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In the news: Tax incentives don’t ensure jobs keep economic value, N.T. Times notes

Tax incentives may not mean permanent jobs

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RESEARCH TRIANGLE PARK, N.C. – The New York Times offers an interesting take on the tax incentives-for-jobs debate that is raging again in North Carolina following Dell’s decision to close its massive PC manufacturing complex in Winston-Salem.

In an article headlined “When Tax Breaks Aren’t Enough,” Catherine Rampell talks about incentives from the employer and jobs perspective, not the politics.

“[S}uppose a company estimates that a new worker could bring in about $48,000 in revenues every year. But the cost of hiring that new worker would be about $50,000 a year. From the company’s perspective, it wouldn’t make sense to take on the hire (here, $48,000 additional revenues - $50,000 additional costs of hire = $2,000 net cost). With a 15 percent tax credit, though, the cost of hiring a new worker might fall to $42,500. That means, all in all, the company would likely come out ahead if it hired the worker (here, $48,000 additional revenues - $42,500 additional costs = $5,500 net gain),” Rampnell wrote.

“So a tax break can appeal to companies that have some wiggle room — but the break makes the difference only if companies are already leaning toward expanding and need just a small tax patch to make the hire worth it.”

For more, read the Times report.

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