USAToday has a pretty hard hitting piece on incentives today essentially saying that they’ve become entitlements and don’t produce any long term effects on economies.
State and local governments offer about $50
billion a year in tax breaks and other economic incentives, according
to economists Alan Peters and Peter Fisher.
Academics say there is little evidence to show that tax breaks have a lasting effect on a local economy.
Property tax breaks to manufacturers appear to
boost industrial employment for a short time, says University of
Nebraska economist John Anderson, a former Michigan economic developer.
“But the impact of incentives dissipates quickly, so in a few years, there’s no benefit to employment,” he says.
But that does nothing to stop our wonderful Department of Commerce.
“A well-thought-out portfolio of incentives is vital to being
competitive for quality projects,” says Jim Fain, commerce secretary in
North Carolina, which has been aggressive in providing economic
assistance to companies. Fain says government involvement is vital in a global economy. “We’re
competing against Ireland, Eastern Europe, Singapore, not to mention
China and India,” he says. “We have to use the tools that we have.”
Nowhere does Fain mention that a better tax environment might do well to spurn business development and keep it here. Apparently, Commerce is so ashamed of NC that they have to bribe people to come here. Lest you think I’m being too harsh, Arizona, Mississippi and New York are ALL re-examining their incentive policies thinking they may have gone too far.