Giving tax credits to businesses is an effective way to generate economic benefits. It’s a process that has been used nationwide with great success. Tax credits for businesses have helped economically distressed communities to generate jobs and other types of economic opportunities. They have been used effectively in many states.
Health, Child Care and Educational Facilities Benefit
In communities, nationwide tax credits have been used to create loans to support struggling schools, child care facilities and community health care centers. They have also helped fund energy assistance programs diversify the economic base of many communities and strengthen and support local industry. The programs created have generated significant sustainable financial and social returns in depressed rural and urban communities. Programs in states like the New Markets Tax Credit in Maine have shown significant progress.
The benefits of these tax credit programs have been many and diverse. They include conserving resources, saving homes, preserving affordable housing, extending educational services and helping to grow businesses in communities that need them most. Studies have also shown tax incentives for companies involved in film production in 37 states benefit state and local economies through increased employment, opportunities for local actors and the creation of high paying jobs.
Short and Long-Term Benefits
The benefits from the tax incentives created benefits right away and for many years to come. It creates jobs right away and encourage studios and production companies to set up shop in depressed areas provide opportunities and an economic boost to the local economy for years to come. It also helps increase tourism and encourage the development of industries and businesses to support the film production. Overall capital investment also increases and the economic impact of these types of tax credits have resulted in higher local and state tax revenues.
Corporate Income Tax Credits
Tax credits are generally offered to corporate entities to promote specific types of economic activity. They allow corporations to deduct part or all of certain expenses from their income tax bill. The tax credits often match dollar for dollar the amount the corporations spend on research and development, facilities and equipment. They also include job creation tax credits for hiring disadvantaged or hard to employ workers including the disabled, low-income veterans, low-skill workers, welfare and food stamps recipients and ex-offenders. The tax credits are usually between $1000, and $5,000 per worker.
Properly evaluated and managed corporate tax credits can change the way corporations view certain localities and transform unproductive communities into productive ones.