Fresh Loaf

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.

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Our friends at the Georgia Budget and Policy Institute pointed us toward a couple of depressing reports today from the U.S. Census Bureau.

One said Georgia’s poverty rate was a lot higher in 2007 even than it was in the depths of the 2001 recession. Not only that, but middle-class Georgians haven’t gained any economic ground since the recession.

The other report said more people in the state now don’t have health insurance.

“Even after six years of economic recovery, Georgians have not regained the ground lost in the 2001 recession,” GBPI Deputy Director Sarah Beth Gehl said in a statement. “With the weakening of the economy in 2008, things are likely to get worse before they get better.” (more…)

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