Pennsylvania offers tax credits for research and development, and has hit its capped total – currently $55 million. This raises a question: should governments be providing tax credits for R&D? Why? And if so, what types of R&D? How does the state know that it’s supporting the most valuable research and development efforts for society? These are questions about consumer preferences – a question that government’s are typically ill-equipped to answer.
The Providence Journal reports that a property developer was awarded $2.5 million in tax credits to redevelop an office structure.
In addition to the state historic tax credits, Chace is seeking a property tax stabilization agreement with the city. A City Council committee will discuss a proposed 12-year stabilization agreement for the Kinsley Building later this month.
How much bread can $13 million buy? In New Jersey it will buy the entire bakery, after The New Jersey Economic Development Authority guaranteed an Italian bakery $13.5 million over 10 years under New Jersey’s “Grow NJ” tax credit program. The bakery, which was considering moving its operations to Pennsylvania, cannot be totally faulted for accepting the tax credit, as a rival bakery benefited from $9.1 million of tax-exempt bonds in 2008. In some sense this recent move can be seen as “leveling the playing field” between the two companies but it does not benefit the other bakeries in the state, or the taxpayers.
”Why is NJEDA financing competitors? And why should taxpayers have to shore up the hoagie-roll industry, anyway? Aren’t there banks in the state? NJEDA papers show that [the] grant, which depends on the bakery actually saving the promised jobs, fulfills state Grow NJ program requirements. And that the [rival’s] financing met federal tax exemption requirements”
Most states have tax incentives for film production, but these incentives don’t always pay off. From the USA Today:
“Policymakers think they are a little bit sexy and they can be messaged as a tax cut,” said Scott Drenkard, an economist with the Tax Foundation. “But it doesn’t comport with the economic evidence that these tax credits in particular don’t have really tangible benefits to them.”
Drenkard pointed to an analysis done last year by the Tax Foundation that found film tax incentives generate 30 cents in tax revenue for every dollar spent. “It’s a question of, do you want to use the tax code to subsidize some businesses at the expense of others, or use it for what it is meant to be used for, which is to collect revenue for government services?”
The Los Angeles Times reports that the FBI is looking into the activities of a lawmaker with regards to a tax credit proposal he made. From the article:
Calderon pushed to extend tax breaks to productions of less than $1 million. He and family members received a total of $10,800 in campaign contributions from an independent producer who could have benefited from the change Calderon advocated.
Despite a dubious track record, states continue to award tax incentives for job creation. Some of the latest tax credits awarded went to twelve companies in Ohio. The Cincinnati Business Courier reports:
The companies are expected to create 1,265 jobs across the state and more than $66.4 million in new payroll while providing $187.4 million in investments.
The Tax Foundation put together an informative map of state business tax credits.
In a case of deliberate “double dipping,” a building project in Newark, NJ could receive government support from three different programs. From The Star-Ledger:
The state Economic Development Authority yesterday approved $23.8 million in tax credits under the Urban Transit Hub program, and $8.3 million under the Economic Redevelopment and Growth Grant program for the Newark project. It also cleared the way for the city Financial Board to approve $6.5 million in redevelopment bonds, which will be purchased by Prudential Insurance.
Darius Dixon from Politico.com has recently covered the latest investigations that have occurred in Oregon, concerning wind farms and the new tax credits and loan guarantee that companies like Solyndra are receiving.
An Oregon newspaper’s investigation into the state’s support for a massive wind project is scratching at old wounds about the federal Energy Department’s loan-guarantee program.
A series of stories by Oregonian reporter Ted Sickinger has raised questions about the state energy department’s decision to offer tax credits to Caithness Corp.’s Shepherds Flat wind project. But his latest article also cites past divisions within the White House about federal support for the project, which the U.S. Energy Department awarded a partial loan guarantee of $1.3 billion in 2010.
Andrew Evans from The Washington Free Beacon reports the bankruptcy of Flabeg Solar, a mirror manufacturer from PA. The mirror manufacturer’s bankruptcy might severely affect the stability and economic efficiency of some of the solar projects funded by the government. The company has received $19 million in state and federal grants, loans, and tax credits.
Flabeg Solar U.S. Corp., a mirror manufacturer based in Pennsylvania, filed for bankruptcy on Tuesday after it could not afford to pay several former employees their severance packages, the Pittsburgh Post-Gazette reported.
Flabeg is reported to have received millions of dollars in financial assistance from federal and sate governments. Pennsylvania helped the mirror manufacturer build its plant near Pittsburgh with $9 million in grants and loans. The Obama administration awarded Flabeg $10.2 million in tax credits, according to the Post-Gazette.