Study Looks for Tax Giveaways

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December 10, 2010; Source: Stateline | For all the attention that goes to tax exempt nonprofits and the taxes foregone by states and municipalities due to their immunity from property taxes, we have long suspected that governments give away tax abatements and exemptions to for-profit developers routinely, and in a way that is rarely ever tabulated. At last there is one study looking at the tax giveaways of state governments to lure new business and jobs.

The report [PDF] published by Good Jobs First is an assessment of how well state governments do with online disclosure of their tax giveaways to businesses and developers in the name of job creation. The best states on that score appear to be Illinois, North Carolina, Ohio, and Wisconsin. The states with no disclosure at all include Arkansas, Delaware, D.C., Georgia, Idaho, Kansas, Massachusetts, Mississippi, Nevada, New Mexico, Oregon, South Carolina, Tennessee, and Wyoming, and the states with so little disclosure that they rank only a tiny bit above the no-disclosure states are California, Maine, New Hampshire, South Dakota, North Dakota, West Virginia, Nebraska, and Alabama.

Even the better states that disclose what they give away frequently don’t post information on whether or not the subsidized companies actually deliver with the jobs and other benefits that they promised in return for the government largesse. Of course, a review and grading of states by their disclosure practices isn’t a tabulation of all property tax abatements (or other subsidies) offered by states, much less the abatements offered by counties and municipalities in addition.

Earlier this year, the New Jersey Policy Perspective issued an analysis of abatements offered by Jersey City to for-profit developers outlining a variety of problems in the process, including the ephemeral benefits promised by the developers, their propensity to make political contributions, among other programs.

In the summer, the N.J. comptroller weighed in with a critical report of municipalities’ abatement process, pointing out that “(d)evelopers seeking abatements may, without repercussion, over-promise benefits that do not materialize.” But we lack the tabulation of tax revenues foregone in developers’ abatements that taxpayers so vocally protest when the entity in question is only a job creating, education creating, health creating, shelter creating nonprofit like a university, hospital, or homeless shelter.

The property tax ruckus around tax exempt nonprofits will not get a fair debate unless we also generate a tabulation of the tax ratables sacrificed for for-profit developers around the nation.—Rick Cohen