When 'creating' jobs costs jobs


Dec 3rd, 2010
by Justice Robert F. Orr
from Greensboro News & Record Blog

 

From Bob Orr, executive director of the N.C. Institute for Constitutional Law:

 

Politicians talk about "creating jobs for people" as a rationale for giving incentives worth millions of dollars to selected corporations. Why give away huge chunks of our tax base in order to "create" jobs while cutting thousands of jobs in the public sector? Until the public gets a good answer to that question, state leaders should take a huge step back from the current incentives policy.

 

State government is eliminating jobs and cutting spending to balance the budget as required by the N.C. Constitution. The cuts will undoubtedly result in additional job losses in the private sector that depends on government projects.

 

From state parks to community colleges; from the university system to health and human services; from the prison system to the courts; the impact of a tax revenue stream that at best is not growing and at worst is shrinking is evident. Recent news stories detailed the probable loss of thousands of teacher jobs due to budget cuts.

 

These potential job losses will hurt public education and public services for our citizens. At the same time, a Florida powerboat company announced an expansion in Beaufort County, promising to create 411 jobs over the next five years. For this "magnanimous" act, the taxpayers of the state are further depleting revenues by $6.1 million through an incentive for the company. This follows on the heels of Hatteras Yacht Company being awarded close to $3 million in incentives with its recent promise to expand.

 

These incentives add to the ever-growing depletion of state and local revenue through the incentives game. Malt-o-Meal gobbles up $5 million for 80 jobs; SPX of Charlotte gets $9 million for 180 jobs; Facebook befriends the state and Rutherford County for $11.4 million for fewer than 50 jobs. The list goes on and on and the cost to the state's treasury goes higher and higher.

 

"But we're creating jobs!" proponents exclaim. No, the private sector is creating jobs and not for any charitable purpose. These companies are expanding because they expect to make a profit from it - and if the politicians are gullible enough to subsidize that business decision from the public coffers, then even better. It just means more money to the corporate bottom line - and less to North Carolina's.

 

No one likes to pay taxes, but most North Carolinians don't object to paying their fair share if tax revenue is used wisely and the tax burden is applied fairly. When the governor hands out cash and tax breaks to multibillion-dollar corporations and the likes of Apple, Google, IBM and Caterpillar shirk their fair share of paying taxes - then others are rightfully more reluctant to shoulder an increased burden of taxation.

 

When it comes to job creation, government leaders have a choice. Keep depleting state revenue through special incentives and explain to all those teachers and other state employees why they couldn't find the money to keep them. Or instead reform the incentives practice and enact a modern, uniform system of taxation. A fair tax system, excellent schools, honest government and innovative economic development that assists small startup businesses will result in job creation that is the envy of our fellow states. North Carolina doesn't have to, and shouldn't, pay huge companies to create jobs.