I wouldn?t bet on it, but a feature-length article in Business Week tells us ?economists are beginning to wonder whether such [corporate tax incentives] initiatives create or save jobs at all.?
Never mind that many economists have known for years that targeted tax breaks are a sham, as have others who?ve taken the time to consider the issue. Critics are happy to welcome the new support of others who were a little slow on the uptake.
The article includes this helpful excerpt:
State officials defend their tax initiatives, saying they have few other tools to boost jobs in the current economic malaise. “If you are working a campfire and you only have embers left, you better get some new kindling,” says Jerold L. Zaro, who heads New Jersey’s Office of Economic Growth. New Jersey policymakers, who currently offer small businesses $3,000 for each new job, credit the initiative with adding 17,000 jobs in the state.
Tennessee points to tax subsidies as a crucial factor in Volkswagen’s (VLKAY) decision to build a plant in Chattanooga in 2008. “Incentives are a win-win proposition,” says Matthew H. Kisber, Tennessee’s head of economic and community development.
The job gains, however, may prove fleeting. In 2002, Ohio lawmakers shelled out $1.7 million in tax incentives to Wal-Mart Stores (WMT) to build an eyeglass manufacturing plant in the state. Wal-Mart shuttered the operation in April, citing the worsening economy, and paid back the money. “It’s a net-loss game for state and local governments,” says [Good Jobs First?s Greg] LeRoy. “The only winners are the companies playing the tax game.”
