Incentives Watch: Sour Economy Throws Harsh Light on Job Incentive Deals


The District of Columbia recently enacted a law giving LivingSocial certain real property tax and corporate income tax abatements, starting in 2015, for hiring and maintaining employees who are District residents, reports a Bloomberg BNA Weekly State Tax Reportarticle.

However, despite these tax incentives, LivingSocial recently announced that it is laying off 400 employees. Of those 400 employees, 160 workers are expected to be laid off in the District, reports the Washington Business Journal.

The effectiveness of job incentives is the focus of a major series published recently by The New York Times, which includes an interactive graphic showing the amount of funds each state devotes annually to business incentives and a searchable database analyzing more than 150,000 awards.

The beneficiary of perhaps some of the most sour jobs incentive deals from state and local governments, according to The New York Times, was General Motors Corp. The New York Times reports that, after the car manufacturer received millions in tax credits, it closed its manufacturing sites and “walked away.” Thanks to a federal bailout, GM is once again profitable. But, many of the towns the company struck jobs incentive deals with “have not been so fortunate, having spent scarce funds in exchange for thousands of jobs that no longer exist.”

Because many state and local agencies do not keep track of how many jobs are actually created by the company receiving incentives, it is hard to know whether the incentive awards are really worth the cost to taxpayers, notes the article.

The New York Times’ investigation examined and tallied thousands of local incentives granted nationwide and has found that states, counties and cities are giving up more than $80 billion each year to companies.

For more information about the various tax credits and incentives available in each state, check out Bloomberg BNA’s State Tax Portfolios.


In other developments . . .

The Hawaii Department of Taxation released temporary regulations that change the way taxpayers calculate their renewable energy technologies tax credit for “other solar energy systems,” such as photovoltaic systems, according to a Bloomberg BNA Weekly State Tax Reportarticle.

By: Kathleen Caggiano

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