly climate. But that needs to wait, somewhat, until we get out from under Act 47 status.