What's the plan on incentives?

By Patrick Gannon | Jul 22, 2014

RALEIGH – For a couple of years now, we've heard that the Republicans who control the General Assembly want to stop "picking winners and losers" and eliminate as many of the tax credits, loopholes, special exemptions and other incentives as possible from the state's tax code.

That sounds like a plan.

Just last week in a newsletter to constituents, Republican Sen. Brent Jackson described the GOP's tax reform strategy as "making the tax code flatter, simpler and more transparent by treating everyone the same and removing loopholes and special treatment provisions implemented under previous administrations."

But Jackson, a Sampson County farmer, then goes on to explain why he believes a sales tax exemption for certain farm supplies is different and why that perk should remain on the books. Jackson said in the newsletter, titled "Tax Reform Explained," that farmers' seeds, fertilizer, fuel and other inputs required to grow shouldn't be taxed if the final product is taxed. "That amounts to double or, in some cases, triple taxation and places an undue burden on the grower," he says.

"I feel that the ag sales tax exemption is essential to securing and expanding this vital, $78 billion industry, so I worked to convince my colleagues to keep it," Jackson wrote in the newsletter.

I'm confused because similar words could be used by any lawmaker wanting to retain any type of exemption or incentive for any type of industry. Getting rid of some tax loopholes and exemptions and leaving some on the books would seem to me to be "picking winners and losers."

Meanwhile, I walked into a committee meeting last week to find senators considering a bill to create a new incentives program and add money to existing programs. The bill, approved by the committee, would create a "New Markets Tax Credit," which would give insurance companies a break on their gross premiums taxes. In exchange, the insurance companies would invest in "community development entities," which would then help fund upstart companies in economically distressed areas where banks are slow to loan.

It's not clear whether those changes are going to become law, but it doesn't seem like they would fit the "plan."

Also, some of the same GOP senators who now want to end a historic preservation tax credit were among the sponsors when the credit was created back in the 1990s. And lawmakers who want to eliminate incentives for film production companies are OK – at least for now – with allowing tax breaks for professional car racing teams and passenger airlines, among many others, to remain in the law.

I'm confused because Republican lawmakers a couple of years ago reportedly balked at the idea of offering a large amount of upfront cash incentives to try to lure Continental Tire to southeastern North Carolina – the company chose South Carolina instead – and because the Republican-led Senate now wants to give the commerce secretary a special pot of money to close similar deals.

I'm confused because I've never seen a written plan about this issue and because the plan I've heard described countless times, like in Jackson's newsletter, appears to be contradicted routinely in Raleigh.

So if someone's seen a written plan, please send it my way. I'm having trouble matching words with actions.

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