Our Observation

It seems like everyone is getting in on the business incentives game these days and Gov. Rick Scott is leading the charge.

The Republican governor asked for a $458 million cut in the corporate income tax but lawmakers gave him much less than that — $30 million. His plan is to phase out the corporate tax — which flows about $2 billion a year into the state’s coffers — over the next seven years.

Lawmakers also increased a corporate tax exemption from $5,000 to $25,000, which will mostly benefit small businesses, and Scott set up the Department of Commerce — two doors down from his office — that is charged with collecting data to judge the impact of these business incentives.

But he’s not doing it for the businesses, he says he’s doing it for you. Call it trickle-down economics, without the notorious name. Scott’s reasoning is that if Florida is friendlier to business, then more will come here and create jobs for the more than 1 million Floridians who are unemployed. “[Lawmakers] know that reducing taxes will be part of the process of getting the state back to work,” Scott said during the state’s budget negotiations.

It all sounds good, in theory. Scott’s plan is to create 700,000 jobs in seven years and there’s the potential that all the credits and incentives will bring in quality, high-wage positions. But at what cost? Eliminating the corporate income tax shifts the tax burden onto the residents, 10 percent of whom don’t have jobs, and further reduces services. Scott did not mention what, in a slow economy, will fuel consumer demand enough to make thousands of new small businesses want to set up shop in the state.

As property tax collection continues to fall — and now corporations are keeping their $2 billion — governments, with already bare-bones budgets will have no choice but to continue making cuts to health care and education and all of the programs that may not make the state any money, but sustain our quality of life.

Incentives to lure businesses or to help them expand in the state or its cities and counties are worthy. But they should expire — just like any deal. Florida is like a business that puts a deal on Groupon for 10 percent of what it would usually cost. Although “Florida” is actually losing money, it’s getting customers into the store in the hopes that some of them will become regulars. They become regulars not because they’re continuing to get a dirt-cheap deal, but because they like what the store (state) has to offer in the long-term — its schools, its parks, services supported by tax dollars.

Lawmakers should make sure there’s structure to business incentive programs so the incentives are not given out on a haphazard basis. Model them on Enterprise Florida’s Qualified Target Industry Tax Refund, which gives refunds based upon very specific results, such as how many jobs would be created, how much the average salary is and if the business is locating to a Brownfield area.

The state’s new department should pay close attention to whether the credits are actually working. And if they’re not, cut them off. Incentives should be available to businesses but government leaders cannot lose sight of who they’re trying to help in the first place — the citizens.