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By D. Schultz

American Politics within the Age of Ignoranc e seems to be at ten coverage myths and undesirable rules that governments and public officers - as a rule conservatives - regularly repeat and re-enact. performing on those myths, the guidelines unavoidably fail and thereby make stronger preconceived ideals that executive is useless at fixing difficulties.

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At one time in South Carolina, the entire state was declared an enterprise zone. At some point the dilution of tax advantages from these programs negate one another, thereby rendering them ineffective within the state and then across state lines. Overall, while a nifty idea in theory, enterprise zones have been shown to be repeated failures in producing the promised benefits. Conclusion No doubt that much more could be said about taxes and the economy. However, the argument of this chapter is that social science research questions the efficacy and impact that taxes alone can have upon the economy, including business investment decisions.

It is like the classic prisoners’ dilemma. If two accomplices are separately questioned by the police, the best scenario would be for both to remain silent. If that were to occur perhaps both walk free. If one talks and confesses he goes free or gets a lesser sentence and the other gets a worse sentence. If both confess they both go to jail. No community wants to be the one taking the economic high ground and not do something. Moreover, no public official wants to look passive as neighbor rolls out the tax red carpet for a business.

Both types of efficiency are important because classical economics assumes free markets are both Kaldor–Hicks and Pareto efficient. This has to be the assumption about tax incentives to induce business location decisions. But the truth is that is often not the case. First, in relocations, while one community wins, another loses (especially if there is a business or plant closing and moving to another location). Subsidizing this cost transforms what might have been a net zero impact in terms of economic costs into an overall loss scenario.

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