From the Northwest Indiana Times:
Most states are doing a poor job tracking whether their tax breaks for businesses are actually spurring job growth, including some that have poured hundreds of millions of dollars into corporate incentive programs even while grappling with record deficits, according to a new report.
The report released Thursday by the Pew Center on the States found that no state regularly takes a hard look at the effectiveness of all of its tax breaks. Twenty-five states and Washington, D.C., do little if any evaluation, including Illinois, which is among the states facing major budget struggles.
Only 13 were found to be doing enough, the study found.
It's difficult to say just how much U.S. states spend combined on tax incentives, but they've become more common in the past decade, particularly since 2008 when the country sank into recession. Unemployment rose and the money available for state budgets shrank, yet researchers found the tax breaks states handed out may not have produced the desired effect.
"Given that states are rebuilding their budgets and economies in the wake of the Great Recession, these are mistakes states can't afford to make," Pew senior researcher Jeff Chapman said.
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Among the glaring problems identified with incentive oversight was failing to provide information to state lawmakers who have to sign off on the programs, at least initially, Chapman said.
Therese McGuire, an economist at Northwestern University, said that with the right information lawmakers should be able to create focused incentives that at least increase the odds of a return on a state's investments, or to choose to provide nothing at all.
"I think it's possible from these examples for policymakers to make intelligent choices about whether or not to give tax incentives," McGuire said. "(And) you're talking to someone who has become sort of innately skeptical of tax incentives."
But University of Illinois economist Fred Giertz said that while the report is well-intentioned, it's often difficult to judge how well corporate tax breaks work.
"I'm not hopeful they'll have really precise results to measure job creation," he said.
Pew reviewed close to 600 documents for its report and interviewed more than 175 people, with every state participating, Chapman said.
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Read more: http://www.nwitimes.com/news/national/report-few-states-effectively-track-tax-breaks/article_baa60396-ae06-5844-b189-2f5e5c269506.html#ixzz1rqN0EzaF
