RALEIGH – A lot of attention is being paid to how the Voter ID Constitutional Amendment will be implemented during the lame duck special session of the N.C. General Assembly. That’s understandable, but it also serves to overshadow some other moves Republican majorities on Jones Street are making that contradict their own campaign appeals to conservative, limited government and respect for taxpayer dollars.
The general issue at hand is tax incentives for corporations that relocate to, or expand operations in North Carolina. The specific legislation that was voted favorably out of the Senate Finance Committee on Tuesday, and similarly out of the Senate Rules Committee Wednesday, is a huge expansion of the Job Development Investment Grant (JDIG) program.
JDIG is a grant that pays corporations for job creation, attaching a certain dollar amount in grant money to each job created. With Senate Bill 820 the upper limit on that dollar amount would skyrocket from $6,500 per job (per year) to $16,000!
Finance Committee Chairman Sen. Jerry Tillman (R-Randolph) said raising the cap would help the N.C. Department of Commerce recruit “big boys with deep pockets who are out there looking” to relocate headquarters.
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It’s all part of a race to see which state can abuse their resident taxpayers the most so that politicians can cut ribbons and smile for photo-ops. The prevailing school of thought is, ‘Everybody else is doing it! If we don’t offer bigger incentives, we can’t compete!’
Naysayers are shrugged off as impractical ideologues and essentially told to take a hike. No matter that these incentives are time and again proven to be near the bottom of the list of factors companies consider to make such relocation decisions, or that the entire premise of playing venture capitalist with other people’s money is antithetical to the idea of limited government, fiscal conservatism, and Individual Rights.
Republicans on Jones Street have expanded incentive programs several times over the past several years, but it’s never quite enough, as the Big Fish always seem to be caught by other states because, according to these lawmakers, those states have higher incentives. So their answer is to try playing the game of catch up.
Except this belies the years long push to make North Carolina more tax friendly for ALL businesses and individuals, with the dramatic reduction in corporate and individual income tax rates since 2013. The logic behind those cuts is more sound and far more consistent with a political party placed in power to implement small government policies.
After all, these corporate giveaways are a treat offered only to about one percent of businesses, while the 99 percent of business owners in the Old North State get no such break.
Although the JDIG program is designed to be a net positive for tax coffers, limiting the pay out of grants per job to the equivalent of 75 percent of that jobs expected income tax generation for the State, like most of government intrusions into the economy it fails to really deliver. It amounts to central planning and, despite the rhetoric, only serves to benefit connected corporations with deep pockets, and the politicians that stand to cut ribbons and pose for photos while taking credit for it all.
Small-business owners across North Carolina, the ones that make up the vast majority of employers in the state, do not have lobbying arms to negotiate such tax perks based on the jobs they create. Joe’s Diner and Sally’s Hair Shop don’t get a grant every time they hire a new employee. If it’s good enough for the “Big Boys”, as Tillman put it, why is it not good enough for the lifeblood of the Old North State’s economy, the small-business owner?
Instead of racing to be first in the incentive game, and violating taxpayers in the process, these Republicans should be more focused on continuing to lower tax and regulatory burdens that would benefit existing North Carolina businesses AND attract the Big Boys at the same time.
Obviously, if incentives are viewed as necessary to attract big businesses, the corporate rate is still too high. Let’s cut it and treat every business the same. State lawmakers picking winners and losers, and the losers always being average taxpayers and business owners, is neither effective for growing the economy, or ethical when it comes to the equal treatment of taxpayers. It is definitely inconsistent with a platform built on smaller government that these same lawmakers profess to support.
Democratic Gov. Roy Cooper campaigned on, among other things, opposition to coroporate tax giveaways just like this. He was right to oppose it on the stump, but, unsurprisingly, completely abandoned that position once he was in office. Cutting ribbons is just too good for a politicians image.
And so it is for the state lawmakers pushing this huge expansion of JDIG. None of them can honestly call themselves ‘conservative’ when it comes to tax policy being that they vote to subsidize large businesses at the expense of the rest of us. So the next time you see your local representative at a ribbon cutting ceremony, know that you’re paying for that ribbon and then ask them what they have done for you lately?
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