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Crawford: Why give tax breaks to a profitable company?
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When your elected legislators start giving gifts to our neediest corporations, you eventually reach a point where the question is asked: When does the giving stop?

The House of Representatives reached that point last week when it debated a bill that will continue to provide a beneficial tax break to one of the state's stellar corporate citizens, Delta Air Lines.

HB 322 would extend for another two years a sales tax exemption the state gave Delta on the jet fuel it purchases for its aircraft. This is a tax break worth about $20 million a year to the airline.

The General Assembly first adopted this tax break in 2005 when Delta was being pushed into bankruptcy by the financial chaos caused by the 9/11 terrorist attacks. Lawmakers thought they should do whatever they could to help the airline through a period of economic uncertainty. The legislature subsequently voted to extend the tax break for a few more years.

I think it would be safe to declare "mission accomplished."

Delta did file for bankruptcy after receiving that tax break in 2005, but the carrier emerged from bankruptcy in 2007 and today is doing quite well. For calendar year 2010, Delta reported a net income of $1.4 billion. That's billion with a "B."

Even when you exclude what the accountants call "special items" from that total, Delta's profits still came in at $593 million. The airline also distributed $313 million in profit sharing to its employees because of the company's success in meeting its financial targets.

That is surely good news. Delta is prospering again and continues to employ large numbers of people in Georgia. A rational person would think that the state's tax break was no longer necessary and could now be retired.

That person would be wrong. The bill to extend Delta's tax break was adopted last week on a 113-61 vote in the House and sent to the Senate where it no doubt will be warmly received.

"When our homegrown companies are successful, by God, we're going to stand behind them," Rep. Ron Stephens, R-Savannah, declared. "What we're telling Delta is, we still want you."

The vote was far from unanimous and several House members, while commending Delta for its role as a major employer, were incredulous that the airline would continue to receive the gift that keeps on giving.

"Everybody likes Delta," said Rep. Winfred Dukes, D-Albany. "I like Delta. But I also like Home Depot and I like UPS. I like Cox Communications, I like Chick-fil-A."

He was making the point that all of these large corporations contribute greatly to the state's economic prosperity and are major sources of jobs. What justifies singling out Delta from the others to receive this particular tax break?

Dukes also noted that there are many small businesses in Georgia that have been struggling for the past few years while the state has been mired in the worst economic downturn since the Great Depression.

Let's stop and think about enterprises like Dave's Goody Barn in Gainesville, Vann's Auto Mart in Jesup, Mickey's Grocery in Blackshear, Reeves Home Furnishings in Clayton or the Dogwood Bakery in Commerce.

Small businesses like these collectively employ far more people than Delta Air Lines, but none of them are getting a tax break like Delta's.

It was only last year that the legislature established a study committee of economists and business experts to review the state tax code and determine how it should be reformed.

One of the findings was that too many tax breaks and exemptions had been granted over the years to various businesses and special interest groups. These tax breaks should be phased out to give us a tax code that is more equitable.

In the face of that advice, a majority of the House members went ahead and voted to keep giving a $20 million tax break to a corporation that reported $1.4 billion in net income last year and did so well that it shared $313 million in profits with its employees.

It reminds me of the parents who warn their child that he'll be electrocuted if he sticks his finger in a wall socket. The child then proceeds to stick his finger in a wall socket anyway.

Tom Crawford is the editor of The Georgia Report, an Internet news service at gareport.com that covers government and politics in Georgia. His column appears Wednesdays and on gainesvilletimes.com.

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