Doesn’t using incentives to create jobs grow the tax base, thus creating more revenue?
In a survey of the literature on tax incentives, economist Robert Lynch reports that any economic benefit from the extensive use of incentives is usually more than outweighed by the negative economic effects of cuts to public services — which must happen in states with constitutions that require a balanced budget (like Kentucky). When a state gives a company one dollar in tax incentives, the company may save a portion of that dollar or spend it out of state. In contrast, public spending on education, infrastructure or health care is almost entirely in-state. This transfer can undermine economic gains and harm the state in the long run. Tax breaks are also not a major factor in companies’ location decisions. One reason is that state and local taxes are not a significant cost of doing business when compared to other factors — particularly the availability of skilled workers, proximity to customers and suppliers and the quality of public services. Many of the factors that matter most requ
Related Questions
- The Cabinet for Economic Development report the number of jobs that have been created because of tax incentives. Isn’t that a good thing?
- Does the American Recovery and Reinvestment Act include any tax incentives to create and sustain "green energy" initiatives?
- Can incentives really create manufacturing jobs?
