2011: Perfect Storm for Tax-Break Accountability

January 3, 2011

Reminder! Good Jobs First is



Which states will have the guts and smarts to rein in wasteful corporate giveaways—veiled in the sheep's clothing of “economic development”—in 2011? Which states will ignore glaring, costly problems and fail to enact real reforms?

A perfect budget storm is raging to help legislators and governors do what needs to be done, a crisis they shouldn't waste. Tax revenues remain depressed because of the recession, and there won't be another federal stimulus “patch” to states, cities or school boards. Financial analyst Meredith Whitney, who called the banking crisis, is


50 to 100 cities will default on bonds this year. California and Illinois are already struggling with their bills.

A perfect policy storm is also howling on economic development subsidies. Job creation is issue #1 for voters because of persistently high unemployment. And taxpayers' appetite for government transparency has been whetted by Recovery.gov, the “Google government” movement, and smart phone apps—not to mention Wikileaks.

As Good Jobs First revealed last month, 37 states now disclose company-specific data online about job subsidies—up from 23 three years ago—with #38 (Massachusetts) coming online this year (though most still have lots of room for improvement).

In 2010, a few states moved to trim giveaways but many more resorted to harsh cuts and budget gimmicks. But in 2011 and budgeting for 2012, states have few places to hide: some will debate more drastic moves, even selling public assets. If ever there were a year when states should—and can—curtail unproductive corporate tax giveaways, it is 2011.

Good Jobs First created three new tools for anyone working on state budget issues in 2011—and we hope to hear from those using them:

Show Us the Subsidies

—rates the 50 states plus D.C. on economic development transparency

Accountable USA

—provides 51 state web pages of ready reference for accountability, plus unplugged corporate income tax loopholes

Subsidy Tracker

—combines online data from dozens of states in the nation's first-ever searchable subsidy database

Here are some giveaways most deserving of scrutiny:

 Tax credits for “new” jobs that are actually just being moved from other states (New Jersey's Business Employment Incentive Program comes to mind)

 Tax breaks of any kind—such as income tax credits or property tax abatements—that fail to meet the definition of “incentive” because they are not targeted to correct injustices such as redlining or concentrated poverty

 Subsidies that are dominated by large companies with deep pockets (and the most subsidy consultants) at the expense of small and locally owned businesses

 Film production tax credits in more than 40 states that now total more than $1 billion a year

 Tax Increment Financing (TIF) programs that are undermining funding for schools and other local services, shifting property tax burdens onto homeowners and small businesses

 Not officially an “economic development” subsidy, the “vendor discount” that costs 26 states about $1 billion in lost sales tax revenue each year ($126 million in Illinois alone).

States have a clear choice in 2011 as they debate painful budget decisions. They can make short-sighted spending cuts while failing to acknowledge the corporate-tax “budget icebergs” that are harming revenues. Or they can protect long-term investments in education and infrastructure—which really do grow jobs—by finally cleaning up

The Great American Jobs Scam