JLF’s John Hood points out in today’s Carolina Journal that — as JLF and others have been noting for years — North Carolina’s program of economic incentives is flawed and boils down to nothing more than arbitrarily picking winners and losers in the marketplace. Hood summarizes a Triangle Business Journal report on the lack of economic impact. From Hood:
Reporter Lee Weisbecker offers a telling, if depressing, example of the problem in the latest edition of Triangle Business Journal. A couple of years ago, a legislative committee asked researchers at the UNC-Chapel Hill Center for Competitive Economies to conduct a rigorous examination of the economic effects of North Carolina’s incentive policies. (emphasis is mine)
The $300,000 study arrived in 2009 to a General Assembly short on attention span and patience for embarrassing news. Based on records from 150 companies receiving targeted tax credits and 465 companies that didn’t, the study concluded that there wasn’t much evidence of economic benefit:
• Only a little more than half of the recipient companies had more employees in 2006 than they did in 1996.
• By the end of the period studied, “companies receiving statutory tax credits no long outperformed – or even matched – the state’s economy.”
• Nearly two-thirds of business executives said they were not even aware that their firms had received credits.
Weisbecker asked Karl Smith, an economic-development specialist at the UNC School of Government, to respond to the incentives study. “It’s a general pattern that when credits are tracked over a long period of time, it looks like you’re not getting that much benefit from them,” Smith said.
Time to jettison this misguided policy and adopt policies encourage entrepreneurship.
