Millions of Dollars for Corporate Tax Breaks. . .

March 26, 2009 9:25 am

by Andre · 29 comments

. . . But no jobs.

It is rare to see Tom Crawford of Capitol Impact pen an editorial criticizing state government, but this morning he’s done just that after the Georgia Senate voted to gradually phase out the corporate income tax for Georgia-based businesses.

In a column appearing in several newspapers across the state, Crawford writes, “All the new jobs that were supposedly going to be created from this gusher of business tax breaks don’t seem to have materialized.”

We have continued to suffer higher than average unemployment since 2005, culminating last month when the jobless rate hit the highest level ever in Georgia at 9.3 percent. How could that be happening if all of those business tax cuts were creating so many jobs?

If you look at data available from the state Labor Department, you’ll see that in the 50 months since January 2005, which was when Republicans assumed control of the legislature, Georgia’s unemployment rate has been higher than the national rate for 28 of those months.

“Crawford: We gave tax cuts; where are the jobs?”

While most will agree that the Georgia GOP is not to blame for the rising unemployment (according to the Atlanta Journal-Constitution, more than half of the state’s counties have a jobless rate higher than ten percent), Tom Crawford is right. The Republicans’ oft-repeated mantra that more tax breaks and more tax cuts will create jobs is folly.

Their policies have failed to create a single new job in Georgia and will contribute to the worsening of this state’s fiscal crisis.

Icarus March 26, 2009 at 9:37 am

The states largest private employer, Delta Air Lines, has gone through bankruptcy, slashed it’s number of employees, and slashed the pay of those who remain during the period cited. The “negative” multiplier effect has taken an especially hard hit to other businesses/employers in the South Metro Atlanta area.

One of the State’s largest industries has been construction/development and ancillary industries. Again, these have been decimated over the past 24 months.

There are a lot of things that affect the number of available jobs beyond tax cuts. There is no way to accurately determine how many more jobs would have been lost if the tax cuts Mr. Crawford and Andre find objectionable were not passed.

Bucky Plyler March 26, 2009 at 9:48 am

Andre,

Gov’t doesn’t create jobs other than jobs for gov’t workers. However, gov’t can pass policies that help businesses create jobs or keep jobs that they currently have.

JRM2016 March 26, 2009 at 9:51 am

Andre,

Care to survey businesses in Georgia and see if we had maintained the 2005 level of taxation if they would have the same, more or fewer people on the payroll today?

Andre March 26, 2009 at 9:52 am

Alright Bucky, if the government can pass policies that help businesses create jobs or keep jobs they currently have, then why haven’t the tax cuts and tax breaks resulted in new jobs being created in Georgia.

Our unemployment has risen consistently even though GOP legislators have frequently said that tax cuts and tax breaks will create jobs, jobs and more jobs.

Explain that for me.

Rogue109 March 26, 2009 at 10:01 am

Their policies have failed to create a single new job in Georgia and will contribute to the worsening of this state’s fiscal crisis.

Andre, I’m shocked. Your post takes issue with a policy position of the majority party in the Georgia General Assembly.

Your criticism means that you do not agree with their plans and what they have already done.

By not agreeing with them and wanting a different legislative route take, you have in effect said that you want the GOP in the Georgia General Assembly to fail.

Why, Andre, do you want the GOP in the General Assembly to fail?

I support the GOP. Why don’t you?

Harry March 26, 2009 at 10:18 am

Georgia has experienced a storm of corporate downsizing, which would have happened under either party. Look at the industries affected: Airlines, carpet, poultry, construction, tourism and conventions. We’ve lost our two largest automotive assembly plants. The wood products industry is suffering due to low prices for pulpwood and dimensioned timber. Ft. Mac and Dobbins AFB are finished. The reamining military in Georgia may well take a hit from downsizing.

Ronald Daniels March 26, 2009 at 10:23 am

“Our unemployment has risen consistently even though GOP legislators have frequently said that tax cuts and tax breaks will create jobs, jobs and more jobs.

Explain that for me.”

I know this is difficult to grasp, but the jobs created from tax cuts mitigates the lost jobs. Imagine what unemployment numbers would be if those jobs were not created.

Andre March 26, 2009 at 10:35 am

Again I ask, what jobs?

Where are the jobs?

IndyInjun March 26, 2009 at 10:48 am

Jobs aside, by what mechanism to the GOP legislators figure to offset, the $700 million revenue produced by the corporate income tax?

It seems here that cutting this tax without making it up is a tremendous leap of faith, not sound financial policy.

A second question is this……Given that the revenue fall-off is now looking to be $3 trillion plus, how can giving $700 million of revenue with no obvious offsetting revenue increase be FINANCIALLY RESPONSIBLE?

Oh, excuse me, if Georgia becomes insolvent, Uncle Barak and cousin Johnny will bail us out. That MUST be the answer.

Rogue109 March 26, 2009 at 11:04 am

Again I ask, what jobs? Where are the jobs?

Again I ask: why do you want the Georgia GOP to fail? Aren’t you a patriot? Don’t you love Georgia?

Bucky Plyler March 26, 2009 at 11:09 am

If businesses thrive & produce they pay sales taxcs. In turn, the employee pay checks allow them to pay sales taxes, which particularly brings in more state sales tax (LOST). The state has been losing the LOST because of a depressed economy.

It’s a good thing to be pro-business.

Buzz Brockway March 26, 2009 at 11:34 am

Andre,

If tax cuts don’t create jobs do tax increases?

Indy,

We cut over $2 billion from the budget this year, adding an additional $700 million (assuming that number is correct) to next year’s shortfall will help provide pressure to continue cutting. That’s not a bad thing.

Buzz Brockway March 26, 2009 at 11:50 am

Let me also say that Crawford cites “Delta, Georgia Aquarium, Gulfstream, Aflac, and insurance companies that market high-deductible health plans” as recipients of “tax gifts” (his term).

Perhaps the Aquarium qualifies as a small business but the others do not. The tax bill passed yesterday will benefit all businesses, not just a select few. It seems to me this bill finally puts the GOP back on the side of small business, not just big business.

Small businesses are the backbone of our economy and it is those people who will lead us out of the recession. Giving them a break is stimulative, much more so than what the Federal government has done.

Additionally, eliminating the corporate income tax will encourage businesses to move to Georgia so long as we remain the lowest taxing State in the region.

Buddha the Magnificent March 26, 2009 at 12:38 pm

Is Andre a troll, or is he simply a five year old obsessed with his fellow kindergartners sharing their toys and cookies?

What do corporate tax breaks have to do with the failure of the housing market in Georgia? Dalton Carpets just shut down two plants this week – why they would respond to the end of the construction boom in that peculiar way? After all the corporate tax breaks, you mean they’re gonna shut down plants and idle workers just ’cause nobody’s buying their products???

In reasonable economic times, corporate tax breaks are an incentive for companies to move here or stay here and employ people. They can’t by themselves guarantee full employment and gang-buster economic activity in the midst of a recession/depression.

Ronald Daniels March 26, 2009 at 12:41 pm

“Again I ask, what jobs?
Where are the jobs?”

Technically it’s not again; the first time you just wanted the situation explained.

Georgia Labor Commissioner Michael Thurmond claims that the jobs lost are due to the country transitioning to a 21st Century Economy. I will cede to you that the jobs thus far created have not surpassed the jobs lost – but the situation would be more dire if not for tax cuts for businesses. I’m sure you are not going to claim that it would be better to tax companies in this struggling economy, thus preventing them from being able to continue present levels of employment.

I don’t think anyone here, or anywhere, is going to be able to point to a certain set of jobs and claim they have been created/saved/ruined by tax cuts. That is a silly notion. This is a silly tangent. You obviously think that the tax cuts hurt, so what is the alternative? Increase taxes on businesses? I’m sure that won’t affect anyone – you know unless you work for a business or buy goods from a business…..

jsm March 26, 2009 at 12:59 pm

Name a state that has had a net decrease in its unemployment rate since January 2005. I don’t think one exists. To demand that Georgia’s economy do the exact opposite of what the national economy is doing is absurd, especially when trying to blame the situation on the state’s current majority party.

Many provisions of “HB 481 – Jobs, Opportunity, and Business Success Act of 2009″, passed by the senate yesterday, don’t take effect for months or years. Those jobs will come, but it won’t be this afternoon. Companies will see that there are benefits to locating in Georgia, especially in this national anti-wealth-builder economy. If you like what Michigan is doing, by all means, move there.

Companies cannot hire people with money that is taken from them in higher taxes. That money should instead be used to hire people, who will pay payroll and sales taxes, who will be happier due to the ability to support themselves, and who will help businesses increase revenue on which they will be taxed. This is not so difficult to understand–some are just not willing to see the process and are bound and determined to believe that depending on government to cushion everyone from negative circumstances is somehow noble. What is noble is working hard, making a profit, and hiring someone who needs a job.

John Konop March 26, 2009 at 1:17 pm

The biggest reason jobs are down is two fold. One we are buying more than we consume ie trade deficit and we hid the problem via easy access to credit ie debt. And now the credit market has become too tight.

The solution is fixing the credit market and America investing in products that we can export or products that take us off foreign dependency. Unless we focus on this all you are playing is a shell game.

IndyInjun March 26, 2009 at 1:18 pm

Additionally, eliminating the corporate income tax will encourage businesses to move to Georgia so long as we remain the lowest taxing State in the region.

Buzz, yes the GA cut the budget. We have to cheer that. The problem is that the education leviathan is largely exempt and that is where future cuts must come from.

As for having low/no income tax rates as a business attractant, that really does not bear up to scrutiny, for the states that have no income taxation have sky-high sales taxes on business even on labor that states like Georgia exempt.

Now if Georgia has gutted income tax, sales tax, and property tax as it has done in the last couple of years, this state SHOULD BE “Mecca.” However, to maintain the transportation and education systems SOMEBODY is going to have to ante up and that will either be the citizens through onerous sales tax rates and confiscatory property tax rates or the Florida and Texas models where Business is also taxed at high rates.

The money has to come from SOMEWHERE and one day soon the Feds are going to find out that they cannot print to infinity.

Rick Day March 26, 2009 at 1:28 pm

There are a lot of things that affect the number of available jobs beyond tax cuts

THEN STOP TOUTING TAX CUTS AS A WAY TO CREATE JOBS

I support the GOP. Why don’t you?

SEE ABOVE. IT IS ALL THEY OFFER.

Georgia has experienced a storm of corporate downsizing, which would have happened under either party.

SAYS THE REPUBLICAN ‘NOT OUR FAULT’ APOLOGIST.

Imagine what unemployment numbers would be if those jobs were not created.

IMAGINE NO POSSESSIONS. ISN’T HARD TO DO (THESE DAYS).

I don’t think anyone here, or anywhere, is going to be able to point to a certain set of jobs and claim they have been created/saved/ruined by tax cuts.

SEE RANT 1 ABOVE.

Name a state that has had a net decrease in its unemployment rate since January 2005. I don’t think one exists.

NAME A MAJOR EMPLOYER STATE THAT HAS NOT BEEN DOMINATED BY “CONSERVATIVE” TAX CUT GOP POLITICS IN THE LAST 8 YEARS

This is like shooting at foam in a beer barrel.

jsm March 26, 2009 at 1:37 pm

Rick, the GOP Congress, as bad as its spending was, handed the democrats a strong economy due to “‘CONSERVATIVE’ TAX CUT GOP POLITICS” when they took over in Jan. 2007.

Try that barrel.

IndyInjun March 26, 2009 at 1:43 pm

jsm, that ain’t a barrel, its a reefer.

IndyInjun March 26, 2009 at 1:57 pm

Rick Day,

LOL

Keep ‘em honest.

Ronald Daniels March 26, 2009 at 2:31 pm

“I don’t think anyone here, or anywhere, is going to be able to point to a certain set of jobs and claim they have been created/saved/ruined by tax cuts.

SEE RANT 1 ABOVE.”

Why? Just because it is difficult to weigh all possible factors and show exactly which set of jobs have been created by a single tax, does not mean tax cuts inherently create or not create jobs. It just means such a thing is likely to overpredict and be a contrived statistic, no matter the side it favors.

Rick, are you really going to argue that increasing taxes on businesses creates jobs? For all the huffing and puffing in this thread, no one has shown any relation with tax cuts and job losses. Whereas it is fairly simple to see how tax cuts gives businesses leeway. You know, those “things” that employ people. You make it difficult for a business to make a profit and they have to fire people, unless the government owns it – then it’s just going to waste your money anyway.

Harry March 26, 2009 at 4:48 pm

So Rick, what set of conditions in Georgia and the US do you think would lead to job creation in 2009? Under what circumstances do you believe taxes should be taken from someone to create a job for someone else? Looking at the cost-benefit, can you see any marginal utility to society of a government jobs program?

Harry March 26, 2009 at 4:50 pm

Should Marxist theory be applied to the US?

Bill Simon March 26, 2009 at 7:06 pm

SEE ABOVE. IT IS ALL THEY OFFER.

Rick, Rick, Rick…apparently you missed the big picture about what else the GOP offers: They offer themselves to companies like Georgia Power in exchange for dollar-raping ONLY residential payers of Georgia Power electricity.

Harry March 26, 2009 at 8:04 pm

At least theoretically it was pitched as an investment with a payout. The Obama budget proposals seem far more nebulous.

If Rick could come up with a proposal that would make taxpayers out of the unemployed I’d love to hear it. But please, no more make-work government jobs.

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