Wednesday, October 24, 2007

City Council needs to get some members who understand Economic Development

Please read this article:
<http://www.journalgazette.net/apps/pbcs.dll/article?AID=/20071024/LOCAL/710240314/1002/LOCAL>

This article discussed the tax abatement that our City Council just unanimously passed for a McDonalds on the south side of Fort Wayne. Our City Council has decided to transfer $250,000 worth of taxes from the new McDonalds to the rest of the property tax payers in Fort Wayne.

As many of you know I am against tax abatements in general. All tax abatements do is transfer taxes from one group of people to another.

The City of Fort Wayne grants a lot of tax abatements to middle and large sized businesses in Fort Wayne. The City does give some to small businesses as well; however, by my last calculation over 98% of all money in tax abatements is given to mid and large sized businesses even though 70% of all new jobs come from small businesses. The City has criteria that require them to grant tax abatements based on the company creating new jobs that will be 150% of the minimum wage.

McDonalds does not satisfy that criteria, so guess what, City Council decided to ignore that requirement.

I have heard one City Council member state that the City Council is just helping a small business. I am not sure how many McDonalds the franchisee owns. If they own several (which is common) then they in no way could ever be considered a small business.

Please realize the following:

The average McDonalds franchise costs almost $1,000,000 ($655,750-$1,225,000 per their website, <http://www.thefranchisemall.com/franchises/details/10357-0-McDonalds.htm>) for a franchisee to open. Most small businesses do not spend a million dollars to get started. In fact; my wife and I have over 100 small business clients in the Fort Wayne area and all of them are smaller then a McDonalds...

Furthermore per the JG article the McDonalds will employ 55 full-time and 25 part-time people.

If the person owning the franchise just owns this one McDonalds then they will qualify as a small business per the SBA, believe it or not.

The City Council has just "lowered the bar" for tax abatements in Fort Wayne and this will have repercussions.

I expect many new restaurants will come forward and ask for tax abatements.

There is only room in Fort Wayne for a certain number of restaurants. The McDonalds that just got a tax abatement will have an unfair advantage over its competitors due to a quarter of a million dollar tax abatement.

Please stop telling me there is a difference between local Republicans and Democrats in general. They march in lock-step and consistently increase the size of government.

Vote Libertarian...

Mike Sylvester

7 comments:

Greg McClain, Editor - Fort Wayne Sentinel said...

Mike you make a great point. There is no difference between the two party giants. I hope many people take some serious time to reconsider their vote before election day. I can assure you I have made alot of changes in my plans! Alot!

Anonymous said...

Mike,

Please tell me how a local business that happens to own one or two franchises is not a small business? they are in the franchise business. what is a business that starts with $1 million?

Mike, just because you cannot relate something back to one of your clients is irrelevant. small business is not defined as "any business represented by Mike Sylvester"

Was Dick Freeland ever a small business when he started with one pizza hut?

You may want to study up a bit on your economic development as well.

Sam T

J Q Taxpayer said...

Mike,

I have to agree with Sam T. on what is a small business.

At the same time how many times has Dick Freeland ever ask or received a TAX ABATEMENT?

LP Mike Sylvester said...

Sam:

You should bone up your your small business definition partner...

Small Business is defined in several different places. As I said in the post, if the McDonalds franchise is owned by a person who just owns one McDonalds franchise it is considered a small business by the SBA...

If they own several, which is typical, then they are NOT a small business per the SBA (Small Business Administration).

How many McDonalds franchises do they own Sam?

Did this come up at City Council?

Is City Council going to start giving fast food restaurants tax abatements? If so there will be a lot of Economic Re-arrangement going on in Fort Wayne at taxpayer expense...

Mike Sylvester

LP Mike Sylvester said...

J Q Taxpayer:

What?

A McDonalds franchisee who owns several McDonalds franchises is NOT a small business. It all depends on how many locations franchisee owns...

I clearly explained this in my post...

Mike Sylvester

J Q Taxpayer said...

Looking at the SBA programs you can be a pretty darn large business, under the right setup, and still be considered an SBA.

I could own 12 Macs and still be a SBA. I just set each up as a stand-a-lone business.

LP Mike Sylvester said...

JQ Taxpayer:

Yes you could do it the way you said; hwoever, there are some disadvantages to doing it that way. I think that most people who do own multiple McDonalds franchises would tend to lump them under one business...

Mike Sylvester