A jobs bill failed in Congress yesterday. It’s worth pausing for a moment to look back at its contents:
The bill would extend, count ?em, 70 expiring subsidies at a cost of $28.5 billion over the next two years. There is little or no evidence that any of these goodies have ever created jobs, and thus it is unreasonable to believe they will produce any in the future?or that their long-postponed deaths would cost jobs.
To be sure, the bill includes many other proposals, including yet another delay in a scheduled?Medicare payment cut for doctors and another $24 billion in?extra federal Medicaid assistance to states. But?to keep it simple, let’s focus?on the expiring tax breaks.??
It is, for instance, hard to see how continuing to allow generous tax depreciation for NASCAR racetracks will create many jobs. It is easier, however, to imagine how this will continue a windfall for the track owners. It is similarly hard to see how the national economy benefits from special tax-exempt bonds for investments in New York City?s ?liberty zone.? Good for developers and contractors doing work in lower Manhattan, as well as investment bankers and bond lawyers. Not so good for developers trying to build projects just outside the specially-designated zone.?
If this sounds familiar, that’s because it is: The federal jobs bill was similar to the jobs bill presently in the North Carolina House of Representatives. Both rely on dubiously effective tax incentives targeted at politically favored industries in order ostensibly to drive economic recovery and job creation. Both cut against economic research suggesting that targeted tax incentives just don’t work. Both illustrate the gulf between the political incentives driving policy-makers and incentives that lead to rational tax policy decisions.
Of course, the two bills aren’t identical. The biggest difference between them: Congress’ version is dead. North Carolina’s is still alive and kicking.
