WHEREAS:

State and local government services and public infrastructure make a vital contribution to the development of local economies and the creation of jobs in the private sector. Adequate health and social services and good recreation facilities improve the quality of life in an area, making it more attractive for business development. Businesses need good police and fire protection, just as individual citizens do. High-quality education and job training services promote the productivity of the local work force, and public investments in physical infrastructure (such as roads, bridges, and sewers) enhance the efficient flow of commerce; and

WHEREAS:

State and local economic development, in turn, is crucial for governments. Growth of the private economy underpins the ability of state and local governments to provide adequate public services to their residents at a level of taxation that is not burdensome. It also raises the standard of living for all residents, of the state or local jurisdiction; and

WHEREAS:

The economic development strategies of many state and local governments include ineffective and costly corporate tax incentives to attract new, expanding or relocating businesses. Tax incentives aimed at improving the so-called "business climate" range from cuts in the corporate tax rate to special sales tax exemptions, from property tax abatements to the establishment of tax-advantaged "enterprise zones." Many states are also deliberately skewing cuts in personal income taxes toward high-income individuals, in hopes of attracting corporate executives and the headquarters in which they work; and

WHEREAS:

The use of tax incentives for economic development is counterproductive. The revenue loss attributable to tax incentives and tax cuts for upper-income individuals undermines the ability of state and local governments to support needed public spending, which in turn reduces the quality of life in an area and makes it a less attractive place to do business and to raise a family. Tax incentives for businesses shift the burden of taxes onto individuals, as well; and

WHEREAS:

Tax incentives rarely accomplish their intended goals. Since state and local taxes are such a small component of total business costs, they do not play a critical role in business location decisions. Tax incentives are most likely to subsidize business investments that would have been made anyway. Finally, tax incentives rarely help the new, start-up businesses that account for the lion's share of all new jobs, because new businesses usually do not make enough money to owe taxes. Direct assistance programs for businesses (such as employee training, technical assistance, and access to venture and operating capital) are far more effective at stimulating business expansions and new small business development; and

WHEREAS:

Advocates of tax incentives frequently support other measures intended to signal to the business community that a "favorable business climate" exists in their state or locality, many of which represent a direct attack on the interests of working people. These include so-called right-to-work laws, cuts in unemployment and workers compensation benefits, low workplace safety enforcement, and reductions in income support programs. "Business climate" promoters like to tout as well the low wages and low level of unionization in their areas.

THEREFORE BE IT RESOLVED:

That AFSCME deplores the whole approach to economic development based on signaling to footloose corporations a state's or locality's receptive "business climate." This approach may succeed at stealing jobs from somewhere else, but it does nothing to create new jobs; and

BE IT FURTHER RESOLVED:

That AFSCME will vigorously oppose the use of all types of "beggar-thy-neighbor" corporate tax incentives as well as individual tax cuts skewed toward the wealthy to attract businesses to locate in a state or locality, including property tax abatements, sales tax exemptions, corporate income tax loopholes or rate reductions, and the establishment of "enterprise zones"; and

BE IT FURTHER RESOLVED:

That AFSCME endorses real economic development strategies, which promote the healthy development and expansion of existing companies and new, small businesses. AFSCME supports such direct aid programs for business as loan guarantees and employee training, because they are visible and allow the recipients to be held accountable for the jobs they create from taxpayer funds; and

BE IT FINALLY RESOLVED:

That AFSCME endorses positive approaches to economic development through improvements in the quality and availability of public services, strong programs in education and training and provision and maintenance of needed infrastructure.

SUBMITTED BY:

International Executive Board