U.S. economic downturn has made many states in the United States to implement strategies to boost economic developments of their respective states using different economic incentives to attract investors. Recognizing the needs to be competitive nationally and globally, New Jersey legislative house has sponsored the “New Jersey Economic Opportunity Act II of 2013” with the aim of fostering an economic development in the state. The goal of Economic Opportunity Act is to improve the panoply of economic incentives to encourage companies in the United States and outside the United States to invest in the state to boost employment opportunities and revenues of the state.
Several states in the United States have also implemented similar programs to enhance economic growth. Example of these states includes Wisconsin, North Carolina, Missouri and Mississippi. Missouri used the BUILD (Business Use Incentives for Large-scale Development) to stimulate 1,410 permanent jobs in 2011 fiscal year. Few years after the introduction of the program, the company such as IBM and Express Scripts implemented business plan to create more jobs in the states to derive benefits from the incentives.
Moreover, the program attempts to strengthening job creations as well as enhancing New Jersey’s competitive advantages in the global economy. Under the program, the New Jersey introduces Grow NJ (Grow New Jersey Assistance Program) and ERG (Economic Redevelopment and Growth Program. The goal of Grow NJ is to stimulate job opportunities by using tax incentive program. 1 Additionally, the Grow NJ is used to allocate base tax credits ranging between $500 and $5,000 to attract more companies into the states. The New Jersey will also use ERG to implement tax incentive program by allocating tax credits for residential projects to achieve the state’s developmental goals.
Thus, both Grow NJ and ERG are to stimulate jobs and enhance economic growth. However, New Jersey may still face constraints with the program’s implementation because the state may face criticisms from the public that public officials are using the state’s funds for firms’ growth.
Section I: Introduction & Methodology
Faced with harsh economic and high unemployment rates, many states introduced tax incentives to stimulate economic growths. Michigan introduced film tax incentives in 2008 to promote the film production in the state. Nearly 60% of tax credits was offered to film producing firms depending on the community the film was shot2. Since the program has been introduced in 2008, more than 100 films have been produced in the state. Some states also use property tax exemptions to enhance investment growth and create jobs. In 2009, Ohio launched the real personal or property tax incentives in exchange of capital investments. Since the programs have been introduced in 2009, Ohio has received projects that worth $440 million.3.
Some states also introduced a reduction of taxable income thereby reducing tax bills of participating entities. Many states attract businesses using sales tax exemption on the overhead costs thereby attracting business investments to their states. For example,
Missouri is currently offering varieties of economic tax incentives to induce economic growth and boosting employment opportunities in the state. 4. Missouri introduced BUILD (Business Use Incentives for Large-scale Development) to create 1,410 permanent jobs by 2011 fiscal year. Following the launching of BUILD, the IBM Service Center has committed to employ several hundred workers to meet the incentives offered by the state and receive the incentive packages. The employment records of IBM have increased at Columbia facility from 143 to 349. Moreover, the company hired new 800 technical personnel in 2012. 5.
Despite the convincing arguments presented by the literatures concerning the economic incentives to promote the economic growths of participating states, Chirink, & Wilson provide a contrasting argument by pointing out that some states do not enjoy economic benefits from the economic incentives6 . For example, Enterprise Zone Program launched in California to create employment opportunities for economically disadvantaged workers does not have impact on job creation. Hagen also argues that economic development incentive programs may not be cost effective for states because firms generally invest in states that have abundant skilled workforce, cheap suppliers and quality infrastructures. 7
Following the analysis of the literatures, the New Jersey could still record economic growth and boost employment opportunity with the Economic Opportunity Act. Analysis of the literatures has shown that economic incentive programs are cost-effective, which assist states to reach their goals. Missouri with its tax incentive program is able to increase the net tax revenues, new capital investment, job opportunities leading to the increase in the overall welfare of the state’s residents. As being revealed in Appendix 1, New Mexico, Louisiana, and Hawaii enjoy economic growth from the economic incentives programs few years after launching of the programs. Thus, New Jersey will boost the state’s economic growth following the implementation of the program.
History of Tax Incentive Financing & Proposed Model of Analysis
Buss, 9 argue that states have started offering tax related incentives to businesses since the British colonization of the United States and the number of incentives has increased since that time. During colonial period, colonial used tax related incentives to attract skilled artisans and entrepreneurs to colonial towns. For example, New Jersey offered Alexander Hamilton tax incentives in 1791 to attract entrepreneurs to the state. Moreover, some states financed infrastructures and offered capital incentives to private industries as early as 1800. By 1844, Pennsylvania invested over $100 million on 150 corporations. Similarly, Philadelphia and Pittsburgh engaged in an intense rivalry making the states to engage in substantial investments in railroads, banks, roads and bridges.10. Similarly, the Mississippi introduced tax-exempt bond program to attract entrepreneurs and industry to the state. In 1949, “Maine authorized the first statewide business development corporation. By 1959, 21 states had similar corporations.” 11. In 1955, New Hampshire granted loans to industries through industrial finance authority, and by 1963, nineteen more states had created similar authorities. Between 1956 and 1963, 17 states introduced tax concession. Following the unemployment crises between 1970s, and 1980s, states engaged in economic growth incentive wars and in 1990s, several states competed intensely among one another using tax incentive programs.12. Between 1980s and 1990s, states in the United States began to replicate one another programs by offering different variations of tax incentive programs.13.
As being revealed in Appendix 2, half of the states in the United States use 15 most common economic tax incentives to attract investments in their respective states between 1986 and 1996. In 1996, 12 of these incentives were used by two third of the states.14.
By 2000s, different states introduce various tax credit programs to attract local and international investors. Delaware introduced tax credit programs in 2000 to attract large projects into the state. Eight years after the adoption of the programs, Delaware has recorded a remarkable success because the state has recorded a 75% increase in the annual activity.
Section III: Economic Opportunity Act of 2013
New Jersey Economic Opportunity 2013 is a revolutionary economic development program aimed to enhance the state’s economic growth. On September 18, 2013, the New Jersey legislature passed Economic Opportunity Act into law. The Act phases out three economic development programs while expanding two of the programs, and the law places more emphasis on job creation and job retention. Theoretically, the job creation tax incentive exemption program is aimed to increase overall employment opportunity in New Jersey. The growth of employment opportunity will act as a catalyst for economic growth. Moreover, the economic development will lead to the consumption of vacant office space and stimulate addition growth through multiplier effects.
The NJ Economic Opportunity Act consists of four basic main components:
(1) Phase-out of former three existing programs that include “Business Retention and Relocation Assistance Grant Program” (BRRAG), Urban Transit Hub Tax Credit (UTHTC), and Business Employment Incentive Program (BEIP).
(2) Provision of substantial expansion of tax credit program using the Grow NJ to finance Mega Projects and projects located at the Garden State Growth Zone and Urban Transit Hubs.
(3) Allocation of $600 million worth of tax credits under the RG program for qualified residential projects targeted to develop areas such as eight South Jersey counties, and Urban Transit Hubs.
(4) “Authorization to create Garden State Growth Zone Development Entities.” 16.
Under the Economic Opportunity Act, the New Jersey set aside the initial $200 million of UTHTC program to finance Grow NJ. The purpose of UTHTC is to:
provide Tax credit program,
Encourage capital investment in the eligible municipalities.
There are only nine eligible municipalities qualified for the programs and they are as follows:
Camden,
East Orange,
Elizabeth,
Hoboken,
Jersey City,
Newark,
New Brunswick,
Paterson and Trenton17.
However, the government phased out the UTHTC program and created Grow NJ to stimulate job opportunity in the state. The amended NJ Grow program offers economic growth incentives for New Jersey businesses within which businesses can qualify. Typically, the Act provides bonuses for business to drive up economic development in the state.
Part of the programs is the Growth Grant Program (Grow NJ) and Economic Redevelopment and Growth (ERG). Both programs aimed to stimulate economic development in the state. Typically, the NJ GROW program is designed to increase the state capacity by offering economic incentive packages to businesses operating in the state. “The Grow NJ is a tax credit program” 18, and ERG is primarily designed to boost capital project within the state. Both programs are designed to offer substantial credits to qualified employers. The ERG also offers annual incremental tax benefits for up 20 years and the annual incremental tax benefits may be up to 75% of the state tax and 85% of the state tax if the business is located within the Garden State Growth Zone.
Under the Grow NJ, the New Jersey offers the base tax credits between $500 and $5,000 per job and per year. Bonus credits also range from $250 to $3,000 per job and per year. The Grow NJ also aims to expand geographical boundaries in the state. Similarly, the New Jersey offers the ERG under the Economic Opportunity Act to increase the state grants. The ERG also offers tax credits to residential projects to enhance project development within the state.
The Economic Opportunity Act also intends to enhance project development using Offshore Wind Economic Development Program and Public-Private Partnership Program. Using the Grow NJ, the state attempts to attract mega projects from the sectors such as energy, defense, manufacturing, logistics and aviation. Under the mega project scenario, the state aims to attract:
capital investment of approximately $20 million with 250 jobs retained / created or 1000 retained or created, businesses from Urban Transit Hub with capital investment of approximately $50 million with 250 jobs retained or created.
Grow NJ also aims to provide assistance to distressed municipalities under the Municipal Urban Aid. The program will assist qualified municipalities under the program to receive assistance under the Municipal Urban Aid Program. New Jersey also intends to attract industrial construction by offering aids to firms that bring capital investment to the state. For a firm to be eligible for the tax credits, the company must meet the requirements for minimum capital investment as presented below:
Requirements for Minimum Capital Investment
$/Square Foot
Industrial — Rehabilitation Projects
$20
Industrial -New Construction Project
$60
New Construction Projects
$40
Office — New Construction
$120
“Minimum FT Employment Requirements”
New Minimum Jobs
Tech Start Ups & Manufacturing Businesses
10
Other Targeted Industries
25
All Other Businesses & Industries
35
The Appendix 3 also presents the project category per employee as well as base amount per employee.19
Despite the strategy used in the design of NJ Economic Act program, there are still limitations to the state’s tax incentives. First, the Grow NJ does not reflect overall program caps to total number of projects combined. Moreover, the Act imposes caps and limits on the total number of credits available for individual projects. There is still a shortcoming on the 50% rule for retained jobs. The program offers 100% credits for the new job created, however, the program only offers 50% of each job retained. Employers could abuse the program by creating additional jobs to receive 100% credits, and do not consider of retaining the job.
The study presents the theoretical analysis to enhance a greater understanding on the reason states offer incentives. Using theoretical frameworks, the paper is able to link tax incentives to economic growth.
Section IV: Theoretical Analysis: Effect of Tax Incentives on Economic Growth
Economic theory offers an explanation on the negative relationship between high taxes and economic growth. Taxes raise cost of operations and lower firms’ returns. Taxes also create disincentive to invest. Firms operating in the states using high corporate taxes will always engage in activities that will minimize their tax burdens. To reduce tax burdens, individual firm may engage in a less productive activity thereby lower economic growth of the state. Moreover, if firms perceive that taxes are too high relative to the services that government offered, they would relocate to other jurisdictions.20. Thus, the tax concepts suggest that states must provide lower tax rates to enhance economic growths. Economic theory also argues that if state’s tax is lower than the federal tax, the tax rates offered by the state will have positive effect on economic growth. On the other hand, if states and federal have an equal tax rate, states may experience negative growth rates.
The theory of consumer and producer surplus also argues that tax incentives are used to generate either consumer or producer surplus. When firms relocate to a state, the relocation will enhance local market for inputs and outputs. In both cases, workers and consumers benefits from firm’s presence because both consumers and producers are better off following firms’ presence.
Historically, firms establish their business entities in states that could assist them to achieve competitive market advantages. Since 18th century, states have employed several tax incentives to attract firms to their respective states in order to stimulate job opportunities. The theory of firm argues that the major objective of firms is to make profits, and firms will only locate their businesses in geographical locations that will assist them to maximize their business objectives. In realization of firm’s business goals, states have competed among one another by offering different incentives to firms. A state that fails to implement a program that will attract firms will face challenges in stimulating economic growth rate. Before the implementation of MEGA, Michigan was ranked 47th out of the 50 states in the United States with reference to the economic growth rate because the state failed to provide high quality economic infrastructure such as roads. Moreover, the quality of the public services such as police, education, and fire protection was poor, and the state’s corporate tax was high.
Buss uses the competitive advantages theory to argue that states have always use tax incentives to enhance firms’ competitive forces20. Thus, states must offer tax incentives to enhance firm’s competitive advantages. However, economic theory points out that society must implement a tax incentive policy that must enhance productivity. Typically, tax incentives contribute to overall economic welfare, increase future consumption as well as enhancing net increase of overall investment. A state can discourage emigration of workers by offering tax incentives to firms. Moreover, the incentives are used to attract outside firms as well as shielding businesses from competitions. Thus, public officials offer tax incentives to protect their states from losing businesses to other states. Buss further argues tax incentives have been the economic tools to enhance economic development, and many states have always use tax incentives to influence business development by protecting and rescuing small business from failure21.
Wasylenko, & McGUIRE also contribute to the argument using the economic theory to point out that increase in the overall level of taxation discourages employment growth 22. Factors such as increase in state’s spending on per capital income and education favor job growth. Poulson, & Kaplan carry out the regression analysis on the impact of marginal tax rates on economic growth, and the results of the analysis reveal that higher marginal tax rate has a negative impact on economic growth.23 The justification of economic growth is that states must provide subsides to firms through tax incentives, and if firms are given many opportunities through incentives, they will improve state’s economic growth and enhancing job opportunities. Justification of economic theory is that there will be an underutilization of resources if states do not provide incentives to firms. To evaluate the benefits that states stand to gain from tax incentives concepts, the cost-benefit analysis is the most widely mechanism. Cost-benefit analysis reveals that tax incentives must reflect both short-term and long-term economic gains to increase job opportunities and enhance economic growth. The amount of tax incentives offered should be significant to have any real impact on corporate decision-making.
Despite the theoretical arguments that point out the benefits associated with tax incentive programs, there are still conflicting arguments about the effectiveness of tax incentives. Many professional associations, public interest groups as well as local and state officials are trying to limit the application of tax incentives by arguing that tax incentives are costly, detrimental and ineffective to corporate welfares. 24. However, supporters of tax incentive claim that tax incentives work and can assist states to achieve an economic development .25. Despite the conflicting arguments about the incentives, Buss, maintains that states in the United States have started to replicate one another programs by offering variations of different possible tax incentives. 26. The history has revealed that virtually all states that implement tax incentives are able to increase their net revenues thereby improve overall economic growths.27. States have continued to introduce different incentives and tax credits to enhance economic development. This study argues that benefits that states derive from the programs are higher than the costs used in the program implementation. That is the reason many states have continued to introduce incentives and tax credits enhance positive economic growths.
Section V: Examples of Similar Economic Development Models in Other States
Within the past two or three decades, many states have applied the economic theory and theory of firm’s competitive advantages to stimulate growth and create job opportunities. Typically, states have used the economic development models as a guide in the application of tax incentives programs to create jobs and enhance economic growths. In 1986, thirty-one states introduced job creation tax incentives and 44 states introduced the same program in 1996. For example, the Wisconsin State government introduces different job creation tax incentive programs in 2012 to create job opportunities and enhance business growth. 28 . The Wisconsin introduced agricultural and manufacturing tax credits to serve as incentives for business opportunities. The incentives have assisted Wisconsin to become one of the best locations for business opportunities.29
The Wisconsin the tax credits for the manufacturing and agricultural companies are phased are as follow:
Tax year 2013 = 1.875%
Tax year 2014 = 3.75%
Tax year 2015 = 5.526%
Tax year 2016 and beyond = 7.50%.
Companies can also qualify for exclusion from incomes if firms are able to create jobs within the state and exclusions are revealed as follows:
Small businesses earn $4,000 per employee,
Larger businesses earn $2,000 per employee.
Similarly, Mississippi introduced the “Tax Incentives, Exemptions and Credits” (p.1) programs in 2011.30 Under the program, the state offers different tax incentives program such as Jobs Tax Credit and Investment Tax Credit. The goal of the tax incentives is to boost investment and job opportunities.
Moreover, the New Mexico introduced the “High Wage Job Tax Credit” to improve the household income and increase the number of workers receiving higher incomes. Between 2008 and 2011, the state increased the benefits derived from the program from $9.3 Million in 2008 to $28.3 Million at the end 2011 fiscal year. Moreover, the Louisiana introduced “Severance tax Exemption for horizontal drilling” to enhance the growth of drilling firms in state. Following the implementation of the program, the state increased the net revenue from $285,000 in 2007 to $239 Million at the end of the 2010 fiscal year. Hawaii also offers the renewable energy tax credits to increase number of firms using a renewable energy for the production of goods and services. Following the implementation of the program, Hawaii has been able to increase its revenue from FY2010 $34 Million to FY2013 $260 Million.
Missouri introduces BUILD to stimulate job growth in the state and following the implementation of the program, Express Scripts Company has created thousands of more jobs in order to receive tax incentives under the program. Typically, the company has employed 3,129 employees across the state with average earning of workers reaching approximately $71,000 per year. Moreover, the company has committed to create 1,079 new full-time jobs in exchange of the incentives. The company has also spent over $270 million on the capital improvement investments within Missouri. Overall, the company has induced annual improvement in the metropolitan areas, which worth $986 million per year. By any metric, Express Scripts’ long-term investments are among the high-profile projects in the state. “The real economic development originally envisioned when the tax incentive programs were developed.” 31
North Carolina also offers similar economic growth program by introducing “Job Development Investment Grant Program that became effective in January 2003 and provides grant disbursements to new and expanding businesses.”32 Following the launching of the program, Red Hat, Inc. invested over $30 million capital expenditures in the state leading to the creation of 240 new jobs, and the program has generated net positive returns for the state.33 Moreover, North Carolina is expecting to receive a boost of U.S.$729 Million of the gross state product from the program. Using the tax incentives, the program is also expected to deliver a $21 million gain in cumulative net revenue. 34
Similarly, Michigan introduced MEGA (Michigan Economic Growth Authority) to enhance economic growth and stimulate job opportunities. Before the implementation of MEGA, the state’s unemployment rate was 8.8% in 1992, above the national rate of 7.4%, and in 1990, the state business climate was ranked the lowest in the United States. In business climate, the state was 47th in the United States. Overall cause was unfavorable government policies, which include high marginal income tax rates and unemployment insurance costs. The state implemented MEGA program in 1995 to attract investments. Under the program, the government reduced the tax burden and assisted firms using industrial revenue bonds. Following the implementation of MEGA, the unemployment rate dropped to 4.2% and was below national average of 4.9%. For the first time since 1966, Michigan unemployment rate was below national average. 35.
Delaware legislature also passed a bill in 2001 to create Preservation Tax Credits program to enhance job opportunities. Between 2001 and 2009, the program assisted the state to create total of 2,479 more jobs and the program offered household incomes reaching approximately $89,779,000. Moreover, the program increases the manufacturing and construction activities within the state. Within Delaware, one million dollar manufacturing activities have been able to generate average of 9.2 jobs and $1 million new construction activities generate average of 11.2 jobs.36
The New Jersey is aiming to offer similar programs offered by other states by introducing Economic Opportunity Act to enhance business opportunities. Typically, the state will derive several opportunities from the implementation of the Act; however, the New Jersey might still face several constraints in its implementation.
Section VI: Opportunities & Constraints of the Economic Opportunity Act of 2013
The section discusses the opportunities and constraints that New Jersey could face from the implementation of Economic Act 2013. The opportunities are the benefits that the state will enjoy from the program, while constraints are the setbacks that the state will face from the program’s implementation.
Opportunities
The implementation of Economic Opportunity Act of 2013 will make the New Jersey to enjoy derive several opportunities. First, the state will be able to stimulate economic development from the program and this will enhance job opportunities in the state. Claudio, and Gondim argue that tax incentive is an instrument of economic stimulation, and tax incentives stimulate investment opportunities in the states or countries that offer this type of program. 37. Tax incentives could also stimulate development in key sectors of the economy and enhance job opportunities. Bartik also point out that tax incentive programs encourage business to relocate and expand their businesses in the participating states38. Historically, the economic and tax incentives are costs effective, which assists states to reach their goals. With economic incentive program introduced by the New Jersey, the state will be able to create thousands of job positions thereby boosting job opportunities.
Moreover, New Jersey will use the Economic Opportunity Act 2013 to attract new firms. Major business objectives are to maximize profits to create values for shareholders as well creating values for other stakeholders. The tax benefits offered by the state will make firms to achieve their main objectives. To achieve their profit maximizing objectives, firms are obliged to establish their businesses in the states that offer tax incentives. With the implementation of Economic Opportunity Act, the New Jersey will be able to attract new firms from other states in the United States and outside the United States thereby boosting job opportunities in the state. The KPMG provides the findings of the survey that reveal the opportunities of tax and credit incentives. The findings of the survey reveal that incentives play critical roles in the firm’s strategic decision. When firms decide to offer an expansion, they consider incentives and credits offered by the particular state before locating their businesses to that state. Typically, 35% of the survey respondents agree that firms consider incentives before making decision on capital expenditures, and 30% of respondents agree that firm consider tax incentives in making decision on mergers & acquisitions and real estate portfolio management. While 28% of respondents state that firms consider tax incentives when making decisions on business expansions and business relocation 39.
Before the enactment of the program, many workers in New Jersey found themselves unemployed because many firms are unable to retain the jobs offered for a long time. The Economic Act attempts to eliminate the job lost to increase job retention across the state. Following the implementation of the programs, many firms will be obliged to retain the jobs offered to workers because of the understanding that they will enjoy credits from job retentions program. Moreover, the new Act will encourage more firms to implement capital projects to create more jobs in the states because firms have now understood that they will enjoy tax credits with more jobs created within the states. The incentives will also encourage different firms from other states to relocate their business to the state, and relocation of more firms will attract skilled workforce into the state. With proper implementation of the program, the state will be able to increase household incomes of the state’s residents thereby increase people standard of living.
Constraints
Despite the opportunities that the New Jersey stands to enjoy from the Economic Opportunity Act of 2013, the state could still face several constraints from the program’s implementation. Ignorance of many firms about the programs might hinder the New Jersey to enjoy the full benefits from the program. Thus, the New Jersey still needs to disburse part of its financial resources for the promotion of the program to make larger number of firms in the United States to be aware of the new programs. Moreover, unavailability of skilled workforce for the program’s implementation could serve as another constraint. New Jersey government will need to hire more tax professionals to implement the program, however, many tax professionals in the United States prefer to work for high paying companies or be self-employed.
Competitions from other states implementing similar programs will also serve as constraints. New Jersey will face stiff competitions from other states in the United States. The study has identified several states that offer similar tax incentive programs to stimulate economic growth and create more jobs. Missouri is one of the states that have already implemented similar incentives. Thus, successful implementation of the NJ Economic Act 2013 will encourage more states to introduce similar incentives thereby serve as competition to New Jersey economic programs. Typically, some states may introduce new programs that offer better incentives and tax credits to firms in order to encourage relocation of businesses in their respective states. Better incentives offered by other states may force already established businesses in the New Jersey to relocate to these states. Thus, New Jersey may still need to continue improving on the program to enhance job retention. With the program improvement, New Jersey will need to offer better incentives in the future to continue enjoying benefits from the program.
Conclusion
The study evaluates the New Jersey tax incentives program that New Jersey has introduced in 2013. The programs consist of NJ Grow Assistance Program and ERG (“Economic Redevelopment and Growth Program”) and the goal of Grow NJ is to provide tax incentives to firms thereby creating more job opportunities. The goal of ERG is to enhance the investment of capital projects. The study also carries out the SWOT analysis of the program and the findings reveal that New Jersey will derive several opportunities from the programs. However, the state will also face constraints with program implementation. Overall analysis reveals that New Jersey will stimulate economic growth and create more job opportunities from the programs.
Notes
1. New Jersey Economic Development Authority, “NJ Economic Opportunity Act of 2013.” USA. 2013.
2. Lawrence, Edward.C., and Briskin, Ellen, Qu, Qing-Jiang. Review of State Tax Incentive Programs for Creating Jobs, Journal of State Taxation.2013.
3. Ohio Department of Development, “Ohio Enterprise Zone Program Annual Report,” USA. 2009.
4. The Pew Charitable Trusts, “Frequently Asked Questions About Economic Development Tax Incentives,” USA. 2013.
5. Jacob, B. IBM Reports 349 Workers at Columbia Center, Columbia Tribune, May 27, 2012.
6. Chirinko, Robert .S., and Wilson, Daniel.J. Job Creation Tax Credits and Job Growth: Whether, When, and Where? Department of Finance, University of Hall. Chicago Penguin 2010.
7. Hagen, Kevin. Are State Tax Incentives for Hiring Effective in Creating Jobs? Yahoo Contributor Network. 2013.
8. Ibid 15
9. Buss, Terry, F. The Effect of State Tax Incentives on Economic Growth and Firm Location Decisions: An Overview of the Literature. Economic Development Quarterly, 15(1985): 90.
10. Ibid 90
11. Ibid 90
12. Ibid 93
13. Markusen, A.R. Reining in the Competition for Capital.USA, Upjohn Institute. 2005
14. Ibid Buss 94
15. Ibid Buss 94
16. Windels Marx, “Tax Incentives Overhaul Legislation: New Jersey Economic Opportunity Act of 2013.” Windels Marx LLP. 2013
17. Zangari, Ted, “Highlights of the New Urban Transit Hub Tax Credit (UTHTC) Program.” Sills Cummis & Gross P.C. 2009.
18. Deloitte, The New Jersey Economic Opportunity Act of 2013 Consolidates and Expands Various Economic Development Programs, USA. 2013
19. Sills Cummis & Gross “Summary of “New & Improved” GrowNJ. Program.” Sills Cummis & Gross P.C.2013
20. Poulson, Barry.W. & Kaplan, Jules.Gordon. “State Income Tax and Economic Growth.” CATO Journal.2005
21. Ibid Buss 94
22. Ibid Buss 94
23. Ibid Buss 94
24. Wasylenko, Michael, and McGUIRE, Therese. Jobs and taxes: the effect of business climate on states’ employment growth rates. National Tax Journal, 38,4 (1995): 497-511.
25. Ibid Poulson, Barry.
26. Hartzheim, L. Artik. State tax incentives. Journal of State Taxation, 15, (1997) 51-64.
27. Kolesar, Andrew. Economic incentives key in relocation decision. State Tax Notes, 95, (1995),148-149.
28. Ibid Buss 95
29. Wisconsin, “Wisconsin is open for Business, Wisconsin,” United States. 2013.
30. Mississippi. “Tax Incentives, Exemptions and Credits. Mississippi,” United States. 2011.
31. Lawrence, Edward.C., and Briskin, Ellen, Qu, Qing-Jiang. Review of State Tax Incentive Programs for Creating Jobs, Journal of State Taxation.2013.
32. Ibid 3
33. North Carolina Department of Commerce. “Job Development Investment Grant 2011
Annual Report,” USA. 2011
34. Ibid Lawrence, Edward.C
35. Public Sector Consultants (1998). State Financial Incentives. Public Sector Consultants Inc.
36. Rypkem, Donovan, D. And Cheon, Caroline. The Delaware Historic Preservation Tax Credit Program: Good for the Economy, Good for the Environment, Good for Delaware’s Future. Delaware Division of Historical and Cultural Affairs. 2010.
37. Claudio, Nogueira and Gondim, Andre. Modern Economy, 3(5), (2012) 608-616.
38. Bartik, J. Timothy. “Business Location Decisions in the United States: Estimates of the Effects of Unionization, Taxes, and Other Characteristics of States,” Journal of Business & Economic Statistics, 3(1), (1985):14-22.
39. PR Newswire, “U.S. Companies Missing Out on Full Benefits From Economic Incentives And Tax Credits, KPMG Survey Reveals.” PR Newswire [New York] 30 Sep 2003: 1.
Bibliography
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Hartzheim, L. Artik. State tax incentives. Journal of State Taxation, 15, (1997) 51-64.
Jacob, B. IBM Reports 349 Workers at Columbia Center, Columbia Tribune, May 27, 2012.
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North Carolina Department of Commerce. “Job Development Investment Grant 2011
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Appendices
Appendix 1: Economic Incentive Program
New Mexico: “High Wage Job Tax Credit.”
FY 2011 $9.3 Million
FY 2011 $9.3 Million
Louisiana: “Severance tax Exemption for horizontal drilling”
FY2007 $285, 000
FY2010 $239 Million
Hawaii: “Renewable energy tax credits.” 8
FY2010 $34 Million
FY2013 $260 Million
Appendix 2: State used 15 most Common Tax Incentives between 1986 and 1996
Incentives
1996
1986
Change from 1986 to 1996
Tax exemption from corporate income
37
33
4
Tax exemption from personal income
33
26
7
Excise tax exemption
24
18
6
Tax exemption from Capital & land improvements
37
33
4
Tax exemption on Machinery & equipment
42
35
7
Tax exemption on Goods in transport
49
47
2
Tax exemption for manufacturers’ inventories
46
44
2
Sales and use tax exemption on new equipment
47
42
5
Tax exemption on raw materials for manufacturing
49
45
4
Job creation tax incentive exemption
44
31
13
Tax incentive for industrial investment
39
29
10
Tax credit for specified state products
6
4
2
Tax stabilization agreements
8
5
3
Tax exemption for research & development
36
24
12
Accelerated depreciation
41
34
7
Source:15
Appendix 3
new/existing
Project Category
Base Amount per employee
Maximum Amt per employee
Maximum Aggregate Award (assumes 10-yr max. award)
Mega Projects
50,000/25,000
150,000/75,000
300 million
Passaic, Camden Trenton, Paterson (“GSGZ cities”)
50,000/25,000
150,000/75,000
300 million
UTHTC cities
50,000/25,000
120,000/60,000
100 million
Distressed Cities
40,000/20,000
110,000/55,000
80 million
Other Priority Areas
30,000/15,000
100,500/50,250
40 million
Other Eligible Areas
5,000/2,500
60,000/30,000
25 million
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