Key facts:
- Business incentives are like lottery tickets, providing big rewards for governments if you don’t count the costs.
- Government officials decry the perceived need to give incentives to companies.
- Rarely do they examine the full costs and benefits of incentive packages.
- Iredell County modeled the financial costs and benefits of an incentive offered in 2009 and showed a positive net present value for the incentives.
- Any model should factor in
- the opportunity cost of forgoing the next best use for the funds
- the likelihood the investment would have happened without an incentive.
- The Iredell model did neither of those.
- Factoring in opportunity cost would have reduced the benefit but left the incentive with a positive net present value.
- Factoring in the likelihood of investment without the incentive would have turned the incentive to a money-losing proposition.
- More incentives should be measured that way.
