3 years ago

Troy Univ. Economist: Cut corporate welfare, lower taxes for all businesses (opinion)

YH Alabama Tax
Alabama’s economic incentive programs are slated for reform this legislative session. Such programs cost Alabama taxpayers millions each year so it is certainly important to evaluate whether this money is well spent. That’s the easy part. The hard part is facing reality and taking the uncomfortable steps toward real reform.

To realize change, state policy makers must replace targeted economic incentive programs with simple, low taxes for all businesses. That would encourage businesses of all sizes and ages to grow and expand in Alabama. Unfortunately, the reforms currently on the table fall short.

Economic incentive programs are tax breaks, subsidies, or other economic privileges granted by governments to a few, select businesses. Paid for by taxpayers, this system puts politicians in charge of doling out hard-earned money to politically connected friends. Not only is government allowed to play venture capitalist with very little accountability — a role in which it has a long track record of failure — it places businesses that are not lucky enough to have friends in high places at a disadvantage.

The high taxes required to support incentive programs ultimately drag down economic growth and job creation, especially among small, young businesses. Ironically, most job creation actually comes from these small, young companies.

Furthermore, economic incentive programs reduce the motivation of both privileged and non-privileged businesses to compete and innovate. Imagine if universities were to predetermine the GPA’s of students, selecting those to be at the top of the class and those at the bottom regardless of how hard each student works. The result is predictable and understandable: students would lose their motivation to study.

The same happens with businesses. Why compete to offer better products and services when politicians ultimately determine the winners and losers in the marketplace? The result is stagnancy and poorer quality products and services.

And, evidence shows that government often chooses incorrectly, resulting in the enormous waste of taxpayer dollars. For instance, in Alabama, both National Alabama Corporation and ThyssenKrupp failed to live up to expectations. A recent Johnson Center study found that each direct job at ThyssenKrupp cost the state more than $555,000 in economic incentives. Even more troubling, the American Legislative Exchange Council (ALEC) listed Alabama as one of the worst states for measuring and evaluating economic incentive programs.

This waste of taxpayer dollars is even more frustrating when evidence shows that economic incentives programs destroy jobs by taking money out of the private sector. According to a report by the Mackinac Center, 95 jobs were destroyed in Michigan for every $1 million in economic incentives granted by the state over a six-year period.

Policymakers interested in creating jobs need look no further than lowering taxes and regulation. Economically freer states, with smaller governments and tax burdens, consistently have higher employment growth. A one-unit increase in Alabama’s economic freedom ranking in the Economic Freedom of North America ranking could create as many as 80,000 new jobs per year!

Unfortunately, the reforms currently under consideration would keep and even expand the same bad structure. While the proposals do include measures that would provide more accountability, such as only paying out economic incentives as jobs are created and capping the overall amount of incentives, they ultimately leave the same bad system in place. Rather than remove unfair privileges and lower taxes for all businesses, the proposed reforms would expand these privileges to select businesses in rural areas or for business with job training needs.

It is good to see economic incentive programs on the agenda for reform. Unfortunately, the real reform required to reduce the burden of these programs on Alabama taxpayers isn’t on the agenda. To put Alabama on a trajectory of growth, policy makers should cut the corporate welfare doles and lower taxes for all businesses. We shouldn’t compete against other states for businesses with corporate welfare; we should compete with economic freedom.

Daniel J. Smith is an assistant professor of economics at the Johnson Center at Troy University. Follow him on Twitter: @smithdanj1

2 hours ago

Alabama Senate delays vote on church ‘Stand your Ground’ law

The Alabama Senate has delayed a vote on a proposed revision of the state’s self-defense law to clarify that deadly force can be used to defend someone in a church.

Senators delayed a Thursday vote after at least one senator threatened a filibuster.

Sen. Bobby Singleton said that the legislation is encouraging people to get “trigger happy.”


Alabama already has a self-defense law that someone can use deadly force if they reasonably believe a person is about to kill them or another person. The bill adds that people can use deadly force if they believe a person is about to use physical force against a church member or employee.

Supporters pointed to deadly church shootings and said members need the legal protection to respond to a threat.

(Associated Press, copyright 2018)

2 hours ago

Debbie Long is a 2018 Yellowhammer Woman of Impact

This summer, Debbie Long will call it a career at Protective Life Corp.

What a career it has been.

Long, who also is a 2018 Yellowhammer Woman of Impact, served as executive vice president, chief legal officer and corporate secretary of the insurance company before taking on a part-time advisory role this year. She is one of Alabama’s highest-paid female executives.


Long also has been a big contributor to her community.

Long told Business Alabama in 2012 that she always wanted to be a lawyer, although first she had idealistic visions of saving the world. After graduating in 1980 from the University of Alabama Law School and then clerking for a federal appeals court Judge Frank Johnson, she went to work for a law firm and practiced corporate law.

“Although I hadn’t initially wanted to practice business law, I found I loved it,” she told the publication.

Long left the firm along with several other lawyers to help form the powerhouse Birmingham firm of Maynard, Cooper and Gale.

In 1992, Long joined the board of Protective Life as general counsel of the insurance company.

Long told Business Alabama that her advice to would-be business leaders would be to stay open to opportunities that might come along at unexpected times.

“It’s very doubtful that someone’s going to come to you early in your career and say, ‘I want to be your mentor,’” she said. “It’s far more likely you will meet people along the way who will give you great advice if you are open to receiving it. Someone at a cocktail party might say something that could change your life.”

Long has been active in the larger business community. She has served as chairwoman of the Business Council of Alabama’s Judicial and Legal Reform Committee and also has worked on the Tax and Fiscal Policy Committee, the Federal Affairs Committee and on the board of ProgressPAC — the lobby’s political action committee.

Last year, the BCA honored her with the Robert W. “Bubba” Lee Political Courage Award, given each year to someone who is willing to take the right position regardless of cost.

“She has shown through her support that she cares about the Alabama business community and she values the role we play and the jobs we create,” BCA Chairman Perry Hand said at the time. “She has been a distinguished member of the Alabama and Birmingham business communities for nearly three decades.”

Her charitable endeavors include Big Brothers/Big Sisters of Greater Birmingham, the YWCA of Birmingham, Oasis Women’s Counseling Center, the Birmingham Museum of Art and Partners in Neighborhood Growth Inc.

In addition, she serves on the Alabama Women’s Commission and the Public Affairs Research Council of Alabama, as well as The Fellows program of the American Bar Foundation.

“It is her commitment to excellence that has made her such a valuable asset to Alabama’s business community, and there are few individuals more dedicated to our corporate community, the rule of law, and the political arena than Debbie Long,” Hand said last year.

Join Long and special guests from across the state for a Birmingham awards event March 29 honoring the 20 Yellowhammer Women of Impact whose powerful contributions advance Alabama. Details and registration may be found here.

@BrendanKKirby is a senior political reporter at LifeZette and author of “Wicked Mobile.”

2 hours ago

Alabama Rural Broadband Act on governor’s desk

A bill that would provide grants to aid rural broadband expansion is on Gov. Kay Ivey’s desk.

The legislation was delivered to the Capitol on Wednesday afternoon after the Senate adopted changes to the Alabama Rural Broadband Act previously made in the House.

Originally conceived as a bill that would offer tax incentives to companies to provide high-speed internet services to some of the state’s more remote areas, the bill was changed to offer grants instead. Projects that would provide speeds of 25 megabits per second down and 3 megabits per second up would be eligible for $1.4 million per project, while projects providing minimum speeds of 10/1 could get $750,000 each.


The bill is expected to provide $10 million annually, with the program being administered by the Alabama Department of Economic and Community Affairs. Private providers and cooperatives would be eligible for the money, but government entities would not.

The sponsor, Sen. Clay Scofield (R-Guntersville), wanted to give providers tax credits for providing broadband rather than cash. The bill still has safeguards in place – the money won’t be received upfront and a legislative committee would monitor the program for effectiveness.

Scofield couldn’t be reached for comment this week.

Ivey is expected to sign the bill after speaking about the need for such programs in her January State of the State speech. The legislation sailed through the Alabama Legislature, receiving unanimous yes votes in the House on Tuesday and in the Senate concurrence vote on Wednesday.

Speaker of the House Mac McCutcheon (R-Monrovia), said grants are better for taxpayers.

“It’s more transparent and gives us more accountability,” he said.

In reality, both funding mechanisms have been dismissed by critics. The MacIver Institute said in a 2014 report that incentives can actually hurt economic growth, while Obama’s stimulus grant program was one of the more stark examples of grant largesse.

Alabama lawmakers hope their broadband plan goes hand-in-hand with a proposal from President Trump to spend an immediate $200 billion and long-term $1.5 trillion on infrastructure improvements. Trump hopes to spur more public-private partnerships – so-called P3s – with his proposal to help state and local governments shoulder more of the load. But his plan has faced criticism on both sides – Democrats aren’t fans of the president’s goal to put more costs on the states, while many Republicans say the plan calls for too much spending and haven’t exactly deemed it a high priority this session.

Some on both sides have criticized the lack of any guaranteed funds for broadband, although the plan cites high-speed internet as an infrastructure priority. There are concerns that federal broadband grants could accelerate the growth of government internet projects, which have largely been a sinkhole for taxpayer money.

3 hours ago

Alabama Committee approves ethics exemption for economic developers

An Alabama Senate committee has approved legislation, pushed by the state’s top industry recruiter, to exempt professional economic developers from the state ethics law.

The Fiscal Responsibility and Economic Development Committee approved the House-passed bill Wednesday on a 10-2 vote. It now moves to the Senate floor.


The proposal would exempt professional economic developers from the rules that govern lobbyists. The rules include registering with the state, undergoing yearly training and reporting activity.

Alabama Commerce Secretary Greg Canfield has said professional site developers, who help businesses decide where to locate, will not work in Alabama if they must register as lobbyists.

Ethics Commission Executive Director Tom Albritton has expressed concern about exempting a group of people, whose primary job involves interacting with government officials, from the state ethics law.

(Associated Press, copyright 2018)

Human trafficking bill that would impose severe penalties for obstruction is step closer to becoming law

Anyone who obstructs a human trafficking investigation in Alabama could be met with the same penalties as the traffickers if the governor signs a bill that passed the House this week with near unanimous support.

The bill, which already passed the Senate, increases penalties in place for those who obstruct, interfere with, prevent, or otherwise get in the way of law enforcement’s investigation into the practice that includes child sex trafficking.

Under current law, such obstruction is only a Class C felony and could result in just one year in prison. The new legislation would increase the maximum offense to a Class A felony, with a minimum jail sentence of ten years.


Senator Cam Ward (R-Alabaster) sponsored the bill and said he is proud that the Alabama Legislature made this a priority.

“This week we’ve taken another crucial step in ending this horrific practice,” Ward said in a statement. “By increasing penalties for those who would aid traffickers, we will hold them just as accountable as the traffickers themselves.”

Human trafficking victims are often children who are trafficked into sexual exploitation at an average age between 11-14 years old, according to the Alabama Human Trafficking Task Force.

“Most people assume, ‘Well, that doesn’t happen in my backyard,’” Ward said in an interview with Yellowhammer News when the bill was first introduced. “…It’s everywhere in our state, but there’s low awareness as to how bad it really is.”

Just this week, a Decatur man pled guilty to child sex trafficking and other charges related to his plan to kidnap, rape and kill a mother and sell her 14-year-old daughter to a Memphis pimp, according to horrifying details reported by the Decatur Daily.

Brian David “Blaze” Boersma’s plan was thwarted because an informant, who Boersma recruited to help him with his plan, alerted the FBI.

“Oftentimes it’s like what we say with terrorism,” Ward said. “If you see something suspicious, tell somebody, because a lot of times, trafficking can take place right underneath our noses in our communities.”

The legislation to increase penalties for obstructing human trafficking investigations was delivered to Governor Kay Ivey for her signature Wednesday afternoon.

Rachel Blackmon Bryars is managing editor of Yellowhammer News.