Together with legislative members of both parties, Colorado Gov. John Hickenlooper announced Monday the first two bills to be introduced Wednesday, the opening day of the state Legislature’s 2013 session. They probably are worthwhile as far as they go. The problem is, that may not be terribly far.
Senate Bill 1, being advanced by Senate Democrats, would allow about 370,000 working families to receive a trio of tax credits. It would broaden the reach of the earned-income tax credit, the child tax credit and the child and dependent care tax credit, and allow refunds to families below a particular income level.
It sounds like an honest attempt to be compassionate, and it has the advantage of boosting the state’s economy, at least somewhat. Lower-income families spend a higher percentage of their income than wealthier families. The chances are, this would put money into the economy quickly.
It just would not be much money. Beyond that, it does little for the very poor, whose problem probably is not with paying taxes. And to top things off, there is no telling where the money might come from.
Colorado only offers the earned-income tax credit when the budget is in surplus. The last time that happened was in 2001-12 years ago. There still may be money to be found to cover all the tax credits, but it hardly sounds like a good bet.
For its part, the state House of Representatives offers House Bill 1. It would offer up to $15 million in grants to companies doing advanced research in such areas as aerospace, energy, bioscience, electronics and other fields.
It would offer three kinds of grants of up to $500,000 per company. The money could come from a bioscience program already established or from the state’s enterprise-tax credits expected to be revamped this year.
Again, the problems are plural. To a true high-tech company, $500,000 is not much money – certainly not enough to relocate from somewhere that may be more convenient or, at least, more well known. To put that in perspective, The New York Times recently did an exhaustive report about the effectiveness of attracting companies through incentives. It found that, according to the most recent data available, Colorado already gives $995 million for incentive programs every year.
It also found that, nationwide, such efforts were fraught with difficulties, problems that were reinforced in another study from the Pew Center for the States. Employers took credit for jobs that already existed. Companies accepted incentive money and closed plants within months.
The Times report tells the story of the “border war” between Kansas and Missouri with the states repeatedly luring businesses away from each other with incentives.
The CEO of Hallmark, based in Kansas City, Mo., had this to say: “If you’re looking at the competitiveness of a region,the most important thing a region can do is to focus on education. And this use of incentives is really transferring money from education.”
Then again, increasing competitiveness or aiding low-income families many not be the point at all.
The real point would seem to be communication. With these two bills, the Democrats announce that while they retain the Democratic values their base demands, they also are pro-growth, pro-business and focused on jobs.
And that is good. It is just that it would be better had they found a more productive way to express it.