(The Center Square) — Jobs created because of Georgia's Job Tax Credit program generated less economic activity than the cost of implementing the program, a new report found.
According to "The Economic and Fiscal Impacts of Georgia's Job Tax Credit Program" report, prepared by Georgia State University's Fiscal Research Center for the Georgia Department of Audits and Accounts, the Job Tax Credit program was initially intended to increase employment in the state's 40 most distressed counties. It was subsequently expanded to include all 159 Georgia counties.
For fiscal 2022, the Georgia Department of Revenue reported $270.2 million in job tax credits used against tax liabilities on returns filed that year, according to the report. Credit carryforwards at the end of the fiscal year totaled $659.5 million, including credits for jobs created that year and jobs created in the previous four years and retained.
Based on DOR data, authors David L. Sjoquist, a Georgia State University economics professor, and Peter S. Bluestone, associate director of Georgia State University's Center for State and Local Finance, estimated that in 2019, 22,688 new jobs were created that were eligible for job tax credits. In 2020, the number increased to 26,322.
"Key to estimating the economic and fiscal effects of a JTC program is knowing the number of jobs that are created because of the program, not just the number of jobs that earn a job tax credit," the authors wrote. "The number of jobs created due to the job tax credit is smaller than the number of jobs that earn job tax credits."
The study concluded that jobs earning a tax credit were "located mainly in metro areas and particularly in the northern half of the state." The average credit per job was roughly $2,892 in 2019 and dropped slightly to $2,781 in 2020.
The authors said they used the IMPLAN model, a "regional input-output model" often used for economic impact analysis.
"The IMPLAN analysis suggests that economic activity due to the JTC generates substantially less state and local tax revenue than the cost of the Job Tax Credit program," they wrote. "Based on the empirically determined estimates of the decisive share of new jobs for which the JTC was responsible, we assume alternative decisive percentages of 5 percent and 11.4 percent.
"Our IMPLAN analysis suggests the JTC programs generate roughly 2,548 new jobs if the decisive percentage is 5 percent and 5,809 new jobs if the decisive percentage is 11.4 percent," according to the report. "This new economic activity generates $21.2 and $48.2 million in state and local tax revenue, respectively. This is less than the $65.9 million cost of the JTC program in 2019."