According to an August 17th Reuters article by Irene Klotz, Florida senator Bill Nelson will soon introduce a Senate bill to set up a new system of investment tax breaks for commercial aerospace companies. Companies hiring displaced space shuttle workers would be eligible for the tax breaks.
What’s not to like about this proposed bill? The former shuttle workers can use the jobs, and the aerospace industry will benefit from retaining these highly skilled, experienced workers. But let’s look a little closer and see how this new bill could go horribly wrong if it is not implemented correctly.
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On the surface, the Nelson bill sounds like good news for the aerospace industry. Investment tax credits spur new investment, and the aerospace industry could surely use a serious jolt of R&D funds. Prior government stimulus packages have given away less than half of one percent to NASA and NSF (prior articles here and here). The amount of this so-called stimulus that could honestly be called an investment into NASA and NSF is even lower.
So along comes Senator Nelson with his compassionate investment plan to save shuttle worker jobs. Way ta go, Bill! But wait – the Department of Commerce would implement Bill’s bill by selecting up to five special enterprise zones, presumably with heavy emphasis on regions that employ the most shuttle workers (Florida, Texas, Alabama, Utah, California). Yet the companies that hire these workers, predominantly start-ups or multi-national firms, will choose the locations where they want to establish their operations – and special enterprise zones offer a major incentive to locate work areas within set geographical regions. What about everywhere and everyone else?
Don’t worry – everywhere and everyone else won’t be left out. We’ll all get to pay the tax bills to create jobs in these other places. And in case that doesn’t sound appealing enough, those jobs and companies located in other locations will be competing on an unlevel playing field with local companies, costing local jobs.
All of a sudden, this doesn’t sound like a very good deal anymore, does it?
It’s even worse for recent graduates with college degrees in aerospace engineering from, say, CU. These young, future employees will need to relocate to other regions and compete against workers with far more experience. That’s how business works… and quite often the younger folks with new, fresh ideas can make a compelling case for employment. Now employers will have 20% more reasons to go with the older, local folks, assuming the bill is structured such that shuttle workers are given preference.
How about this for a better plan? Get rid of the five special enterprise zones and make the whole U S of A one giant special enterprise zone. Aerospace investment will boom, companies can hire anyone they want to (including former shuttle workers), and locations are chosen according to what makes sense for the business and workers – not government.
Whenever government gives itself the ability to choose the winners and losers, watch out. Bureaucracy seldom yields a better solution than economic freedom.
Agree? Disagree? Sound off below!