Retrovision: The City’s War on Small Business

This post originally appeared on 7 December 2016.

God bless those nice people in city government. They are completely clueless.

Here’s a letter to the editor of the El Paso Inc. from the owner of the Hoppy Monk Joseph Valenzuela delineating the wrongheadedness of building our economic base through tax incentives.

It is absolutely wrong that our city representatives approved a $5.2-million tax incentive for the multi-national corporate chain Topgolf. They will receive a 75-percent rebate on all property taxes and a 75-percent rebate on all city sales tax they collect from customers on their ground-floor sales.

. . .

It is ludicrous to hear that Jessica Herrera, assistant director of El Paso’s Economic and International Development Department, said the city offered a financial package to address the company’s so-called concerns that the area may not prove as profitable because the population is less dense than other cities.

Herrera goes on to say, “Incentives give them, as a retailer, confidence that they don’t have to take 100 percent of the risk because they feel, ‘How is this market going to play out if we open our doors?’”

So the assistant director of economic development wants taxpayers to take on some of the risk of a very successful corporate chain so that Topgolf can do us the favor of opening in El Paso – when the facts show several other chains that have opened locations in El Paso are among the most successful, if not the most successful, in the country.

Topgolf will also receive a 100-percent rebate for building and planning fees. As if Topgolf can’t afford to pay $34,000 in planning fees. To add injury to insult, El Paso taxpayers paid to have our city reps take “recruitment” trips to the company’s headquarters in Dallas.

Do you reckon that our city reps stayed at the Motel 6 and ate at the Waffle House on those “recruitment” trips?

Just wondering.

This whole scenario is no different than us as taxpayers giving 75-percent property and city sales tax incentives for a Walmart, Applebee’s or McDonald’s to open in our community and take away business from our local small businesses – the businesses that actually contribute to our city’s culture rather than homogenize it, as corporate chains do.

Consumers pay 8.25 percent in sales tax – 6.25 percent goes to the state and 2 percent to the city. If you come to The Hoppy Monk and spend $100 before tax, we collect $2 in taxes from you that go to the city.

However, if you go to Topgolf and spend that same $100, the $2 that Topgolf collects – which is supposed to go to our city’s tax revenue – will instead be pocketed by Topgolf and its extremely wealthy ownership: billionaire Thomas Dundon, publicly traded Callaway Golf Company with its market cap of $1.16 billion, private equity firm Providence Equity with $45 billion in assets and WestRiver Group, with $1.66 billion in assets.

Economies are delicate competitive ecosystems. When our well-meaning elected officials come in and queer the game, they put the people who don’t benefit from their fiscal largess at a disadvantage. Are the people who go to TopGolf going to stop at Hope and Anchor on the way home? Or are they going to blow their entertainment budget on beer and nachos while they’re whacking balls off the top deck?

People are going to spend their money where the get the most value for their dollar. I get that. And that’s cool. That’s what they call “free market capitalism.” Except free market capitalism doesn’t contemplate government subsidizing one business to the detriment of another.

To paraphrase Martin King Luther, Jr, “Socialism for big business, rugged individualism for small businessmen.”

When the City gives tax incentives to a company like TopGolf, or the ballpark, the City is not only depriving itself of legitimate revenue, it is also shifting the tax burden to other taxpayers.

That is, you.