(Doug– if you e-mail me the graphs, I’ll edit them into the diary. – promoted by JulieWaters)
this is a memo I sent recently to legislators on House Ways & Means, Senate Finance, House Commerce, and Senate Economic Development; it concerns the Financial Services Tax Credit program (a gift from Howard Dean to one of the Chittenden “Bishops” Harlan Sylvester, a securities broker AND a political broker)
note: unfortunately, I cannot figure out how to post the graphs, but I think you’ll get the point; especially when you read the last paragraph
note also that this is an opportunity to save money (or at least redirect it) that those who bitch about “welfare fraud” are loathe to acknowledge
TAX INCENTIVES REVISITED
As you consider what to do with the VEGI tax “incentive” program, I offer the following cautionary tale. Although not a perfect analogy, the Financial Services tax credit program (which was mercifully allowed to sunset) illustrates the risks of such a strategy.
The three graphs at right show job growth before, during, and after the program. In all three sectors, growth was positive before the program and generally continued with little change (except for Holding Companies where one firm bumped the number in `97).
Two of the three sectors grew during the market expansion in the late `90s but leveled off or declined with the recession (and one grew a bit after the program was scuttled). This shows why tax “incentives” are not long-term investments. Market conditions are much more important than taxes.
Here is the tale of the tape: job change by NAICS code.
523 32 more jobs then in `01
55111 22 fewer jobs then in `01
525 42 fewer jobs then in `03
So after spending over $10 million in foregone revenues, we have 32 fewer jobs now then before the last recession. And this data is from the 2nd quarter of 2008 (latest available). It will only get worse when the figures for the 2nd half of 2008 are published. And they call this economic development?
The graphs as Doug e-mailed them to me –Julie
Clicking on them gets you a version twice the size.