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MetroNews ‘Talkline’ debate: Are tax credits worth it?

CHARLESTON, W.Va. — Two advocates for more efficient government spending in West Virginia say tax credits for economic development projects should be viewed the same way as direct spending in the budget because such credits eliminate revenues that could have otherwise been collected.

“There’s nothing wrong with them (tax credits) if they’re used properly,” said Bill Maloney, a former Republican gubernatorial candidate who is now president of the Center for a Brighter Future.  “The big problem we have in West Virginia is the transparency issue.  You really have no idea what the benefits of these things are.”

Ted Boettner, executive director of the West Virginia Center on Budget and Policy, agreed.

“Oftentimes, these subsidies to businesses are rarely analyzed and monitored,” he said.  “They often go to companies that would have built here anyway and they also divert money from public goods and services.  They have a whole host of hidden costs, especially when they’re not paying good paying wages.”

Both Boettner and Maloney, who were guests on Friday’s MetroNews “Talkline” worked together on an opinion piece that was published in Friday’s The Charleston Gazette.

Keith Burdette, secretary of the state Department of Commerce, defended tax credits.  “I think it would be foolhardy for West Virginia to unilaterally disarm,” Burdette said.  “We compete against states that offer targeted tax credits every day and every single state in the United States offers them.”

In that op-ed, Boettner and Maloney said the following: “Every dollar that was spent in tax credits is money that could have been invested in our children, infrastructure or to lower everyone’s taxes, not just for those rich enough to hire the most well connected lobbyists.”

The piece continued, “For most of these businesses, it (subsidies) is just a way to get free money.”

Maloney argued such credits are often not an option for small businesses.  “Small business is where it’s (development’s) at in West Virginia.  They create more jobs than any other place we have, yet they never get the breaks that the big companies that come in, and get these special deals, do,” said Maloney.

Boettner said the state budget is fully examined each year.  “We go line item by line item, as you know, through that budget.  There’s conferees.  There’s lots of discussion, but when it comes to this other form of back door spending, we barely look at it,” he said.

The two have suggested, among other things, conducting a thorough review of tax expenditures, giving a state agency responsibility over reviewing the effectiveness of tax credits and grants, publishing all recipients of economic development subsidies and implementing sunset provisions and caps on tax credits.

Earlier this year, Governor Earl Ray Tomblin signed into law $25 million in tax credits for The Greenbrier Resort.

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