The 2013 General Assembly is considering giving special tax treatment to encourage mobile home sales, help Georgia’s aircraft maintenance companies compete against their counterparts in other states, and lower the cost of zoo construction projects.
The tax breaks on the menu would diminish state revenues by tens of millions of dollars if all became law. That would be on top of the nearly $300 million in corporate tax credits for economic development Georgia now hands out each year.
This should raise eyebrows even if state budget cuts to education weren’t still causing teacher furloughs and layoffs across the state, while a lack of transportation funding results in long commutes for workers in Atlanta’s northern suburbs.
Supporters say their specific tax break is worthy because it will deliver jobs. Corporate beneficiaries or their lobbyists will often characterize their tax break as a potent job creator at committee hearings.
Lawmakers, who decide which tax break bills reach the governor’s desk, lack an independent method to conduct cost-benefit analyses to help them make informed choices about which breaks live up to their promises.
For example, the Legislature is considering extending a break on taxes paid by maintenance companies that work on aircraft based outside Georgia. Officials for Gulfstream, a maker of private jets on Georgia’s coast, say they need the tax break to be competitive against similar companies in other states.
A tax break for Gulfstream enjoys bipartisan support. No doubt it would cause some out-of-state repair business to continue coming to Georgia, resulting in more jobs. So, if we’re going to give up tax revenue we could use for education and transportation, how many jobs are we getting in return? How long will those workers be on the payroll?
Is Georgia getting more or better jobs with the aircraft tax break than it would for a proposed $30 million tax break program to encourage redevelopment of downtown districts? Would the state get more bang for the buck by approving the pending bill to cut the sales tax on mobile homes?
Legislation introduced this session proposes taking a small step toward increasing the public’s ability to understand the trade-offs the state makes when it approves a new tax break. Introduced this year in the Georgia House by state Rep. Chuck Martin, R-Alpharetta, House Bill 454 creates a path to independent research that lawmakers can use to decide whether to extend an existing tax break.
It’s a good start that should result in a public report that sheds more light on whether specific tax breaks help the economy or create jobs.
Gridlocked roads and an underfunded education system are cited by businesses as reasons they locate in neighboring states. We don’t know the cost of perpetuating those problems because the state diverts scarce resources to tax breaks that may not work.