WHY TAXPAYERS DESERVE DETAILS – NOT VAGUE TALKING POINTS AND HIGHER TAXES On June 25th, the mayor of Columbia, Steve Benjamin, unveiled what’s being commonly called the “Bull Street Development Deal.” The deal would involve the city committing to an estimated $70 million for infrastructure, two parking garages, and a minor league baseball stadium. The estimated economic […]
WHY THE RUSH TO PUT FUTURE TAXPAYERS 120,000,000 MORE DOLLARS INTO DEBT? The news broke this week that Boeing plans to expand its existing North Charleston campus to include an information technology “center of excellence.” The expansion, according to a company spokesman, will create 2,000 jobs. State lawmakers quickly announced plans to issue $120 million […]
HOW SOUTH CAROLINA FELL INTO GORDON TULLOCK’S “TRANSITIONAL GAINS TRAP” At a recent debate sponsored by the Policy Council on the merits of taxpayer-financed “incentives” – the headline for the event was “Economic Incentives: Capitalism or Corporate Welfare?” – moderator Pete Calcagno of the College of Charleston referred briefly to the concept of “transitional gains.” […]
Here are just a few of the things legislators are doing right now in the name of ‘economic development.’
Government-driven economic development is a secretive process in which politicians give away tax exemptions, subsidies, and other taxpayer-funded incentives to private companies. Politicians “invest” tax dollars without disclosing any meaningful analysis or information on the company, without providing an estimated return-on-investment, and with no public input.
After the headlines, after the press releases and fanfare, where do all these investments go? Some of them go south and take millions of tax dollars with them.
One of the final pieces of legislation that may pass the General Assembly this year is an omnibus economic development bill that provides an array of targeted credits and subsidies aimed at stimulating South Carolina’s ailing economy. Recipients of the credits range from alternative energy producers to start-ups to waste-grease biodiesel producers. In effect, new and unproven industries are getting the nod over established, independent businesses left to pick up the tab.
With the film industry clamoring for additional tax breaks, it is worth asking whether such targeted tax breaks actually work.
As we’ve written before, targeted tax incentives do not result in long-term economic growth. For certain industries, however, targeted tax breaks are especially ineffective. Our analysis of tax breaks for retailers found that such incentives do not create new jobs. Likewise, numerous academic studies have demonstrated that film incentives result in little benefit to taxpayers.
Are Retail Incentives Constitutional? A Review of the Sembler and Bass Pro Shops Incentives Legislation Are economic development incentives constitutional? If the state’s frequent reliance on such incentives to attract firms like Boeing is any indication, the answer would seem to be an obvious yes. But that does not mean all incentives would pass […]
It goes without saying our political leaders should treat public tax dollars with the same care and consideration they would their own finances. This maxim has never been more necessary when we consider the state’s recent experiment with government-driven economic development. As illustrated by the Boeing incentives package, there is little transparency regarding the financial details of these agreements, as well as the process by which lawmakers approve such incentives.