Economy

It's the Cronyism, Stupid

Schadenfreude about Delta's expensive virtue signal is fun, but there's a much bigger problem.

Nate Jackson · Mar. 5, 2018

A funny thing happened on the way to Delta Air Lines showcasing its “woke” political activism — it lost $40 million to the state of Georgia, where its Atlanta hub is. Delta was one of the numerous companies that, in knee-jerk response to the Florida massacre, dumped partnerships with the NRA. The shooting had nothing to do with the NRA, but grandstanding trumped common sense. As we noted at the time, Georgia Republicans responded almost immediately by refusing to restore Delta’s tax break.

Erick Erickson explains, “Up until a couple of years ago, Delta had a special perk in the Georgia tax code. It was exempt from paying sales tax on aviation fuel. Other airlines had to pay the tax. Delta did not. When the state reassessed how it calculates and collects transportation taxes during the recession, Delta lost its perk. Delta has lobbied for it ever since.” And the air line won’t get it back.

Now for the even funnier thing — because criteria for the NRA discount was so specific, just 13 Delta passengers ever bought tickets with it. Losing $40 million for 13 people works out to about $3 million per discounted ticket. In other words, these corporate do-gooders just made one really expensive virtue signal.

Still, as much fun as schadenfreude can be, this leads us to the larger point that cronyist tax breaks are a fundamentally bad idea. Unfortunately, every state and governor, as well as every city and mayor and every elected official of either party anywhere in between, offers sweetheart tax deals to corporations for locating in that city or state. Bipartisanship! And this corrupt income redistribution leads to all kinds of ugly stuff. For one thing, Delta lobbies in Georgia for all sorts of leftist causes and against conservative ones — like the state’s Religious Freedom Restoration Act, which Republican Gov. Nathan Deal vetoed in 2016. In this case, however, Delta probably has a case that Georgia Republicans are violating its “freedom of association” rights by using the tax code as retribution for a political stance. Neither would be an issue if it weren’t for such anti-free-market favoritism in the tax code.

What Delta did was inexcusable political opportunism, but the greater fault lies with Georgia and every other state that favors big, leftist corporations at the expense of small businesses and American taxpayers.

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