Investigating tax credits, subsidies and incentives

By Zachary Matson

Each year local and state governments provide private companies with billions of dollars of tax credits, subsidies and other forms of incentives to mover or open new facilities in their communities. These deals are shrouded behind layers of quasi-public agencies, weak disclosure rules and secretive businesses, but rarely the economic benefits turn out as originally billed.

IRE board president and columnist David Cay Johnston and Greg LeRoy of Good Jobs First provided insights into exploring these deals and their true costs to the public on a panel at the recent IRE Conference in San Antonio.

Johnston said the most important part of any investigation is determining the actual return of investment for the taxpayers. The more simplified the numerical represenation of this, the better the story will be.

Among possible story angles into the world of business incentives, LeRoy suggested looking into the secretive world of site location consultants, a flourishing industry of private firms that work on behalf of businesses seeking out the best deal possible.

Another interesting angle could looking into where the workers at a new business actually live. In one instance less than 20 percent of workers at a factory actually lived in the county that provided the incentives to create those jobs.

For more, check out Good Jobs First or David Cay Johnston’s column at Tax Analysts.

Zachary Matson is a journalism student at the University of Missouri.