What Brown's Budget Gets Right

A quick look at Jerry Brown’s California budget reveals a pleasant surprise: the new governor is proposing cutting a number of business tax breaks.

A quick look at Jerry Brown’s California budget reveals a pleasant surprise: The once and current California governor has proposed eliminating a huge swath of special business tax breaks, “redevelopment authorities,” enterprise zones and other subsidies for business. He’s absolutely right.

Scads of research shows that special favors governments do for business often shift development or “poach” it from other states rather than stimulating new activity. Even when they truly create activity that wouldn’t exist in their absence, such activity simply amounts to a transfer of resources from taxpayers to the owners of businesses that do the things favored by politicians who hand out subsidies. This is deeply unfair.

Eliminating business subsidies won’t solve California’s fiscal ills or patch its gaping revenue holes but Brown’s attacks on them show that, at least on one issue, the new Governor is serious about fiscal responsibility.