(The Center Square) – Georgia has earned a reputation for being one of the most business friendly states in the nation, but a majority of Georgians believe tax incentive programs meant to attract manufacturers to the state need oversight.
According to a Georgia Budget & Policy Institute (GBPI) poll, 68.7% of Georgians support implementing a formal review process to examine the return on investment from incentives the state provides to companies each year.
Gov. Brian Kemp often has touted the state's good rating for its business climate. Business magazines Site Selection and Area Development have ranked Georgia the No. 1 state for business for seven consecutive years. Site Selection's ranking is based on an analysis of announced projects and the state's tax climate. Area Development magazine's ranking focuses on the cooperativeness and responsiveness of state government.
"From advanced manufacturing to leading-edge cyber innovation, we are proud to work with job creators to secure mutual success and a brighter future for Georgia," Kemp said when news of the Area Development ranking broke last month. "Moving forward, we will work around the clock to keep our state government streamlined, responsive, and business-friendly, and there is no doubt this ranking will help to strengthen our economic recovery as we protect the lives and livelihoods of all Georgians."
Kemp and state economic officials announced Oct. 1 that more than 10,000 jobs were created across the state by economic development projects in the first quarter of fiscal year 2021, generating more than $3.71 billion in new investments.
According to GBPI projections, Georgia will grant a total of $3.5 billion in tax exemptions to manufacturing companies this year. More than half of Georgians polled believe lawmakers should reduce that number.
Numbers obtained by The Center Square show the Georgia Department of Revenue issued more than $22.3 million in manufacturer's investment tax credits in fiscal year 2019.
According to the Georgia Department of Economic Development (GDED), under the manufacturer's investment tax initiative, Georgia offers 1% to 8% tax credits to companies that have been in the state for three years and invest at least $50,000 for a new project or location. Companies that create more than 500 jobs with their expansion also can qualify for the credit.
Georgia offers companies a buffet of other tax credits the GDED promotes in a digital brochure on its website.
Apart from the expansion incentive, the state job tax credit gives companies $1,250 to $4,000 a year in credit for five years for every new job, according to the GDED. If a company increases import or export traffic by 10% at the state's port, it can be eligible for a bonus credit of $1,250 per job for five years.
More than 33% of the 1,017 registered Georgian voters who responded to the GBPI survey, conducted by the University of Georgia's School of Public and International Affairs Survey Research Center, said they "strongly supported" an annual review of the return on investments for tax credits the state issues each year. More than 47% of respondents said the state should reduce manufacturing tax credits.
Georgia Department of Revenue spokesperson Kristen Bartholomew said the department "does not comment on policy or legislative issues."
Government should avoid picking winners and losers, policy analysts at the Georgia Public Policy Foundation (GPPF) said.
"Tax policy should not single out individuals, products, businesses or particular groups for preferential treatment," the GPPF said in its policy guide, which was published this month. "Taxes should be designed to raise revenue to fund necessary government programs, not to micromanage economic decisions in a complex economy."