The North Carolina General Assembly’s Fiscal Research Division this week released its 2010 Economic Development Inventory.
The report itemizes state government’s “economic development spending,” which includes appropriations, tax credits, deductions and preferential tax treatment targeted to a particular business or industry. The report delineates between “direct incentives” and “support programs.” Direct incentives provide funds or relief directly to a company or to a local government designated for a specific company, while support programs are those that provide support for businesses considering locating or expanding in N.C.
The report finds a total economic development spending of $1.2 billion in FY 2008-09. Of that total, 95%, or $1.16 billion, is for direct incentives. By comparison, state corporate tax revenue for FY 2008-09 totaled $835.5 million.
In short, if the state ended their targeted handout and tax credit corporate welfare schemes, the added revenue would be enough to offset an elimination of the state corporate tax. Or it could offset a significant reduction in North Carolina’s high “small business tax.”
The policy of high tax rates for most with handouts and tax breaks for some makes for bad economics and an unfair treatment of similar businesses. The Economic Development Inventory is a prime example of how politicized our economy has become.