State Commerce Secretary: Tax Breaks Need More Oversight
The Pew Center on the States said WV should do more to monitor, evaluate and report the value of business tax breaks. Chart from the WV Center on Budget & Policy, based on a Pew Center report.
January 7, 2013
CHARLESTON, W.Va. - The state official leading efforts to draw prospective employers says West Virginia needs to do a better job of tracking and evaluating the tax breaks it hands out. Critics charge that few in state government can even say how much West Virginia is giving away in tax breaks, let alone how many jobs are created as a result.
Commerce secretary Keith Burdette admits the state does not do enough to track the tax credits and exemptions. Specifically, he says, it is time to look at which of the two-dozen state tax credits actually spark employment.
"Analyzing what works and what doesn't, I suggested to the legislature we need to do another periodic review. We need to make the system clearer. We need to be able to determine the validity of all of our tax expenditures."
The national group Good Jobs First ranked West Virginia 29th for how well it monitors and publicly reports the tax breaks and job claims. The group's director Greg LeRoy says they gave the state a C- grade. He says West Virginia could tighten up a lot without chasing away employers, because the incentives are actually a lot less important than people think.
"There's lots of states that have been disclosing gobs of tax credit data for many years and that didn't hurt their business climate. For the average company in this country, all state and local taxes combined come to less than 2 percent of their cost structure."
LeRoy says things like the cost of supplies and transportation, and the quality of the workforce, are far more important. And he says in general, public disclosure is good for the business climate.
According to a New York Times investigation published last month, West Virginia granted the third most incentives of any state in dollars per person. Burdette says the way the Times counted the figures created an inaccurate picture, because it made broad sales tax exemptions look like targeted subsidies.
"The mistaken belief is that there's this vast amount of incentives; the amount actually is very conservative and very small. The bigger exemptions are actually in sales tax exemptions."
Burdette says West Virginia's not unusually generous with its business incentives, but he says the state has little choice but to compete with the offers of other cities and states.
More information is available at www.goodjobsfirst.org.