Soapbox: Lawmakers’ tax cuts hurt the state
March 30, 2009 at 9:21 am by Thomas Wheatley in Soapbox
Essig
Last week, the Georgia General Assembly passed the Jobs, Opportunity and Business Success Act, a package of bills that offered tax cuts and credits for Georgia businesses. Proponents said the legislation would help spur the economy and create jobs. Alan Essig of the Georgia Budget and Policy Institute writes below that such cuts, while well-intentioned, hurt the state in the long run.
Well-intentioned as they may be, state legislators pushing hundreds of millions of dollars of business and special interest tax cuts in the name of job creation and economic stimulus are doing far more harm than good. Notwithstanding that Georgia is already one of the lowest tax states in the nation, research and experience proves that state tax cuts for business and other special interests have a negligible overall economic impact and are not a cost-effective method to stimulate Georgia’s economy and create jobs.
In this time of economic and fiscal crisis it is incumbent upon legislators to stop grandstanding, pandering, and misleading the public. While the state budget should prioritize limited state funds for state programs that have proven to have the most value, that same value-based approach should be used in making tax policy.
The economic crisis Georgia faces is a national problem, and misguided legislation calling for hundreds of millions of dollars in state tax cuts won’t stem the tide of the national recession; not only doesn’t it help, but it hurts.
What the state can and should do during this economic crisis is assure that assistance and services are available for those families most affected by the economic recession, and that training, education, and economic development programs are available and utilized to best position Georgians to take advantage of the national economic recovery.
Tax policymaking that does not demonstrate that the beneficiaries bring increased value to the state hurts the millions of Georgians facing unemployment, no health insurance, food instability, lack of child care, and housing instability. It’s not only those already in poverty that are affected; it is also middle class families that lose jobs for long periods of time and slide downward who depend on the community of Georgians to provide a safety net during this crisis.
At the time of most need, less tax revenue consequently results in more uninsured children and fewer medical services available for children enrolled in Medicaid and PeachCare. Layoffs and furloughs of state employees result in those same middle class families having a more difficult time applying for and receiving unemployment insurance, food stamps, and other safety net programs that help assure, even in the most difficult times, the health and welfare of Georgia families.
Although state tax cuts necessarily have a limited effect on immediate job creation, state investments in its residents help prepare Georgians to take advantage of the national economic recovery when it does come. As jobs change, workers need to learn new skills, but with cuts to technical schools and universities thousands of unemployed workers and new high school grads lose opportunities to become the educated workforce we need them to be if Georgia is to rebound when the rest of the nation does. For example, the Georgia Quick Start Program is a national model for employer-specific job training and a key component of Georgia’s economic development policy. Already facing budget cuts, the loss of revenue due to additional tax cuts could lead to a further erosion of this program and make it more difficult to draw businesses into the state.
This historic economic crisis calls for legislators to thoughtfully integrate tax and budget policy to assure that vital government services are available when most needed and that programs are funded that are most effective in helping Georgians take advantage of the economic recovery when it does come.
(Courtesy GBPI)
March 30th, 2009 at 10:15 am
You are right on the money. We have to invest in Georgia. I hate politicians that see spending as the solution to every problem, but there is a world of difference between investing in the future and wild-ass spending. This legislature is the worst. They won’t invest in job creation and a vibrant business climate, they give away money to their friends, and they forget about hard-working people who have been badly side-swiped by the recession.
March 30th, 2009 at 10:33 am
Refreshingly well written piece on the subject.
We could copy- [translate;] -paste this in France the same, with the current polemics on departement(~ districts) fundings.
Surely families should be prioritised over potential new businesses.