Good Jobs First (GJF) announced today that Wisconsin taxpayers can now access nine years of economic development subsidy data in the organization’s searchable Subsidy Tracker database. The enhanced and expanded database developed by GJF now includes information about nearly 2,200 state and local subsidies for businesses in Wisconsin, totaling more than $1.8 billion.
The updated database adds nearly 30,000 new entries across the U.S. from 160 state and local programs, and 138 federal ones. Access to the database is free and unrestricted at: goodjobsfirst.org/subsidy-tracker. Read more
Conservatives Critique “Tax Cronyism,” and Progressives Critique the ALEC Report
I was pleasantly surprised to learn recently that the American Legislative Exchange Council (ALEC) has issued a report calling on policymakers to end the wasteful subsidies given to corporations by state and local governments. Their report titled The Unseen Costs of Tax Cronyism: Favoritism and Foregone Growth criticizes special tax breaks for certain companies, which it points out tend to increase the tax burden on other companies and put them at a competitive disadvantage.
Corporations are very good at extorting costly subsidies from state and local officials, but some of those corporations and a growing number of policymakers are realizing that these incentives aren’t an effective way to promote economic growth. As WCCF intern Jelicia Diggs wrote in a recent WI Budget Project blog post, a number of businesses in the Kansas City area have prevailed on Missouri legislators to call a ceasefire to the use of incentives for pirating corporations across the border with Kansas. Read more
A new interactive tool created by the National Priorities Project (NPP) provides a very interesting way to visualize the major federal income tax breaks. The data tool allows you to see the size of the 10 major federal income tax breaks, and the results might surprise you.
The combined cost of the ten largest tax breaks is more than $750 billion this year, and the top two account for nearly half of the total. This web page compares those amounts, and the interactive tool allows you to also see who benefits from each and how the costs have changed over time. As you move your mouse over the bars in the graph on the left, the charts on the right-hand side will change to show information about a specific tax break.
As Early Investment Capital Falls Nationally, It Jumps 31% in Wisconsin
Bruce Murhpy’s latest commentary at UrbanMilwaukee.com ventures where few people (especially “angel investors”) dare to tread – by challenging the perception that Wisconsin lags in availability of venture capital for entrepreneurs and should allocate state funding to create more incentives for boosting the amount of such capital. His analysis was triggered by a January 17 Milwaukee Journal Sentinel (MJS) article, which reported that Wisconsin enjoyed strong growth in early investment capital in 2012 – with a 31% increase last year, even though the national venture capital pie contracted by 10%.
Murphy’s column critiques the MJS article and contends that it painted a “glass half empty” picture of venture capital in Wisconsin, but I think he concedes that the Milwaukee paper has accurately reported the statistics. He notes that a PolitiFact column in the Journal Sentinel reported that Wisconsin ranked 25th among the states in the amount of venture capital raised in the first three quarters of 2011 – which I think is better than many people seem to believe. Read more
Considering all the talk about jobs in the Governor’s State of the State address on Tuesday, I found it interesting that there was no mention of the Wisconsin Economic Development Corporation (WEDC). But perhaps that shouldn’t come as a big surprise, considering all the negative publicity for this private agency, which was created by Governor Walker and the Legislature in 2011 to replace the state Commerce Department.
The latest round in several months of bad publicity came this week in a Journal Sentinel article by Jason Stein and Cathleen Gallagher about problems with the administration of new tax breaks intended to encourage private investment in qualified Wisconsin businesses. In case you missed that January 14 article, it’s an excellent example of investigative journalism.
I don’t have time now to summarize all the findings, but the major problem cited in the article is that the WEDC, “took a year and a half to begin posting the list of companies that have been approved to receive the tax-advantaged investments.” UW economics professor Andrew Reschovsky succinctly summed up the problem with the lack of information about which companies state residents could invest in and qualify for the tax breaks:
“For an incentive to really change behavior, presumably you have to know about it in advance.”
I raise the issue of these tax breaks not to add to the criticism of the WEDC, but instead to point out that policymakers need to take a very careful look at all the tax breaks and other incentives that are being handed over to certain companies and whether that money is being spent effectively to create good paying jobs. Read more
Earmark Transparency Bill Passes Easily in WI Senate, Moves to Assembly
In an unusual display of broad, bipartisan agreement, the Wisconsin Senate voted 30-3 Tuesday in favor of a bill that would require biennial budget bills to be accompanied by reports listing all the earmarks in the bill. SB 114, which now moves on to the Assembly, also prohibits budget conference committees from adding earmarks. At the national level, President Obama has pushed for similar legislation.
Earmark transparency is the kind of “good government” issue that often draws rhetorical support from lawmakers and citizens across the political spectrum, but which is likely to run up against a wall of unspoken resistance that protects the status quo. That’s not to suggest that there aren’t some legitimate questions and concerns about whether this seemingly straightforward requirement will always be practical and effective, but there’s growing sentiment for allowing more sunlight to shine on the budget process. Read more
A growing body of evidence suggests that film subsidies are not a cost-effective means for states to promoting economic growth. The Center on Policy and Budget Priorities (CBPP) issued a report last month that declared tax credits for film production to be as ineffective as they are widespread. More than 40 states offer such credits, according to CBPP, despite the fact that these subsidies result in few high-quality jobs for residents, reward companies for production they might have done anyway, and don’t pay for themselves.
Add to that a new report by the Massachusetts Department of Revenue, which underscores some of the same points made by CBPP. The report finds that the state’s $82 million tax incentive brought in $10.7 million in additional state tax revenue and created 222 jobs for locals in 2009 – at a cost of $325,000 per job. Two-thirds of the production spending considered attributable to the tax incentives was paid to non-residents or out of state businesses. Read more