North Carolina has for the past several years participated in the “necessary evil” of handing out hundreds of millions of dollars to corporations in order to lure them to the state. The hope is that they’ll create jobs and build infrastructure in places that desperately need the economic boost.
In two high profile and controversial cases, North Carolina granted Google and Dell $260 million and $250 million respectively. But are the incentives really worth the cost?
Corporate incentives are specially tailored packages promising tax breaks/credits, land grants or promises of free or reduced infrastructure costs designed to attract a specific corporation to an area. On the surface, of course, this seems like a good idea — considering North Carolina is reeling from a decade-long decline in the manufacturing sector, we could use all the new jobs the state can attract.
Also, apart from North Carolina’s recent boom in the biosciences field, there are still several counties in the eastern and western part of the state that are extraordinarily impoverished and that could use the boost a large corporation would bring. But corporate incentives are not a healthy way to attract jobs to an area. Most incentive packages target a specific company and don’t provide a benefit to the economy on the whole, neglecting the real problems facing an area.
What are the best ways to attract new jobs to your state without having to dish out millions of dollars in incentives? North Carolina needs to spend these hundreds of millions of dollars on improving a mediocre education system. Teacher pay lingers in the middle of the national average, and the average expenditure per pupil by the state government is embarrassingly close to the bottom of the overall state rankings.
North Carolina also needs to ease the tax burden across the board rather than for specific companies. North Carolina ranks near the top of the heap in overall taxes across the nation, producing an unfavorable business climate with high property, corporate, income, and sales tax. A study by the Tax Foundation ranks North Carolina as 40th in terms of having a “business friendly environment.”
As glamorous as it may be to attract the big name corporations to North Carolina, the incentives neglect to provide a benefit to small businesses, which employ over three million people in the state. I doubt a local automotive parts store is going to receive a $1 million grant from the government to expand infrastructure — even though the company is more likely to give back to the community than a large corporation such as Google.
The practice of using corporate incentives to attract businesses to North Carolina needs to end because it’s bad for the overall business climate in the state. The government targets specific companies, creating an uneven playing field for other businesses and neglecting the real reasons a company may not want to move to a certain state. Incentives can be a good thing when they’re open to all businesses, but when only large corporations receive the hundreds of millions of dollars in windfalls, it’s poor public policy.
