Morgan: Supporting job creators (The Journal Record Monthly Column - June 2014)

No sooner had the gavel come down to close the 2014 Oklahoma Legislature than talk moved to what might be on the agenda for next year.

A disturbing trend recently has been calls for a complete overhaul, if not full repeal, of all tax credits and incentives. Historically, tax policy has been designed to encourage desired behavior and discourage unwanted behavior.

The goal of most tax incentives is to boost job creation, capital investment and economic activity. Clearly the Legislature recognizes the importance and success of incentives because they pass new ones every year.

In 2014 alone, lawmakers extended a tax credit for aerospace engineers and their employers because it has a proven record of bringing high-paying, high-tech jobs to the state. A tax credit for clean-burning vehicles was extended to 2020 because lawmakers know the importance of supporting the state’s natural gas industry with CNG vehicles and infrastructure. And the Small Employer Quality Jobs Program was extended to all counties in the state because of its success in creating jobs for rural areas.

Like it or not, Oklahoma is in competition with 49 other states to attract and keep jobs. If an incentive like the aerospace engineer tax credit is proven to affect more than 350 jobs with a payroll of $50 million, there should be no question about keeping it. Yet some want to paint all incentives with the same brush and impose the same restrictions on all of them.

Despite record state revenue collections, there are those who want lawmakers to have more tax dollars to spend and see tax credits and economic development incentives as a way to get it. Whether the goal is to have money for income tax cuts or more government programs, the effect is simply shifting the tax burden even more onto business. With more tax dollars coming into the state coffers than ever before, the focus should be on prioritized spending, not increasing revenue on the backs of job creators.

The State Chamber supports the idea of judging any economic development incentive by whether or not it creates jobs or economic activity greater than the cost in tax dollars. Those that don’t make the grade should be eliminated. But there is no doubt that many incentives are creating jobs and economic activity that wouldn’t happen without them.

Fred Morgan is president and CEO of The State Chamber of Oklahoma.