Tax break deals need enforced
It sounds like a simple concept: Honor your promises and we’ll honor ours.
That is the message being sent by a variety of government entities across the nation that are revoking lucrative tax breaks for corporations that don’t live up to their end of the bargain and create the specified number of jobs.
The economy has hit nearly everyone hard, perhaps none more so than local governments who have seen revenue declines. Many corporations are also being forced to trim the fat.
But what is occurring in several places including DeKalb, Ill., and St. Louis is that these companies that are saving millions in taxes aren’t living up to their end when it comes to job creation.
Tax breaks are a necessary tool to attract corporations or economic development. The logic that the jobs created will put more money back into the community, spurring growth, is solid.
According to the Washington-based economic development watchdoggroup Good Jobs First, governments hand out an estimated $60 billion a year across the country.
Government officials are now looking at these job-creation promises a little more skeptically and putting clauses into contracts that give them more leverage to recoup or discontinue tax breaks if companies don’t meet the agreed upon requirements.
The jobs these companies create are vital to our communities because they keep people employed and inject money into the economy.
But tax breaks take money from the coffers of local governments and school districts, both of which are struggling to make ends meet in many cases.
Tax breaks should be a key part of making competitive proposals to attract companies to invest in our communities. But these must come with the understanding that both sides must live up to the agreements.