Tax exemptions, credits and other incentives are supposed to be economic stimuli that ostensibly invigorate the economy, or a specific sector thereof, for the greater public good. And quite often they do. The incredible growth of the Georgia film industry, and of the satellite businesses that have sprung up and thrived as a result, is a premier (no pun intended) example.
But tax breaks don’t always work the way they’re supposed to — or the way we’re told they’re supposed to — for lots of different reasons. Some of those reasons involve honest miscalculation or unforeseen circumstances. Sometimes, too often in fact, tax breaks are political sweeteners for influential and powerful constituents. Sometimes state or local governments give away too much to get too little.
It all comes down to whether tax incentives ultimately serve the public interest or just politically connected private ones.
In this year’s session of the Georgia General Assembly, Senate Resolution 222 created something called the Special Tax Exemption Senate Study Committee. And it sounds as if the creation and purpose of this panel are definitely in the public interest.
Maggie Lee, in the online business blog The Saporta Report, writes that Georgia, like many other states, is less than vigilant about following up on whether its supposed tax “incentives” are paying off for anybody but the businesses that are paying less tax.
Sen. John Albers, R-Roswell, the committee chair, said some of the state’s various tax breaks are “head-scratchers, some are great, some are somewhere in the middle, so this I think this gives us the opportunity to present those facts.”
The group’s short-term goal (with a deadline of Dec. 1, a comprehensive overhaul is obviously out of the question) is to write short assessments of some of the state’s tax credits. According to Lee’s story, the plan “is to include plain math: is it a good financial deal? But it would also include intangible benefits, like whether it improves quality of life in a community, for example. Evaluations would also include the efficiency of a program: how well does the discount it offers cause people or companies to do things they wouldn’t otherwise do?”
That “discount” issue is important. Tax breaks can obviously help businesses in ways that create jobs (see above.) On the other hand, a business does not automatically not hire people just because it gets a tax cut. (Former Gov. Roy Barnes suggested, in his unsuccessful 2014 run to win his old job back, that some tax incentives should be tied to job creation – an idea that, in some form, this committee might consider.)
If nothing else — and this committee has the opportunity to accomplish a lot else — this process can do a lot to bolster public confidence in the idea that tax policy in Georgia is about more than a quid pro quo between lawmakers and the powerful interests that fund their campaigns.