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Entries in Tax Credits (2)

Tuesday
Sep202011

Outrageous Tax Credits, from Snooki to Solyndra

Photos.com/Thinkstock(WASHINGTON) -- In a time of pinched public budgets, should governments still be giving tax credits to companies?  Recent examples of economic development money gone awry range from the egregious to the silly.

In California, solar panel maker Solyndra went bust after having soaked up $528 million in federal development aid.  In New Jersey, angry taxpayers are protesting the so-called Snooki-subsidy -- a $420,000 tax break given by the state's Economic Development Authority to producers of the TV show Jersey Shore, which some residents say depicts the state's citizenry in an unflattering light.

In Washington, poultry farmers get tax-free chicken-bedding.  Georgia gives a tax break to people who patronize companies that refurbish corporate jets.  Michigan subsidizes restaurant meals eaten by restaurant employees.

Still, other breaks apply to corporate relocations: One company is paid millions to stay put, while another is paid millions to move.

In every case, the rationale is the same: Public money is being used to promote what development authorities believe is public good -- job creation or job retention; the nurture of a promising new industry or the protection of one old and ailing.

Economic development spending by states and cities totals $70 billion a year, according to Kenneth Thomas, associate professor of political science at the University of Missouri at St. Louis.  The biggest chunk of that, he says -- some $46.8 billion -- goes for incentives effecting the location of private investment: ensuring, for example, that the company filming the Jersey Shore films it on the Jersey shore.

Thomas says there's little evidence that this spending results in net job creation.  What more typically results, he and other experts say, is a re-shuffling of existing jobs.  At a time when governments are cutting programs and collectively laying off hundreds of thousands of workers, he asks if now might not be the time to re-think economic development.

Greg LeRoy, executive director of Good Jobs First, an organization that rides herd on economic development, says if he were given a choice between no development and spending the way it is now, he'd opt for none.

"The better course of action would be not to provide any credits," he says.  "It's not that credits cannot have their place," it's that most turn out to be nothing more than "windfalls" to corporations that would have done the same thing they're being incentivized to do, without incentives.  When credits are given, he says, they always should include clawback provisions, so that if the beneficiary fails to provide the hoped-for jobs or otherwise fails to live up to his end of the deal, the state or city isn't left holding the bag.

Copyright 2011 ABC News Radio

Friday
Aug052011

Obama Proposes Tax Credits Aimed at Getting Veterans Back to Work

Ryan McVay/Photodisc/Thinkstock(WASHINGTON) -- The president on Friday proposed new tax credits to encourage companies to hire the nation’s one million unemployed veterans, saying “servicemen and women need to know that America values them not simply for what they can do in uniform, but for what they can do when they come home.”

“Today we're saying to our veterans, 'You fought for us and now we're fighting for you, for the jobs and opportunities that you need to keep your families strong and to keep America competitive in the 21st century. And at a time when there is so much work to be done in this country, we need everyone's help to do it,'” the president said in a speech at the Washington Navy Yard.

The president called for a “Returning Heroes Tax Credit” ranging from $2,400 to $4,800 for companies that hire unemployed veterans and an increase in an existing tax credit for companies that hire unemployed service members with disabilities.

“The bottom line is this:  We still have a long way to go and a lot of work to do to give folks the economic security and opportunity they deserve.  And that begins with connecting Americans looking for work, including our veterans, with employers looking to hire,” the president said.

In addition to tax incentives, the president proposed a “reverse boot camp” to help veterans transition back into the workforce. The idea is just one concept that will be considered by a new task force working to ensure the career readiness of veterans.

“The problem is that right now we spend months preparing our men and women for life in the military, but we spend much less time preparing them for life after they get out.  So we'll devote more time on the back end, to help our veterans learn about everything from benefits to how they can translate their military training into an industry-accepted credential,” Obama said.

Copyright 2011 ABC News Radio







ABC News Radio