The
Exeter “town economic director” has decided that the “town” should “purchase”
the Ioka at $800k. To be more precise, he wants to force taxpayers to pay for a
building at 60% more than its assessed value. He claims that after having sold
it at $400k, the ensuing property tax collections would somehow outweigh the purchase (for whom?).
There are many problems with this idea.
Expectations. After
purchasing it for $800k, what renovations (i.e., costs) much be completed for a
decent resale? Even
more, there is no guarantee that anyone will purchase the Ioka from Winham.
Wealth transfer. To pay
for the “Capital Improvement Project,” Winham decides that property taxes
should be raised by a quarter per $1k. If (If) the sale goes through, will individual taxpayers get reimbursed their investment?
Of course not. The winners are those who see their plans for the Ioka come to fruition. The losers are those who want no part in it.
Ignoring consumer demand. Winham
makes the claim that residents should want to own such a historic thing. Well,
if people had wanted that, they would have already bought it—there has been
more than enough time, and nobody followed through. Nobody wants it. Why does
Mr. Winham think that forcing people to buy it is a good thing?
Winham says that the purchase is “too important to left to chance.” Let’s be clear: NOBODY is leaving it to chance. If left alone, entrepreneurs will decide based on consumer demand. Success will be determined voluntarily by consumers who utilize the Ioka. This is not chance, but entrepreneurship. We continually see good businesses thrive and poor ones evaporate. What Mr. Winham must mean is that people are too stupid to determine what goods and services should be produced in Exeter, and only his genius can guide production.
Increased taxation. He goes
on to say that the tax is less than two coffees at D-squared. I don’t see how
he calculates that, but (a) the price is less important than the idea of
forcing many to subsidize his dreams of grandeur, and (b) some families are
marginally struggling and cannot afford even the slightest tax hike.
Bureaucracy replaces market. After
the taxpayers are forced to pay Mr. Winham for this building, then what
happens? Then the town government decides what to do with it. How will they
decide? Most certainly not by consumer demand but by political machinations.
Whoever will get the government the most power, votes, or kickbacks wins.
Government intervention. On a
larger scale, this is a good example of government propping up prices. Clearly $800k
is way too much for a dilapidated building. Instead of trying to strong-arm the
taxpayers, the owner should understand that the price must be lowered for the market
to clear. Instead of taking a loss due to his poor investment, he wants you and me to pay for his mistake. To those (including Winham) who would support this idea: make a
Kickstarter page and try to purchase the building voluntarily. If you can’t get
enough capital, it means there is not enough demand for it. Forcing others
to pay for your desires is wrong.
Overall,
this is nothing but town cronyism. Is Winham simply a self-proclaimed do-gooder
with no understanding of economics? What is the connection between him and the Ioka owner? Who are the potential buyers that Winham has in mind? Cui bono?
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