GRE Argument Essay 76

The following appeared as part of an article in a local Beauville newspaper.

“According to a government report, last year the city of Dillton reduced its corporate tax rate by 15 percent; at the same time, it began offering relocation grants and favorable rates on city utilities to any company that would relocate to Dillton. Within 18 months, two manufacturing companies moved to Dillton, where they employ a total of 300 people. Therefore, the fastest way for Beauville to stimulate economic development and hence reduce unemployment is to provide tax incentives and other financial inducements that encourage private companies to relocate here.”

The author of the article that appeared in a local Beauville newspaper suggests that for economic development Beauville should follow reducing tax rate and providing financial inducements as done in the city of Dillton. He makes this statement by considering the development of the economy of Dillton due to the effects of such changes and is hopeful of the same in Beauville. However, in a rush of excitement, the author has not taken into consideration a complete view of the situation. It is equally likely that these suggestions prove to be ineffective, or even result in the deterioration of the economy of Beauville.

First of all, it must be made clear that the economy of one city is different from another’s. The factors that lead to the present economical status of a place are not the same everywhere. For example, if a city is self-sufficient and produces its own raw materials for factories, has good technical know-how and is financially sound, its economy will be progressive. For the development of its economy, it also requires a stable and good administration as well as favourable laws. Other factors like poverty, unemployment, gap between the rich and poor etc. also play a very important role in determining the way of progress of the economy. Considering this, the background of both the cities should be compared for similarities in order to employ the strategies of Dillton to Beauville. However, there is no account of the present situation of both the cities. If Dillton has benefited with the changes mentioned in the article, it could be because it is a progressive and economically sound city. On the other hand, if Beauville does not have favourable factors or does not have a sound economy, such changes might not be as effective. Contrary to the hopes of the author, it might prove disastrous to lower the corporate tax rates if they form a major part of the government’s income. To put it in simple words, the author’s claim that Beauville would benefit if the same changes are introduced in it, as in the city of Dillton, is not convincing because both the cities are independent of each other and their economies are not comparable.

In the argument, the author says that within 18 months, two manufacturing companies moved to Dillton due to reduction of corporate tax and incentive of relocation grant offered by the government. The author has however ignored the history of the number of companies that have moved into the city of Dillton. It is likely that in the past also there have been many companies that have moved into the city due to its progressive nature. However, there is no account of how many companies had established in the past in the same city. It is likely that the rate of introduction of new companies was the same, or even higher before the changes were introduced than what it is now. Therefore, it cannot be determined by the fact that two manufacturing companies have moved in the city in the last 18 months that Dillton has benefited from these changes.

With new companies establishing in the city there is an increase in employment opportunities. However, if a company is relocating itself from another place to a new place, it is likely that it retains its employees. It is possible that if a new company relocates in the city of Beauville, it brings its workforce that it had employed earlier with itself. It would benefit from keeping the old workers since they are experienced and know their job, rather than employing a whole lot of new workers and training each one of them. This view has been ignored by the author. Therefore, against what the author perceives, any new company might not help in reducing unemployment, but on the contrary it might increase the population of the city.

Corporate tax forms a great part of the government’s total tax collection from the city. These taxes are used by the government to support the city and develop its infrastructure. A reduction in this will reduce the amount that the government uses for the purpose of development and upliftment of the society. Hence, it makes a great difference to the economy of any city if this share is reduced. Moreover, the author does not suggest any other financial inducement that the government should follow to encourage relocation of private companies. Therefore, the fate of these inducements cannot be determined. It is evident that the author has shown skeptical behaviour in giving such suggestions and he must consider the above given discussion before giving his argument.