To the editor:
"Prosperity follows tax cuts" has become the battle cry of tax initiative proponents. But, like so many of their unsupported claims, it's just another hallow, vote-getting phrase that has no documented evidence. The assertion that lower taxes will make Utah more attractive to industry looking for a new location is not supported by legitimate studies. In fact, just the opposite is true.Several years ago, a General Electric vice president was quoted in The Wall Street Journal when he was discussing the location of a new plant. He said GE didn't care about state and local taxes, it only cares whether it receives the public services/goods the taxes should be able to buy.
Businesses, like individuals, evaluate a whole series of positive and negative factors of a location before deciding on where to locate. The place-to-live considerations are both for the company and its employees, and address both economic and lifestyle concerns.
Public services/goods, critical in the weighing of place-to-live factors, include the quality of both public and higher education, recreational and entertainment opportunities, low crime rate, transportation facilities and others. Note, rapidly changing technology often dictates cross-fertilization between firms in its industry and/or with research universities.
In July 1988 Design News, a "Job Paradise Index" for engineers ranked 40 cities considered favorable. Raleigh-Durham was first, with a score of 440. Salt Lake City was 26th, with a score of 346. For the Salt Lake area, the specific comments were: "Economic advantages: Aerospace industries and defense industries like Morton Thiokol, Hercules and Unisys keep this area active. Growing biotechnology industry promises lively future. Lifestyle advantages: Fine arts museums, symphony, zoological gardens and ski resorts highlight area activities. Mormon church attracts added cultural events. Research hospital another plus."
No mention was made of taxes, but many of what the magazine considers pluses could be damaged under tax limitation.
Given the physical distances to major population and industrial centers, any manufacturing or wide-area service operation that could economically prosper in Utah, could equally thrive in tens, hundreds, or, in some instances, thousands of alternative locations.
If the rigid tax-limitation measures are adopted, our elected officials will be unable to make changes necessary for our state's - and its citizens' - economic well-being, especially for the young who have most of their own lives before them.
I believe the decline in Utah's per capita income, as compared to other states, will continue, if the highest priority is not given to place-to-live considerations, and that the relative decline of economic welfare will accelerate if the tax initiatives pass. Over the longer period, the accumulated losses to individuals and the group will force their repeal. The costs of foregone opportunities and the projection of a "backwater image" for the state will possibly hurt and haunt us for a generation.
My concern about the tax initiatives has nothing to do with my own position at the university. I'm at retirement age, and my income will not change whether they are passed or defeated. I do care about Utah's welfare and that of its citizens, including my grandchildren.
Claron E. Nelson
Professor of economics, University of Utah