Over the past several months, we have blogged several times on state tax incentives, in particular on the need to strengthen transparency and evaluation of tax credit programs (see our posts here,  here, here and here). The issue  seems to be quickly gaining critical mass.  In September, a Joint Legislative Task Force chaired by Senator Mike Mazzei and Representative Jeff Hickman began examining transferable tax credits (the Task Force meets again November 5th in Tulsa). Earlier this month, Representative Mike Reynolds called for an investigation into possible abuses associated specifically with two transferable tax credit programs, the Small Business Capital Companies credit and the Rural Small Business Capital Companies credit.  The Oklahoman has taken note, arguing in this editorial that, “while we remain convinced that some incentive programs are justified, the potential for abuse makes the scrutiny vital and timely.”

One common argument for tax incentives is that in the competitive world of state economic development, states that fail to offer tax breaks to entice companies to invest or stay put will see investment and jobs shift elsewhere. Read the rest of this entry »

In a recent post on our blog, Paul Shinn looked at state tax incentives and made the case for holding them to the same standards of accountability as direct government spending programs.  In the new blog at Tax.com, David Brunori, who is among the most knowledgeable and sharpest tax policy experts in the nation, pulls no punches in taking aim at the bidding wars that often break out between states hoping to attract or retain manufacturing facilities. In this case, he’s discussing the competition between Indiana, Kentucky and Tennessee to lure Harley-Davidson to open a motorcycle assembly plant in their states. Brunori writes: Read the rest of this entry »

I recently attended a meeting of the state’s Incentive Review Committee. This board of citizens is appointed by elected leaders to review some of the hundreds of tax incentives we give to encourage specific economic activities. Dr. Larkin Warner, a member who also is a retired professor of Economics at Oklahoma State University, called the committee’s attention to two research approaches and current views on state tax incentives for businesses.

In the July 13 & 20 edition of Business Week, Jessica Silver-Greenburg asks Will Tax Breaks Boost State Jobs? She points out that incentives are a zero-sum game. Michigan might be better off for keeping a GM plant by spending $44 million in tax money, but the country is not.While state economic development officials defend the programs as essential to the state’s economic future,  Greg LeRoy of Good Jobs First, contends:

It’s a net-loss game for state and local governments. The only winners are the companies playing the tax game. Read the rest of this entry »

The Brookings Institution recently released a study of the continuing shift of jobs away from cities and toward the suburbs. According to Job Sprawl Revisited: The Changing Geography of Metropolitan Employment, only 21 percent of Americans who live in metropolitan areas work within three miles of a downtown area. All but three of the 98 areas studied have seen jobs move further away from the city center from 1998 to 2006. Nearly every industry is involved in this outward shift.

Only 21 percent of employees in the largest 98 metro areas work within three miles of downtown, while over twice that share (45 percent) work more than 10 miles away from the city center.

Oklahoma’s major metropolitan areas are joining in this trend. Our jobs are not as spread out as most metro areas, but lately they have been spreading faster. Just under a quarter of Oklahoma City (23.9 percent) and Tulsa (23.1 percent) jobs are 10 or more miles from the city center, compared to the national average of 45 percent. From 1998-2006, Oklahoma City share of jobs in this “outer ring” has grown by 4.6 percentage points; in Tulsa it grew by 3.8 percentage points. Both are considerably higher than the national average growth of 2.6 percent.

Read the rest of this entry »