While politicians often pay lip service to small businesses for their job creation and economy boosting, big businesses are the ones who are awarded most of the state-level economic development incentives, according to a new study by Good Jobs First.
The study, funded by the Surdna Foundation and Ewing Marion Kauffman Foundation, looked at more than 4,200 economic development incentive awards in 14 states—including North Carolina—and found that 70 percent of the awards and 90 percent of the dollars went to large companies.
In North Carolina, the study analyzed the One North Carolina Fund from 2008 to 2013, which covered 182 deals totaling $26.4 million. Large companies (such as General Electric, Smithfield Foods, Goodyear and Bayer) were awarded 93 percent of these deals and 95 percent of the dollars, according to the study. The One North Carolina Fund, the study says, is a broad incentive program, requiring a local government match but no minimum threshold for job creation, job retention or investment. Projects must pass a wage test, however, and an economic impact analysis is used to review and determine subsidy amounts, which are given as cash grants in installments as benchmarks are met.
“Given small businesses’ important role in the economy—and their still-lingering credit access problems coming out of the Great Recession—this massive allocation of tax breaks to big businesses is wasteful and ineffective economic development policy,” the study said.
Good Jobs First also recommended that states reform their incentive rules by narrowing eligibility to exclude large recipients.
