Tax Abatements: Do They Really Provide Bang For The Buck In Jobs?

By Jeff Neumeyer

December 13, 2011 Updated Dec 13, 2011 at 6:41 PM EDT

ALLEN COUNTY, Ind. (Indiana's NewsCenter) --- Holding government accountable.

Do tax abatements really spur new job creation, and how do we measure their effectiveness?

It's a complicated subject, where it’s hard to come up with right or wrong answers.

The Fort Wayne General Motors Truck plant over the past two decades has gotten several tax breaks on plant expansions.

The B-F Goodrich Tire plant in Woodburn and Vera Bradley have also seen new tax obligations delayed in exchange for new investments and new jobs.

We got our hands on a report from a local printing company filed to track whether it delivered on promises of 20 new jobs supporting an annual wage of more than $17,000.

In 2006, the business reported creating 33 more jobs than first forecast, but the average annual wage came in about $7,000 lower than pledged.

In 2008 and 2009, records show the company didn't file anything, making it tough for county officials to verify if tax abatements had been earned.

Allen County Council's president says either way, investments were made, and that jurisdictions wanting jobs can't get too stingy with incentives.

Darren Vogt/(R) Allen Co. Council President: " For people to think that we just hand out money left and right, it's not the case. I mean, business can do business wherever they want and they're going to look to see what incentives are out there."

Tom Lewandowski/N.E. Ind. Central Labor Council: " There's almost no accountability in this. Things are self-reported. You know the old saying is, trust everyone but always cut the cards. We're not cutting the cards."

Economic development officials defend tax abatements, saying they don’t cut taxes owed, they simply phase in the taxes owed on any new investment made.

But Lewandowski counters, if you're handing out tax breaks, there needs to be a way to verify the companies deserve them, that it's about the public good, not about ribbon cuttings and press releases for elected officials.




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