Why Business Incentives May Not Speed State Economic Recoveries
May 21, 2020
Josh Goodman & John Hamman of pewtrusts.org authored an interesting article discussing business incentives and COVID recovery starting with: Process of enacting government programs and filling new jobs can take years. Read More Below:
During economic downturns, state policymakers face pressure to strengthen their economies and create jobs. In an effort to spur an economic recovery during and after the Great Recession, some states created business tax incentives designed to influence companies’ location and expansion decisions.
But even successful incentives may not offer benefits fast enough to help during a steep downturn such as what the country may face in the aftermath of the coronavirus pandemic. If tax incentives are part of a state’s economic strategy, policymakers need to follow best practices when designing the programs and include protections to ensure that they do not cost more than intended.
Although each incentive is different, states and business tend to follow typical steps—outlined in the figure here to design and implement programs intended to create jobs and encourage capital investment. These processes usually play out over several years, especially if new construction is planned, so it can take time before the anticipated benefits materialize.
Benefits of State Economic Development Incentives Can Take Years to Materialize
Quick creation of jobs in response to a downturn is difficult.
Bill introduced (5-8 months)
Visit this article:https://www.pewtrusts.org/en/research-and-analysis/articles/2020/05/21/why-business-incentives-may-not-speed-state-economic-recoveries