February 13, 2014
A Very Special Interest Tax Cut

So special that it is going to a single couple here in Kirkland.

The owners of the Parkplace Cinema, Jeff Cole and Chris McKenzie, were finding it hard to afford the new digital projectors, so the city decided to help them out.

But on Jan. 21, the Kirkland City Council helped keep those changes looking positive when they passed an amendment to the Kirkland Municipal Code, which authorized Cole and co-owner, wife Chris McKenzie, to utilize the seat tax within ticket prices toward the cost of going digital for three years.

"I'd been talking to our mayor at the time, Joan McBride -- she's a big movie fan and comes to the theater a lot," Cole said.  "She had talked to me about her concern that the movie theater would close."
. . .
Forgoing the seat tax for three years wouldn't finance the entire project, but it would help offset the $250,000 price tag.

City documents state the Finance Department estimates the city will lose $39,000 a year in admissions tax revenue, or $117,000 until June 30, 2017.

That's a pretty nice tax cut.  The city says that it was justified because Kirkland would have lost more than that — if the theater had closed and not been replaced.

Is the tax cut justified?  Judging only by the information in that article, I would say no.  In general, both for economic efficiency and basic fairness, I prefer tax systems with few loopholes and special deals, and low rates.

Those who have followed these tax debates for some time will not be surprised to learn that Joan McBride, the former mayor, is a Democrat, and is running for another office, against a man who has sinned — from the Democratic Party's point of view — by favoring prudent budgeting.

In theory, most Democratic politicians favor higher tax rates.  In practice, most Democratic politicians love handing out tax breaks to rich people, if those rich people support the Democratic Party.

Cross posted at Jim Miller on Politics.

(For some time, I have thought that there was a good argument to be made for increasing taxes on the movie industry.  I would even argue that there is a good argument for imposing a Pigouvian tax on them, given the damage so many American movies do, here and abroad.)

Posted by Jim Miller at February 13, 2014 01:06 PM | Email This