Mandan News

Letter to the editor: Tax breaks should be limited to ‘new wealth’

This letter is written out of respect and gratitude for the work being done by Mandan’s governing officials and employees. It is in this spirit that I offer the following regarding the granting of tax breaks to businesses either seeking to locate in Mandan or those that have already made the decision to locate in the city.

Every tax break granted a business means a future tax increase for the taxpayers because someone will have to make up the cost difference to help pay for the city’s operations budget that the business would otherwise have paid in taxes. The other taxpayers, those that did not receive a tax break, is that “someone.”

Does this mean tax breaks should never be granted? No. However, consideration should be given to the classification of businesses to which tax breaks are provided  Tax breaks given to primary sector businesses are more preferred recipients of tax breaks – if that becomes necessary for them to decide to locate in Mandan.

There are many factors that define the various categories of primary sector businesses. However, the one factor all primary sector businesses have in common is known as “new wealth,” the income generated by the businesses that results from the sale of their products or services in a regional, national, or international marketplace. Examples of primary sector businesses in Mandan are Cloverdale, L&H Manufacturing and Branding Irons, the refinery, and NISC to name a few. More complete information on industrial classifications can be obtained from the North Dakota Department of Commerce.

Although Wal-Mart and apartment complex developers may provide needed products and services, they and other non-primary sector businesses should not receive tax breaks because they are not primary sector businesses and as such do not make significant contributions to “new wealth.”

New wealth increases the amount of money already present in the community. This influx of money along with that which already exists is the means by which the shopping public can purchase food, automobiles, healthcare products, meals at restaurants, going to beauty salons, etc. The continual inflow of new wealth adds to the existing pool of money as long as the primary sector business continues to operate.

It is with this in mind that I believe tax breaks should be given only to primary sector businesses that can justify the need. It is unfair to burden taxpayers in Mandan with a future tax liability that will eventually be necessary to offset the loss of tax income resulting from the tax breaks. Mandan is an exciting and growing community and has been enjoying some successes in the development of its primary sector and retail sector businesses. The city’s continued growth should be accomplished on its own merits and not on the granting of unjustified tax breaks to retail sector businesses.

 

-Joel Melarvie, Mandan