Should Utah Give Delta Airlines a Tax Break?

Delta Airlines is on hard times, and is thinking about moving its hub out of Salt Lake City. Utah Republican legislators are thinking about giving Delta a tax break in an effort to entice them to keep their hub here. I think that smacks of unsound government. What do you think?

For once I'm with Governor Huntsman on this one--sort of. The Deseret News is reporting that the governor is in disagreement with GOP legislators on the issue:

Speaking Wednesday to the Deseret Morning News editorial board, Senate President John Valentine, R-Orem, said GOP senators like the idea of changing the corporate income tax to give specific breaks to the transportation industry, which would include Delta Air Lines, which has its Western hub in Utah.

The governor warned, as valuable an asset as Delta is to Utah, state officials still must be careful not to get into a tax-cutting bidding war that could ultimately harm state revenues so much that it would not be worth it.
This is where my "sort-of" agreement comes in. I don't believe in giving preferential tax breaks, period. Instead of giving preferences, why don't lawmakers do something that benefits the entire economy?

I don't think Delta is going to "leave" just because we don't give them another tax break--unless they are already in negotiations with another Western city, which I don't think they would be while they're over a barrel. But what of it anyway? Are they threatening us?

If Delta cuts back its operations, it will be because it is an inefficient air carrier. It will put a wrinkle in a few people's plans, probably, including some higher priced airline tickets. But that annoyance will pass as other, more efficient airlines notice the opportunity and fill the void.

Government, while thinking it can solve far more problems than it really can, actually gets in the way and makes problems worse. If Delta is ailing, why should we encourage them to avoid finding an answer to their economic health problems?

Besides being unfair to others, that's exactly what a tax break would do.

I think the GOP legislators should back off. Let the market take care of itself. In the overall scheme of things, Utahns will be much better off.




Comments

  1. Delta's bluffing to see if they can scam a quick buck. There's not a major airport in the entire region that can handle the kind of volume that Delta does and they darn well know it.

    Even if they did start talking to other cities, who'd be crazy enough to bump billions of tax dollars into building the required capacity for them? And just how many major airlines have done a successful hub move? It's empty puffery and I hope proposals to give them a handout die swiftly.

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  2. The main reason we have inefficient carriers around is the level of government involvement in the air transportation industry.

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  3. How can Huntsman say this about Delta when he was a big promoter of subsidies for Real Salt Lake? What a hypocrite.

    And where was he on Granite School District's recent decision to rebate property taxes to well-connected developers?

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  4. Jesse,

    I hope it's totally bluffery and not that some Delta muckety muck is taking some Republican legislative muckety muck to a whole bunch of Jazz games...

    Scott,

    Exactly. And in so many other areas as well government is overweening and inefficient.

    Anonymous,

    I agree (although I'm not familiar with the Granite district episode). That's why I think it's important to understand and stick to principles rather than to follow every wind of pragmatism.

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  5. Get Delta OUT of SLC!

    Southwest and Jet Blue are waiting to buy the gates available in Salt Lake City. Delta has cut their flight schedules dramastically decreasing the supply for an ever increasing demand.

    As someone who flies out of Salt Lake City weekly, I see nothing but great advantages to loosing Delta.

    Why on earth would we want this parasite of a airline to stay in town? They're in the middle of 'firing' (not laying off, but firing) a number of their veteran employees in order to cut costs.

    Delta is getting enough tax breaks from the Federal Government, they need nothing from us. Their own incompetence and greed is why their failing. Let them fail.

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  6. It sounds like my idea--that other carriers would eventually come in to take over where Delta left off--would happen much quicker than I thought. That's a good thing!

    Delta's behavior--firing long-time employees to cut costs--appears to me to be an indication that they don't have a very good idea what their costs are. That happens often to large, bureaucratic companies. Bailing them out would be the worst thing we could do.

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  7. Circuit City tried to do the same thing, laying off senior employees to cut costs. One quarter later, profits had plunged and they were begging most of them to come back.

    It sounds like Delta is trying to learn that hard lesson as well.

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  8. You said, "I don't believe in giving preferential tax breaks, period. Instead of giving preferences, why don't lawmakers do something that benefits the entire economy?" I absolutely agree. Of course after saying that, I sure hope Delta does not ultimately pull out of SLC, because then it would be likely that SouthWest would step up. You know what that means? Each time you fly you can expect the inevitable cow-herding experience.

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