Chip Taylor

Two views on incentives

Biz journals covers Georgia's attempt to reduce the incentives offered to Rubbermaid, since they haven't moved as many HQ-related jobs to Georgia as they promised. This comes at the end of the article:

Experts are divided over whether incentive packages, such as those offered Newell Rubbermaid, benefit the taxpayer.

Economic policy expert Michael Mazerov says corporate incentives rarely are a boon for taxpayers since companies generally already have a location in mind, based on the logistical needs of their business.

"Most of the money gets spent on rewarding companies for things they would have done anyway," said Mazerov, a senior fellow at the Washington, D.C.-based Center on Budget and Policy Priorities, who says the perks typically are not "cost-effective."

But Randal Morris, assistant director for economic development services with the Small Business Development Center at the The University of Georgia, says states have little choice but to offer such sweeteners, since all of them do and companies have come to expect them, and that indeed, incentives can influence a company's ultimate decision to locate in a region.

"Incentives are a necessary component of the economic development process," Morris said.

"By virtue of not having them, a state places itself at an economic disadvantage," he added.

I'd say they are unavoidable, rather than "necessary," and add that the influence on location decisions is marginal. Other than that, both experts are pretty much correct.