The President and Vice-President Elect saved 1,000 jobs this week by preventing Carrier from moving them to Mexico from Indiana. “How” is the question that has many on the right wondering if this is Solyndra Part II. The answer is no.
Solyndra was a special interest boondoggle that received a stimulus-funded subsidy of $500+ million dollars to keep the doors open (a secured loan the government had to repay when Solyndra went bust). What prevented Solyndra's success wasn't so much a high corporate tax rate and regulatory burdens so much as limited market interest that the government tried to artificially manufacture. Solar is expensive and not massively popular due to price and other variables. Carrier, on the other hand, does heating and cooling, their products are massively utilized and affordable. Market demand isn't the hang-up here, it's regulatory burden. The United States has one of, if not the, highest corporate tax rate in the world. Progressives idealize everything about european style governments except their lower corporate tax rate.
The dispute is the $7 million in tax credits given to carrier. Solyndra was given a subsidy, Carrier was given tax credits. A tax credit isn't a subsidy but a credit towards a tax bill, a reduction in the amount that a business will pay with the goal of the offset made up in tax revenue back to the government. Credits are fine when determined by states and localities as a tactic to attract business with the design of increasing overall revenue. When they're abused or offered only to specific companies as a perk, that's crony capitalism. Critics of the Carrier deal say that these credits may fall into the latter.
Here's the thing: Should we rail on businesses for trying to reduce their tax burden when the current economic climate, created over the past eight years, has turned so hostile towards business that they must work with tax credits to keep jobs? Isn't that the issue? The economy and business climate should be so great that businesses don't have to use tax credits to retain jobs, hire, or seed for future city or state revenue. Until that time, it's hard to fault a business for trying to keep its doors open by keeping more of its own money.
There does exist a genuine concern with whether or not the incentives offered to Carrier were specific to Carrier or available to all businesses in Indiana, which, if they were not, does open up the possibility that other businesses may try to shake down Washington for the same result (although Indiana has the benefit of a governor who is also the next vice-president, so other states may not have the ability to achieve this same result). The best way to thwart that is to do exactly what Trump outlined in his speech yesterday from Indiana: Reduce the corporate tax rate from 35% to 15%. That's an excellent start.
Conclusion: No, Carrier is not like Solyndra, tax credits aren't awful when used correctly in this Obamaconomy, and the sooner businesses can start keeping more of their own money to grow and maintain, the better.
