Jack TenneyExtra Point

by Jack Tenney, Publisher

October 1998

Tax credits

Hey, sailor, wanna research and development tax credit?

With that line or one very much like it, governments pursue the three goals of economic development: jobs, jobs and jobs.

Of course, its neither that simple nor that successful. Every government does it as part of a huge zero-sum game. Why? Its like the reason you used to give your parents for letting you stay out all night after the prom Gee, Mom, everyones doing it.

Because so many governmental tax concessions are targeted toward newcomers, sooner or later a business has to do a James Brown concert just to break even. You know what a James Brown concert is like, don't you? The Godfather of Soul signals the midpoint of the nights entertainment by crying out, Im leaving and Im never coming back! Then the show really starts as backup singers, the brass section of the band and everyone in the audience tries to coax James to stay. Don't go, James, don't go! we all chant in synch with the driving beat of the drums and bass as James Brown slides around feigning exhaustion. At just the right moment, he comes raging back to center stage, grabs the mike and belts out another encore as we all go nuts.

My mother worked for a large insurance company in Boston back in the days when hundreds of clerks processed papers on each of 25 floors. My mother, a widow with a kid that never missed a meal, snack or dessert, literally worked for my living. Many of her colleagues were recent high school graduates marking time until they could get married and live happily ever after. As a result, my mother chipped in for engagement presents, wedding showers, wedding gifts, baby showers and, finally, farewell gifts week after week after week after week. She was to an established tax-paying business what those promising young folks passing through were to startup companies. She would have done better for herself throwing a few James Brown acts instead of hanging in there for a retirement party.

Real economic development is accomplished from the bottom up. No government program, block grant, IRB, tax credit or training program caused Microsoft to happen. If you had to cite a single most important factor for growing jobs in one region rather than another, you would inevitably end up talking about educational institutions: Stanford-Silicon Valley, University of Texas-Austin, Georgia Tech-Atlanta, Duke-UNC-Research Triangle, MIT-Harvard-Route 128.

If you buy that, wouldn't you think someone would be beating the drum to dramatically increase public support of UVM and Vermont State Colleges?

Almost right behind access to lots of people who like to think is access to air travel. Sun Valley, Idaho, built by the Union Pacific Railroad as a destination resort, might be a competitor for Trapp Family Lodge but I don't think Ketchum's little airport in a box canyon is a reasonable hub for a company like IDX.

Finally, economic development depends on bread and butter infrastructure: roads, utilities and communications.

I would sure like to see us put more money into higher ed, roads, bridges, utilities, and communications and, probably, a little less into James Brown concert tickets.