Daily Yellow Hammer readers (how could you not be?) will recall that, last week, I wrote about the Alabama Education Association’s efforts to squash House Bills 159 and 160 which are collectively known as The Alabama Job Creation and Retention Act.
HB 159 would allow voters to give the Governor and the Alabama Development Office more flexibility in offering tax incentives to land major economic development projects and retain companies that might otherwise relocate outside Alabama.
The corresponding enabling bill, HB 160, sets strict parameters for how incentives can be used to ensure there is a robust return on our investment in offering these incentives.
You may or may not be familiar with the practice of offering incentives to entice businesses to locate here and provide jobs for Alabamians — but you’re definitely familiar with the wildly successful results. Alabama’s success in landing world-class companies like Mercedes, Honda, Hyundai and ThyssenKrupp proves how effective tax incentives can be for bringing jobs to this state.
Now, let’s quickly disprove every single AEA argument against economic development in Alabama.
AEA Claim #1: “House and Senate Republicans are pushing things down our throat!”
WRONG: These measures have bi-partisan support from representatives on both sides of the isle who are making job-creation their top priority.
AEA Claim #2: “Voters don’t support this!”
WRONG AND WE’LL PROVE IT: Because this is a constitutional amendment, the decision will ultimately be up to the voters — just as it should be.
AEA Claim #3: “Job incentives harm education funding!”
WRONG: This one is my favorite because it comes with actual numbers being claimed by AEA Executive Hypocrite Henry Mabry. Mabry has frequently used a scenario in which we recruit 200 companies employing 1,000 workers at a cost to the Education Trust Fund of $300 million.
Ok, so let’s break down Mabry’s scenario:
o He assumes that each of the 200,000 workers will make $30,000 annually and the effective state tax rate is 5%. That is how you would get to $300 million.
o Well, if 200 companies come to Alabama or expand in Alabama by 1,000 employees each, that would mean 200,000 jobs. A little over 174,000 Alabamians are currently unemployed.
o SO, not only would our unemployment rate be ZERO, but Alabama would have to import 26,000 workers from other states!
o For each one point reduction in the unemployment rate, Alabama adds approximately $160 million to the Education Trust Fund. So under Mabry’s scenario, we could actually boost education funding by as much as $1.2 billion for an initial investment of only $300 million.
o More jobs. Lower unemployment. More money for education.
THANK YOU MR. MABRY FOR MAKING THE CASE TO PASS THIS RIGHT AWAY!
To close things out, here are a few more numbers…You know…FACTS to prove the approach the legislature is trying to take works:
o Since 1995 Alabama has used capital income tax credits on 418 projects totaling almost $500 million. That sounds like a lot until you learn that these projects exceeded $15 billion in total investment and resulted in the creation of more than 52,000 direct jobs.
o So total investment was more than 30 TIMES the state’s initial investment.
o There is no question these projects helped spur the economic growth that added billions to the Education Trust Fund.
o In Fiscal Year 1994, the Education Trust Fund totaled $2.9 billion. In 2010 it was $5.2 billion, and that’s after a pre-recession peak of $6.7 billion in 2008.
And they argue incentives take money out of the Education Trust Fund?
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