Want to deplete your tax base? Give 'job creators' what they want

[applegrove]

Want to deplete your tax base? Give 'job creators' what they want



By Richard Florida at the LA Times

http://www.latimes.com/opinion/op-ed/la-oe-florida-government-incentives-to-businesses-20140916-story.html

"SNIP...................

Instead of calling Tesla's bluff, Nevada shelled out $1.25 billion in so-called economic development incentives, and a grateful Tesla agreed to make its batteries in the factory that it was already building. “The gigafactory will mean nearly $100 billion in economic impact over the next 20 years,” Gov. Brian Sandoval said when announcing the deal. The state's director of economic development, Steve Hill, added exuberantly that the deal would “allow every under employed person to reach full employment. It will lift up everyone in the region. Property values will go up. The prosperity of the region will be materially changed.”

...............

If incentives are gravy for the companies that receive them, they are a hardship for the locations that pay for them. The $725 million in sales tax abatements that Nevada will be giving to Tesla over the next two decades is equal to 80% of the state's current annual sales tax revenue. The $332 million in property tax abatements that Tesla will receive over the next 10 years amounts to 250% of Washoe County's annual property tax revenue.


Virtually all of the published research on the subject shows that most economic development incentives are a senseless waste of taxpayer money. The Lincoln Institute of Land Policy, for example, studied the issue and found that “instead of creating new jobs or spurring employment, the main effect of incentives is simply to deplete a community's tax base.” Poorer, less advantaged communities often take the biggest hit, being more likely to gamble public funds on the hope of new factory jobs. My own analysis found no connection between incentive dollars spent per capita and such measures of economic success as wages, incomes, human capital levels or unemployment.

It's time to put an end to incentive madness once and for all


.......................SNIP"

[Dont call me Shirley]

1. +1,000,000,000

[BlueJazz]

2. I've thought for years that it was a Dog and Pony show just for the masses. I also suspect it's..

...a bribery circle.

[Recursion]

3. I'm not sure I understand the claim

The $725 million in sales tax abatements that Nevada will be giving to Tesla over the next two decades is equal to 80% of the state's current annual sales tax revenue.

Right... but without them Tesla wasn't going to make the batteries there. It's not like they're "giving up" $725 million; they never had $725 million to begin with, but with this deal they get the sales taxes from the economic activity of the employees as well as the excise/property taxes on them (I would have said their income taxes, but apparently Nevada doesn't levy one).