Historically, Florida has been one of the lowest wage bases and relies heavily on tourism and our guests in the winter. Florida needs to diversify its economy, but it’s not as easy as it sounds.
There is fierce competition among the 50 states for high-paying jobs and corporate headquarters. Countries that win this game will spend a lot of taxpayer money to recruit these companies.
But is it really fair for someone working for $15 an hour to see our state take Florida taxpayer dollars and gift a wealthy Fortune 500 company as an “incentive to move”? There is certainly understandable anger over the perceived corporate welfare.
Is there a way to balance two competing goals: reduce corporate welfare while helping to ensure high-paying jobs are added as we diversify Florida’s economy?
What Florida has chosen to do is create a qualifying Target Industry Tax refund program to try and bridge two worthy goals: reducing corporate welfare while creating new, high-paying jobs. TaxWatch in Florida describes the program as:
It’s a performance-based program that refunds some of the taxes the company has already paid, but only after verifying that contractual requirements, including a promised increase in higher paying jobs, are met. The program is only available to the most sought-after industries with the greatest economic benefit and only those that have not yet decided to locate or expand in Florida.
The program also has bipartisan legislative support, is loved by state and local economic development agencies, and consistently beats expectations, with companies creating far more jobs than needed. Most importantly, the program provides taxpayers with a significant return on investment of more than 5-to-1—resulting in more than $5 in additional state revenue for every dollar the state pays in refunds.
Unfortunately, Florida has let this program lapse and has chosen in the last two legislative sessions not to extend the program.
TaxWatch describes the impact of losing a partial target industry tax refund program as follows:
Survey research and professional opinions indicate that incentives are unlikely to be the primary consideration in choosing a site. However, practitioners point out that it can be a disqualifying factor in the initial stage (a fatal defect) and may be a deciding factor or a determining factor in the final stage.
Committee members at a program convened by the Florida Economic Development Board lamented QTI’s loss, saying that Florida is now “outside the game” when it comes to attracting new business from outside the state and that despite Florida’s many business climate assets, it cannot compete with Incentives offered by states such as Texas, Tennessee, Georgia and North Carolina.
Recently, Florida — specifically Tampa — two North Carolina “megaprojects” — the global headquarters of Honeywell and the massive new campus of healthcare giant Centene — lost more than 1 million square feet of office space and more than 3,200 jobs. While there were many other factors involved, it is likely that the loss of the QTI may have played a role.
Florida TaxWatch was founded to promote effective and efficient government. Part of their annual effort is to publish a list of “turkeys” in the Florida budget that recommends the governor veto it as improper spending on pork drums. When an organization like TaxWatch recommends government spending, it’s worth paying attention to.
Contrary to what political parties and many political pundits would like us to believe, most government decisions are neither white nor black. It is often the result of competing worthy goals such as reducing corporate welfare and diversifying Florida’s economy.
How do we conduct civic discussions when two worthy priorities collide? How will you decide how Florida should compete in the corporate relocation game?
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