Gomer Pyle School of Economics thinking was on full display at the joint economic development incentives committee today.
A presentation by a UNC consultant explained that the ?statutory? tax incentives used to stimulate job growth in the state for the last 12 years are, for the most part, ineffective. He said the only incentives that seemed to be any good were tax incentives for R&D (actually, according to the charts, they looked to be more ?not detrimental? than ?good?).
The consultant therefore favored a shift to more discretionary (also non-tax) incentives?a really bad idea, for many reasons. Since these incentives permit government to decide who gets the goodies, and what those goodies are (instead of the current tax incentives, which are available to anybody who qualifies), they would add considerably to the lobbying and political insider shenanigans, not to mention create a less-predictable business climate. Discretionary incentives would also open the door for politically correct boondoggles, such as giving economic development handouts to ?green? companies that will never earn a dime.
The consultant did at least suggest one thing that will work?that North Carolina lower its corporate tax to get more in line with its neighbors.
However, a Gomer Pyle School of Economics valedictorian, Representative Bill Owens, who is the committee co-chair (and likely to get his way, given the makeup of the assembly), said there wasn?t enough money to cut the corporate tax rate, and there wasn?t enough money to increase discretionary incentives (good idea, bad reasoning?it?s not a matter of money, it?s just a bad idea). Then he suggested that the assembly make sure that economically distressed counties continue to get lots of statutory incentives. In other words, let?s make sure that tax incentives that don?t work are continued in the areas where they are least likely to work.
Shazam, Shazam, Shazam!
