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Good Jobs First - understanding how tax incentives are used to create jobs


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What are tax incentives? How are they used to create jobs? How are they sometimes misused? All of this and more in this webinar!v See the full webinar by going to and then click on the training page to purchase the webinar!

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Good Jobs First - understanding how tax incentives are used to create jobs

  1. 1. Smarter IncentivesSmarter Incentives for Good Jobsfor Good Jobs Greg LeRoyGreg LeRoy Executive Director, Good Jobs FirstExecutive Director, Good Jobs First North East RegionalNorth East Regional Employment & Training AssociationEmployment & Training Association Webinar ~ February 6, 2014Webinar ~ February 6, 2014 11
  2. 2. Good Jobs First:Good Jobs First: A Resource for State and LocalA Resource for State and Local GovernmentsGovernments  Many Tools @ www.goodjobsfirst.orgMany Tools @  Model Research and PublicationsModel Research and Publications  Testimony, Training and SpeakingTestimony, Training and Speaking  Technical AssistanceTechnical Assistance  Subsidy TrackerSubsidy Tracker  ““Report Card” StudiesReport Card” Studies 22
  3. 3. ~$70 Billion per Year!~$70 Billion per Year!  Property Tax AbatementsProperty Tax Abatements  TIF: Diversion of Property and Sales TaxTIF: Diversion of Property and Sales Tax  Corporate Income Tax CreditsCorporate Income Tax Credits  Sales Tax ExemptionsSales Tax Exemptions  Enterprise ZonesEnterprise Zones  Land Write-downsLand Write-downs  Infrastructure AidInfrastructure Aid  Personal Income Tax DiversionsPersonal Income Tax Diversions
  4. 4. Site Location 101Site Location 101  Business basics matter most (not taxBusiness basics matter most (not tax breaks)breaks)  Public officials in “prisoners’ dilemma”Public officials in “prisoners’ dilemma”  ““Job blackmail,” “Economic war among theJob blackmail,” “Economic war among the states”states”  Unregulated site location consultantsUnregulated site location consultants 44
  5. 5. Transparency = CornerstoneTransparency = Cornerstone  Job shortfalls > Clawbacks, RescissionsJob shortfalls > Clawbacks, Rescissions  Poverty wages > Job quality standardsPoverty wages > Job quality standards  Excessive costs > Elimination, capsExcessive costs > Elimination, caps  Bias against urban poor > TargetingBias against urban poor > Targeting  Hogged by big business > ReallocationHogged by big business > Reallocation  Huge $ to Wal-Mart > Big-Box RegulationHuge $ to Wal-Mart > Big-Box Regulation  Subsidies to privateers > Contract ReformSubsidies to privateers > Contract Reform  Big $ to political donors > ReformsBig $ to political donors > Reforms 55
  6. 6. 20072007 66
  7. 7. 20102010 77
  8. 8. 20132013 88
  9. 9. Show Us the Subsidized JobsShow Us the Subsidized Jobs  55% of major state ED programs name55% of major state ED programs name recipient, value of subsidyrecipient, value of subsidy  Only 1 in 4 reports actual jobs createdOnly 1 in 4 reports actual jobs created  Only 1 in 11 reports actual wages paidOnly 1 in 11 reports actual wages paid  IL, MI, NC best (but hardly passingIL, MI, NC best (but hardly passing grades)grades)  MS, KS and ID still in the darkMS, KS and ID still in the dark 99
  10. 10. States with (at Least Some)States with (at Least Some) Exemplary Tax-CreditExemplary Tax-Credit DisclosureDisclosure  IllinoisIllinois  IowaIowa  North CarolinaNorth Carolina  MassachusettsMassachusetts  MissouriMissouri  Rhode IslandRhode Island  Washington (sometimes…)Washington (sometimes…) 1010
  11. 11. IllinoisIllinois 1111
  12. 12. North CarolinaNorth Carolina 1212
  13. 13. IowaIowa 1313
  14. 14. MassachusettsMassachusetts 1414
  15. 15. Show Us the Local SubsidiesShow Us the Local Subsidies  2/3rds of big cities & counties fail to2/3rds of big cities & counties fail to disclosedisclose  Deadbeats include Charlotte, CookDeadbeats include Charlotte, Cook County (Illinois), Dallas, Harris CountyCounty (Illinois), Dallas, Harris County (Texas), Los Angeles (city and county),(Texas), Los Angeles (city and county), Miami-Dade County, Philadelphia, andMiami-Dade County, Philadelphia, and San Francisco.San Francisco.  Memphis, New York, Austin, Chicago getMemphis, New York, Austin, Chicago get top gradestop grades
  16. 16. Subsidy TrackerSubsidy Tracker First-ever searchable 50 states +First-ever searchable 50 states + DC + localities database ofDC + localities database of company-specific subsidy datacompany-specific subsidy data 1616
  17. 17. Subsidy Snapshots in NYCSubsidy Snapshots in NYC  Visible atVisible at underunder “Resources and Tools”“Resources and Tools”  Map deals by Community Board Areas inMap deals by Community Board Areas in each borougheach borough  Released with borough presidentsReleased with borough presidents  Offered to training providersOffered to training providers 1717
  18. 18. Detroit MSA Shutdowns 2001-04Detroit MSA Shutdowns 2001-04
  19. 19. MEGA Deals 2001-2004MEGA Deals 2001-2004
  20. 20. Twin Cities Metro Area: Subsidized Business Relocations (Mostly TIF), 1999-2003
  21. 21. Twin Cities Metro: Subsidized Business Relocations’ Impact on Job Access via Transit
  22. 22. Solution: Align DevelopmentSolution: Align Development Subsidies with Transit RoutesSubsidies with Transit Routes  Make workplace access via transit anMake workplace access via transit an eligibility requirement (or at least aneligibility requirement (or at least an application-rating preference) for anapplication-rating preference) for an incentiveincentive  California, Maryland, Illinois, New JerseyCalifornia, Maryland, Illinois, New Jersey have made small stepshave made small steps
  23. 23. Job-Creation Shell GameJob-Creation Shell Game  Multi-state metro areas (Kansas City,Multi-state metro areas (Kansas City, Memphis, Charlotte, NYC)Memphis, Charlotte, NYC)  Job blackmail (Sears, Motorola Mobility,Job blackmail (Sears, Motorola Mobility, CME and ADM in Illinois alone) (NJ,CME and ADM in Illinois alone) (NJ, OH…)OH…)  Active-pirate states (Texas, Florida, NewActive-pirate states (Texas, Florida, New Hampshire, Rhode Island, Tennessee)Hampshire, Rhode Island, Tennessee)
  24. 24. Solution:Solution: De-monetizeDe-monetize Interstate JobInterstate Job FraudFraud
  25. 25. Fresh Fodder!Fresh Fodder!
  26. 26. Boeing Exemplifies Trend:Boeing Exemplifies Trend: Stakes Are Higher Than EverStakes Are Higher Than Ever  Deal flow is depressedDeal flow is depressed  ““Megadeals” are up in number and costMegadeals” are up in number and cost  So accountability really mattersSo accountability really matters 2626
  27. 27. Deal Flow is DepressedDeal Flow is Depressed 2727
  28. 28. But Megadeals Are SurgingBut Megadeals Are Surging 2828
  29. 29. MegadealsMegadeals  240 deals @ $75 million to $5.6 billion240 deals @ $75 million to $5.6 billion (and now $8.7 billion)(and now $8.7 billion)  Number and cost up sharply since 2008Number and cost up sharply since 2008  Average cost per job: $456,000Average cost per job: $456,000  Only ½ to manufacturingOnly ½ to manufacturing  New York and Michigan (and nowNew York and Michigan (and now Washington is #1) = top spendersWashington is #1) = top spenders 2929
  30. 30. And So Are Their CostsAnd So Are Their Costs 3030
  31. 31. Paying TaxesPaying Taxes to the Bossto the Boss  16 states allow companies to16 states allow companies to effectively keep some of employees’effectively keep some of employees’ state personal income taxesstate personal income taxes  2,700 companies named in database2,700 companies named in database  Loss to states ~$700M/yearLoss to states ~$700M/year  PA, NJ developmentsPA, NJ developments
  32. 32. Job-Creation &Job-Creation & Job-Quality StandardsJob-Quality Standards  Money for SomethingMoney for Something December 2011December 2011  60% of programs require job creation,60% of programs require job creation, retention or traineesretention or trainees  40% have wage requirement but only 20%40% have wage requirement but only 20% are tied to marketsare tied to markets  15% require health care premium15% require health care premium contributioncontribution 3232
  33. 33. Austerity MantraAusterity Mantra ““At a time when governmentsAt a time when governments must make difficult budgetmust make difficult budget decisions, spending to createdecisions, spending to create jobs should be transparent, fairjobs should be transparent, fair and effective.”and effective.” 3333
  34. 34. Workforce DevelopmentWorkforce Development “Integration” Issue“Integration” Issue  ED and WD should not just be “betterED and WD should not just be “better integrated”integrated”  ED should be *subordinated to* WDED should be *subordinated to* WD 3434
  35. 35. Contact Us!Contact Us! Greg LeRoyGreg LeRoy Executive DirectorExecutive Director Good Jobs FirstGood Jobs First 202-232-1616 x 211202-232-1616 x 211 3535