By Gina Jordan
http://stream.publicbroadcasting.net/production/mp3/wfsu/local-wfsu-896885.mp3
Tallahassee, FL – There's been a lot of talk this session about tax credits and other subsidies to spur job growth and boost Florida's economy. Some lawmakers call such incentives a proven economic engine that will grow revenue. But not everyone thinks tax breaks are the best way to help.
Amid record high unemployment, state lawmakers have put forth a lot of so-called jobs bills during this session. They include tax incentives for large companies that have the ability to grow and hire more workers. One example is the Florida Ports Investments bill, which provides for tax credits to companies that invest in qualified port projects in Florida. It's sponsored by Senator Jeremy Ring, Democrat of Margate.
"We need to do this to stay competitive because it's one of our most important industries, and if we don't do this, we will actually lose a big chunk of this industry."
John Hall, Executive Director of the Florida Center for Fiscal and Economic Policy, says the thing about subsidies and other tax incentives is that they take revenue away from the budget that could be used to fill a need, like solving what educators refer to as the talent gap.
"We have over one-million people who are unemployed. We've lost 900-thousand jobs, which is important. But the best way to attract business and to expand business is through the quality of our life and through investments in our educational system."
Hall says lawmakers choose winners and losers when they dole out tax credits. He says small businesses, which represent the bulk of employees in Florida, tend not to get those subsidies. Besides, he says any business with products or services that are in demand will hire workers regardless of whether a tax credit is available. A group that believes there is a place for such incentives is Florida Taxwatch. Kurt Wenner is the group's Director of Tax Research.
"We think the tax credits for hiring people off the unemployment rolls, the direct tax credit, is a good one. The film and entertainment industry credits have some promise. So there's a lot of things that are moving right now and generally, we think they're pretty good investments if they can really be tied to job creation."
One economic development bill would convert cash grants into tax credits for digital media, films, and other entertainment productions. Hall's Economic Policy Center takes the stance that the state has needs right now and can't wait for the impact of those productions on our economy.
"We're already a low tax state in Florida, one of the lowest tax states in the country. There's no certainty at all that those dollars will in fact by themselves attract the film industry to do more films and entertainment type media projects that will result in additional jobs."
Other proposed legislation would put an $18-thousand sales tax cap on boats and airplanes sold in Florida. Supporters say it will create jobs by spurring sales of those expensive items. But Hall says anyone who can afford a yacht can afford to pay the full sales tax.
"If you look at the exemption that would be provided for, let's say, a $10-million yacht under an $18-thousand cap; that's a loss of revenue of over $500-thousand dollars roughly. That $500-thousand could pull over two-thousand people off of a long waiting list for developmental services."
Wenner says Taxwatch has looked closely at tax caps on yachts and airplane purchases, and he sees a problem with that argument. He says Florida isn't collecting the revenue now, because buyers know they can purchase those giant-ticket items in other states without paying taxes.
"So not only are they not collecting any tax from that now, the affiliated industries like maintenance and repair...that's not taking place here either. So trying to keep all that stuff here, in the boating industry, nobody has more shore line than Florida, so it makes sense that we would be the leader, and we're not at this time."
The Economic Policy Center believes tax credits are really just the state sending limited revenue to wealthy individuals and profitable corporations at the expense of meeting the needs of families. But Wenner says you could say the same thing when voters agree to increase the sales tax by a penny.
"If you target tax credits correctly and you create a better economy, create jobs, that's going to end up inducing more economic activity, and then that will bring in tax revenue on its own. So really the best way to have a healthy state revenue system is to have a vibrant economy, and we think things that can help to do that are worth the investment."
Both organizations, described as nonprofit and nonpartisan, agree that investment in all levels of education and job training are essential, with a focus on turning out talent for high tech, high wage jobs.