Our take: Maine can’t prove the tax credit program works

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The Maine government watchdog has re-examined a state’s business incentive tax credit program and came to an old conclusion.

Investigators with the Office of Program Evaluation and Government Accountability were unable to determine whether the Maine Seed Capital Tax Credit program could meet any of its stated objectives, either to the creation and retention of jobs or to attract investment.

It is important to note that investigators did not find that the program was not meeting its objectives. They found that the information collected by the state was not sufficient to answer the questions.

We have been here before.

For years, interest groups have contested the idea that the state can use tax incentives to create new jobs.

Unlike research and development grants, which have a solid balance sheet creation of businesses and jobs, tax breaks for businesses are more difficult to assess.

To justify these programs, the government would have to prove that, without the program, the new jobs would not have been created and the new investment would have gone elsewhere.

And according to OPEGA, they don’t.

From the report:

“While the goal of the program is to create and maintain jobs, no effective program design element has led to this result. The participating companies we spoke to described a range of experiences in creating and maintaining jobs, but there is a lack of systemic program data to reliably measure this outcome.

And:

“Another goal of the program is to increase investment, but we have identified design features that allow credits to go to investors who may have invested anyway due to a connection to the business. “

Lack of access to capital is often cited as a barrier to starting new businesses, and new businesses are the most prolific source of new jobs. Maine has a vested interest in helping these businesses get started.

But, obviously, the program shouldn’t give investors another dime until the state can prove it works. The Legislative Assembly and the Department of Economic and Community Development will need to do a lot more work to integrate data collection into this and other incentive programs to show that they are not just giveaways to people who don’t. don’t need help.


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