Missouri shows us another corporate welfare flop | Arkansas Blog

Tuesday, January 3, 2017

Missouri shows us another corporate welfare flop

Posted By on Tue, Jan 3, 2017 at 9:20 AM

AP reports on the success of Missouri Gov. Jay Nixon's promise of up to $2 billion in state "incentives" — AKA corporate welfare payments — to build that state's economy. The record isn't complete, but in six years fewer than half the hoped-for 48,000 jobs have materialized.

Nixon responds that some major increases in auto plant employment wouldn't have happened without the giveaways.

There've been some embarrassments — default on bonds issued for a promised Chinese manufacturing facility that didn't happen. No, not a pulp mill.

This passage could be applied to any state in the country, including Arkansas, which has also had a difficult time over the years statistically supporting the notion that incentives have paid for themselves.

Missouri's experience highlights the extent to which states are willing to use targeted tax breaks to attract jobs, and the difficulty in determining whether the incentivized promises ultimately pan out.

"When firms apply for incentives, they tend to propose more jobs than are actually created," said Dagney Faulk, research director at the Center for Business and Economic Research at Ball State University in Indiana.
Academic research over the years has said time and again that corporate welfare is not the critical ingredient in industrial development (nor tax policy either). Raw materials, location, infrastructure, education, qualify workforce and even quality of life all add up to much more important factors.

And how do governors respond? By giving still more tax dollars away. Arkansas has upped the amount it will lend companies, backed by general revenue, and has even plowed tax money (in the form of money pumped into the teacher retirement system) to take an equity position in private business.

Tags: , , , ,

From the ArkTimes store

Favorite

Comments (7)

Showing 1-7 of 7

Add a comment

 
Subscribe to this thread:
Showing 1-7 of 7

Add a comment

More by Max Brantley

  • Mississippi school will replace Jefferson Davis with Barack Obama

    The Jackson, Miss., School Board has decided to rename an elementary school named for Jefferson Davis, the president of the Confederacy, for Barack Obama. That inspires an idea for Little Rock.
    • Oct 18, 2017
  • Environmental group finds agricultural chemicals in Arkansas drinking water

    The Environmental Working Group released a report this week that asserts that the drinking water for about 200,000 Arkansans contains unsafe levels of chemicals related to industrial agriculture and a related effort singles out Tyson Foods to do something about it.
    • Oct 18, 2017
  • Little Rock to reveal bid for Amazon headquarters

    Thursday is the deadline for cities to make a pitch for Amazon's second headquarters and Little Rock will unveil its proposal at a 10:30 a.m. news conference Thursday in the Venture Center in the city's Technology Park development on Main Street.
    • Oct 18, 2017
  • More »

Readers also liked…

  • Auditor Lea caught not telling the truth

    State Auditor Andrea Lea, who began her tenure in statewide office with a degree of competence unseen in some other Republican counterparts (think Treasurer Dennis Milligan particularly), is becoming more deeply mired in a political scandal.
    • Mar 4, 2016
  • Arkansan on Obama's latest commutation list

    President Obama today announced commutations of the sentences of 111 federal prisoners, including one from Arkansas.
    • Aug 30, 2016
  • Latest Obamacare repeal bill would hit Arkansas treasury hard

    The latest effort to undo Obamacare, the Graham-Cassidy legislation, would shift federal support for health coverage to a block grant system to the states. Bad news for Arkansas.
    • Sep 18, 2017

Most Shared

Most Viewed

Most Recent Comments

Blogroll

 

© 2017 Arkansas Times | 201 East Markham, Suite 200, Little Rock, AR 72201
Powered by Foundation