RALEIGH – Republican legislative leaders held a press conference Thursday morning to announce plans to lower the bar for corporations to qualify for special tax treatment for moving to North Carolina. The announcement comes as rumors swirl that tech juggernaut Apple is considering North Carolina to locate a new campus.
The rejiggered corporate welfare scheme, more officially recognized as the Job Development and Investment Grant (JDIG), would lower qualifications for the grants to companies to help land some of the “near misses” North Carolina has endured over the last several years.
JDIG allows companies to take a tax credit against employees’ withholding taxes. The state-government-turned-venture-capitalist idea rests on a foundation of centrally planned economic development that is not consistent limited government.
The new proposal would lower these tax perks for company investments, from $4 billion investment and 5,000 jobs, to $1 billion and 3,000 jobs.
The idea being that the jobs created bolster the economy, and the tax base, and thus support the tax credit itself.
This year’s JDIG modification will also reportedly eliminate the $6,500 per-job cap on the tax credits, double the timeline, from five years to 10 years, for the company in question to meet the job target, give the company credits for future job expansions, and extend the life of the grants to 30 years, from 25 years.
Wow. That sounds like a great deal.
Lawmaker certainly think so. They have consistently touted JDIG as a net positive for the state tax coffers and the economy. A win-win.
The question is, if this is such a win-win deal to offer outside companies – every job created earns the company a tax credit, and then tax revenues still grow on net – then why don’t the hundreds of thousands of resident business owners in North Carolina get the same treatment?
If this is such a win-win for the state – based on the rhetoric that money (grants/credits) only goes out once a job is actually created and generates the tax revenues from which the credit is granted – then why must there be tens of millions of dollars appropriated toward JDIG every year?
There maybe a simple answer for the latter that I am missing, but I have never understood why a program that is purportedly self-supporting needs initial funding from taxpayers. The way they describe the sequence of events make the initial appropriations a confusing requirement.
The honest answer is that such corporate welfare, economic development incentives, what have you, are hardly a net gain for the liberty of North Carolinians or the bank accounts of taxpayers.
Americans For Prosperity had a campaign called Reverse Robin Hood that highlighted just how much taxpayers are bilked through such corporate welfare schemes. It’s a great resource to understand just how this incentive game works. They focused on Gov. Roy Cooper, being that these programs are executed at the via executive agencies, but the same logic applies to those writing the laws.
To be sure, Cooper loves this new proposal. He loves it so much that he wants it to be a stand alone bill that so he can vote for it and claim credit for any big corporations it “attracts” like Apple.
In a statement on the issue a Cooper spokesman said, “As we do on many economic development efforts, the governor’s office worked closely with the legislature and other interested parties on this change that can help bring even more jobs to North Carolina. We believe this is important enough to be voted on as a standalone measure.”
What Cooper means, of course, is that he will most assuredly veto the Republican’s budget for political reasons, but he’d like to be on the record supporting the big corporate incentive package so he can claim it while cutting ribbons at a new Apple campus, so ‘please let me vote on the corporate welfare by itself?!’
And yes, this is the same corporate welfare Cooper explicitly campaigned against in 2016. Funny how that works.
Republicans are not likely to give him that satisfaction, but one thing is for sure – when it comes to big corporate incentive packages the Republican leadership and the Democrat in the Governor’s mansion are hand-in-hand.
Never mind that multiple years of revenue surpluses should allow lawmakers to further cut income taxes – a move that would respect the people that already live and work here AND serve to attract companies from out of state.
Instead they’ll use their elected positions and taxpayer funds to bribe companies to move to a state that already offers one of the best set ups in the country.