Monday, September 17, 2012

Tax Credits and the Reality of Job Creation

This is a letter to the editor I wrote back in July and published at
I dont have the original link but Im posting it here now in order to preface some other new material on the issue of tax credits as a tool to stimulate the economy and why they do not work...

We were told we were broke. No money for schools, for cities, recycling, public works much less public employees. Amid a blizzard of misinformation and bogus budget numbers we were convinced to give up billions in state aids on the promise that teachers and public servants were the cause of it all and someone had to pay.

What it paid for was a massive tax credit program that has extended hundreds of millions to corporations promising to create jobs for cash. Plexus Corp in Appleton was given fifteen million to supposedly create 350 jobs at a cost of nearly $43,000 per job. Kohls department stores got another 62 million and they are just the latest.

Prosperity was just around the corner. All Manitowc had to do was suffer an 11% increase in the school tax. Valders now much the same with Chilton not far behind. The cities took the same hits. Then lay off dozens. Hundreds district wide.

This week Plexus announced the layoff (not hire) of 116. In making the announcement a company spokesman said that they “...made the layoffs in response to a decrease in customer orders.” Wait? Weren't we told that investment creates jobs? That tax cuts drive investment? Did we misunderstand?

It seems that customers create jobs. So says Ginger Jones, CFO of Plexus Corp. Tax credits not so much.

Unemployed public workers make poor customers. No less so the workers at Plexus who will not receive their first week's unemployment because that was cut too. So it is for the other 13,000 who lost their jobs in June. But Plexus got its 15 million and no doubt the board will reward Ms. Jones well. The employees at Kohl's hope she is a big customer there. The unemployed shop at Wal Mart.

You may also find this link interesting...

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