A report released Wednesday by Jobs to Move America calls Alabama’s system for corporate tax incentives “exactly the wrong way” to improve the state’s economy, citing $4 billion in giveaways between 1993 and 2020 with scant information about what taxpayers have received in return.
Former Democratic state Rep. Patricia Todd, JMA’s southern policy manager, authored the report. “The Hidden Costs of Alabama’s Tax Incentives” describes Alabama’s approach as lacking in transparency and accountability and makes recommendations for how it could be improved to meet the public disclosure standards of other Southern states like Florida, Louisiana, North Carolina, Mississippi and Tennessee.
It makes the following policy recommendations:
- Have a unified economic development budget that would include a comprehensive accounting of all economic development programs (tax-based, subsidies, grants, etc.). Louisiana and Kentucky have already adopted this budget model.
- Hold annual public hearings on corporate subsidies so members of the public can ask questions and make recommendations.
- Use a third party or independent legislative party to evaluate each incentive and provide a report on a public website that includes the amount of incentive, clawbacks, pay scale of workers, return on investment and job outcomes. This will ensure accuracy and transparency and should occur every three to five years.
- Provide robust information to the public about how return on investment is calculated. This should include impact on communities, workers, and current businesses.
- Make all subsidy and incentive programs transparent and provide full access to the public to all information on the subsidies and tax credits given, the terms of the deal and the extent to which the recipient has fully complied with the terms of the subsidy agreement.
The report notes that Alabama ranks 49 in state tax collection rates while it has some of the country’s lowest levels of educational attainment and highest rates of poverty and incarceration.
“Alabamians’ public tax dollars should be used to create as much good as possible for our communities — not to further enrich billion dollar corporations,” Todd said. “The recommendations in this report will bring more transparency to our state’s tax incentives programs and ensure that Alabamians have the information they need to keep corporations and public officials accountable to the public.”