Every year, dozens of governors, particularly Republicans, win plaudits for curbing business taxes and state expenditures. The Cato Institute, for instance, recently gave A’s and B’s to those (Rick Perry, Mitch Daniels, Tim Pawlenty) who have supported “spending cuts and pro-growth tax cuts.” There’s just one problem with this approach: it doesn’t work, according to a new report by the University of Massachusetts. Spending on infrastructure and education, the report shows, is the wiser course since tax breaks do little to create jobs.
In Connecticut, for example, corporate tax breaks have expanded to $350 million a year, up from $3 million in 1990. But they’ve had “no meaningful impact” on jobs because they haven’t improved the area’s productive capacity the way new roads and skills would. Each additional $1 million invested in infrastructure, by contrast, could create about 12 jobs, according to the study; vocational training could raise the average worker’s earnings $100 a month. For a politician, however, “vocational training” may not bring in the laurels.