Wednesday, December 6, 2017
UCA profs doubt the benefit of a key element of Arkansas corporate welfare
Posted By Max Brantley on Wed, Dec 6, 2017 at 11:54 AM
It's a report by Jacob Bundrick and Thomas Snyder of UCA, themselves part of an economic think tank that owes its existence to such funders as the Koch brothers. If you didn't know, the Kochs hate taxes and regulation, but through their Americans for Prosperity political organization have generally been a foe of taxpayer-funded corporate welfare.
The researchers target the quick action closing fund, money doled out to industrial prospects at the governor's discretion. Bundrick and Snyder conclude that these subsidies don't stimulate economic activity. One important point: a company that opened a factory after receiving the money might have done the project anyway. There are other factors to consider too: Impact on existing businesses, the impact of imposing the tax that produced the money and so on.
Since 2007 through the end of fiscal 2016, the legislature appropriated $156 million for the fund and it has been credited with creating 18,000 jobs. The credit is perhaps misplaced, the authors suggest. They write:
However, despite the state’s monitoring of the number of jobs created or retained by the firms receiving subsidies, empirical research examining the relationship between QACF subsidies and the local economy is non-existent.
Broadly speaking, our results provide reason to be skeptical of the QACF as a job creator, at least at the county-level. These results are not only important for economic development policy in Arkansas, but for economic development policy across all 50 states.
I find interesting in a scan of the report the wealth of other studies that have found the same thing that I've always argued — the value of corporate welfare in job creation is vastly overstated by the people handing it out.
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