While a number of economists are busy criticising tax incentive systems and other programs suggesting that they are risky to tax payers, the fact of the matter is that these programs often allow businesses to give back to communities in more ways than one.
Maintaining a Competitive Edge
As various states across the United States start to introduce a plethora of incentivised programs for business owners, they are able to keep their businesses competitive. By not offering these programs, not only are states at the risk of losing their business but states are also risking a rise in unemployment rates, which evidently is a primary concern in today’s unstable economy.
Are we creating New Jobs?
While most people assume that tax incentives help in creating new jobs, that isn’t really the intended purpose behind these programs. Take the state of Maine for example, where the state government put in action a number of tax programs to put the state’s businesses on a level playing field with other states. This helps in retaining Maine jobs, since if the businesses aren’t competitive; the government is risking loss of existing jobs.
The state has been able to successfully introduce the Business Equipment Tax Reimbursement Program, where a company receives reimbursement only if it invests in business equipment. While one may not see a direct implication this has on Maine Jobs, a basic study into where the saved tax money that is saved is invested will show you how it impacts the job retention initiative of the state on the whole.
Such programs have proven to be beneficial to the economic future of states such as Maine where they are expected to operate and compete in a global business environment.
Dealing with Inter-State Competition
In addition to dealing with global economies on a macro level, within the United States, competition between states is also becoming extremely strong. With an aim to emerge out of the constant mode of recession, states are getting much more aggressive with their initiative to attract new businesses. With added incentives for businesses that relocate, it is important that states become more proactive with their business generating capacity and design a more favourable infrastructure for businesses.
There are a number of economists who are still under the impression that upon receiving tax holidays, reimbursements of benefits, organizations tend to take everything and give nothing in return. As a matter of fact, in addition to providing hundreds if not thousands of jobs, these organizations are also able to offer a range of indirect benefits to immediate communities.
With tens of millions of dollars being spent on goods and services by companies, families which depend on these industries for a livelihood see immediate benefits. In addition to this, by facilitating more secure jobs, states are further allowing flow of money which contributes to the growth of local and state economies.
Considering that we are living a more aggressive global marketplace one cannot simply ignore the need to design sustainable environments for businesses as well as job growth. By designing relevant programs, governments are able to benefit communities effectively in the long run.