The N.C. Senate’s budget contains more targeted tax incentives in an effort to jumpstart job creation. It’s the continuation of a well intentioned — but seriously flawed — policy that simply picks winners and losers. As JLF’s John Hood explains in this recent column, a report compiled for the General Assembly last year exposes the reality of incentives. From Hood: (emphasis is mine)
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.
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.
That last bullet point is particularly important. Remember it the next time a politician tells you executives won’t move here, or expand an existing facility, without taxpayer incentives. Bologna.
