The Cost of Tax Breaks for Jobs
Via the Star-Ledger, we find that a NJ think tank — New Jersey Policy Perspective — has taken a hard look at the massive subsidies being funneled to private businesses in NJ and found that there aren’t many jobs associated with all of that money. In the past two years, NJ has given out $822M in tax subsidies:
New Jersey has been providing tax breaks to corporations in the name of economic development for 220 years. In the past 15 months, though, the Legislature and governor have been on an unprecedented spending spree that will depress revenues for schools, police and other vital services for years in the future. […]
The desire for jobs in New Jersey is obvious. In March of 2011, nearly 203,000 fewer people held jobs than in March of 2008. The unemployment rate lingers at 9.3%, according to the state Department of Labor and Workforce Development. The state has been slow to recover those lost jobs. Last month, the Labor department reported just 9,600 new jobs were created in February. At that rate the state won’t return to pre-recession employment levels until 2013. You’d think there’d be a lot more hiring, given how many tax subsidies the state has awarded recently. […]
$822M for an unemployment rate of 9.3%. The link and the larger paper (pdf) provide a detailed list of the companies that got these incentives and how much they were for. Lots of very big names there — of companies that are sitting on a fair bit of cash already. And this is an interesting detail of how some of the money got spent for Campell’s:
Campbell is a good example. Last month, the state approved a $41.2 million Urban Transit Hub Tax Credit to help it pay for the second phase of its $100 million renovation of its Camden headquarters, which is 0.7 miles (i.e., more than half a mile) from the Walter Rand Transportation Center in Camden (and separated by Interstate 676). The award, which is 80 percent of the expected cost of phase two, includes $2.6 million for construction management and $6.3 million for furniture. Campbell has agreed to move 49 of its employees from Cherry Hill to Camden and hire five new employees in each of the next 10 years.
One of the companies on the list — Atlantic Coast Media Group — got $3.7M and says that it will be hiring 140 more people as a result of this grant. Which is outstanding news if that is true. And like lots of other states, there is no mechanism to hold these companies to account for these kinds of promises. But this is an incredbible amount of money:
In the case of these tax four programs alone, the state is conceding $822 million in revenue over the next 10 to 20 years. That’s more money than the state collects in a year from the gasoline tax. It’s the same amount the governor cut in school funding for the current fiscal year.
And it is a big statement of priorities. That providing an additional revenue stream to businesses (and this is what it is) is more important than education, policing, roads that the State of NJ is busily cutting back on.
Tags: jobs, Tax Breaks for Business
Cassandra, I actually agree with you. As I have written myself, all subsidies should be done away with. Tax credits also. There is a differnce between lower taxes and tax credits. I am in favor of lower taxes, or better yet a fairer tax system for all citizens. But credits and subsidies only give power to politicians. I would ask you though, are you just as in favor of doing away with subsidies and credits for green technology? Personally I don’t believe you can have it both ways. I work within the oil industry and I am in favor of cutting the credits and subsidies to that industry, if the green industry is required to play on a level field. I believe that the oil industry will win out based on reliability, if there is no unfair advantage given to the green technology by government.
As I told you over on your preferred site, Frankie, I will be willing to CUT OUT COMPLETELY all subsidies to GREEN technologies as soon as they have the 75 YEARS under their belts that the OIL INDUSTRY has enjoyed to help them establish their industries and gain market share.
You ALWAYS leave that out or are you a COMPLETE IDIOT?
The BEST part of DADDY DON”S issue must have run down your momma’s leg.
that was….uncalled for?
Sorry, Frank. Two cups of high-test and I haven’t taken my meds yet.
skippertee, don’t let it bother you. I have come to expect it when visiting Liberalville. And I don’t ague that the subsidies were wrong seventy five years ago. But the current state of affairs with the debt does not make an argument for any subsidies. Also if we are going to level the playing field thjen we can’t say one is wrong, but another is right because we agree with it. As for Daddy Don, well I always thought of him as a lost uncle.
Actually Frank, I LOVED Don Knotts.
Frank, I don’t have a problem with the government being involved with R&D or technology development on a basically venture capital basis. The key to this is that the involvement has a limit — financial, time and applications.
The internet was largely a US government creation — with a function of making sure that critical military communications would survive a large scale attack. While the initial investments in that (plus other R&D and usages) have paid off in the growth of an essential and profitable bit of the Knowledge Economy, there is little investment still by the US into the internet in relation to private sector investment. (Unless you count figuring our how to capture all of our data.)
Unlike the internet, green technology is nowhere near being a mature technology sector. I would not object to time/funds limited investments that act like venture capital acts (without the equity participation). So helping to develop new battery technology or electricity storage technology seems reasonable to me since that is the kind of thing that you won’t find many investors willing to back since it is mostly R&D at this point. Helping to fund new nuclear plants or even clean coal technology, on the other hand, acts as a massive subsidy to businesses that are already quite mature and quite profitable.
The other thing about green technology is that this is the only path to real energy independence for the US. As I’ve written here quite often, there are countries who are pursuing this with a vengeance — the Germans have a very robust solar panel manufacturing business, the Chinese are investing in solar and wind tech (and R&D) and the Saudis are making massive investments to be able to transition their economy from oil to energy (from clean sources). Energy independence for the US means being able to meet our power needs *on our own*, not in buying the technology or the plant from the Germans, the Chinese, the Saudis or whoever else is making the investment to position themselves to sell us more stuff because we were too short-sighted to grab these markets for ourselves. And make no mistake — the people who go on and on about more drilling feed that shortsightedness. Because there is simply not enough fossil fuel here in the US to feed our increasing appetite for energy.
So back to this post — I wouldn’t object much to subsidies that create jobs as long as there is some accountability for that. If you give a business $XM, they should be able to make some commitments based upon that figure and taxpayers should be able to measure success on those commitments or have a clear way of clawing back some of that money.
We ask our school children and teachers for way more accountability than we ask of businesses who get our tax money. It is really time to change that.
Cassandra, not surprised that you would see the need to subsidize green technology. You gave your reason in the middle of your comment. I do feel you controdict yourself and show your bias, by denying subsidies to develope new coal or nuclear technology that could lead to both energy independence and cleaner fuels. Both of which you claim to desire.It seems to be the old story. Cut the funding, as long as it’s not my ox being gored.
I also noted that the nuclear business and the coal business are fully mature businesses with their own funding streams that could put their money at risk for R&D. They don’t need any help from taxpayers — they have nothing but capability to get funds on the capital markets.
But thanks for playing, Frank. I spent a good deal of time explaining how I think government money ought to be used to spark new businesses and all you can do is retreat back to the current wingnut teajad against green technology. A teahad that is specifically designed to keep the US working well behind the current curve for energy technology. It is heartbreaking, really — you can look around This Modern World and see that much of what lets us live the lives we have comes from Americans doing what Americans do. Creating and making the next big thing *used* to be the business of this country. Now we actually have a political party and ideology that *specifically* wants us to hold in place as other countries invest and build massive businesses. A political party and ideology that no longer wants us to create stuff to sell to the world — just hand over money to people who don’t need it and wait their turn to complain about the next big complaint. Which will be that instead of buying oil from the Saudis, we are paying to licence green tech from them.
Sheesh. With people like you around we never would have gone to the moon. Or built the interstate highway system. Or even built an airplane.