From WRAL comes this unsurprising report:
More than a third of the incentive projects announced under North Carolina’s largest economic development programs in the last decade failed to generate a single new hire….Overall, companies awarded the grants from 2009 to 2016 have so far reported hiring just over half the jobs announced under the two programs.
Remember this when you continue to hear announcements from the governor’s office (regardless of who the governor is) that the latest taxpayer corporate handout will “create” X number of jobs. More than likely, the true number will end up being far smaller.
Defenders of the crony corporate handouts say the failure of these projects to live up to their promises is a “no harm, no foul” situation because the companies only receive handouts if they “create” new jobs. This is false, for two main reasons:
- The companies making investments in response to the crony handouts use scarce resources that could have been more productively used by other entrepreneurs, including labor. Many of the “new jobs” claimed by the incentivized companies are actually just shifts in the workforce, as the companies hire workers away from their current job. Such movement of scarce productive resources from entrepreneurs making economic decisions to those making political decisions makes our economy worse off.
- The practice of crony corporate handouts invites a culture of corruption to state government. When businesses see they can lobby politicians for taxpayer handouts, the amount of lobbying and potential for quid pro quo arrangements is greatly increased.
A far better, and fair, incentive program would be to replace our state’s current web of targeted crony handouts and politically-motivated tax breaks with the elimination of the state’s corporate income tax. Either tax all businesses the same or don’t tax them at all.