At MLC committee meeting, legislators urged to more closely scrutinize tax incentives
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Friday, August 16, 2013 at 11:53 AMStateline Midwest ~ 2013 MLC Annual Meeting Edition
When it comes to economic development, investment does not necessarily equal performance. This was one of the themes heard at the Midwestern Legislative Conference’s Economic Development Committee meeting in July.
A topic of particular interest was the value of state business incentives. States spend up to $80 billion on incentives in hopes of attracting or keeping businesses — and the jobs and economic activity that come with them.
But Peter Fisher, research director for the Iowa Policy Project and professor emeritus at the University of Iowa, cautioned that these incentives (such as tax cuts and credits) are often arbitrary and possibly unnecessary.
“The majority of location decisions are driven by something other than incentives,” he told lawmakers who attended the meeting.
Other critical factors include the pool of skilled and qualified workers; the quality of schools and other local amenities; access to markets and suppliers; the quality of state and local government services; and other business costs (such as transportation, wages and energy).
According to Fisher, the goal of economic development policy should be to raise a state’s overall standard of living — bringing higher income levels, lower poverty rates and greater economic security.
