A recently-published article from Governing Magazine details a soon-to-be-published study that will shed some light on the economic impact of various government incentive programs. The Rio Grande Foundation (and most mainstream economists) have long-criticized such programs.
According to the report, “Most of the programs (researchers) looked at — investment tax credits, property tax abatements, and tax credits for research and development — were linked with worse overall fiscal health for the jurisdiction that enacted them.” The forthcoming study can be found here.
Researchers also found and ranked states by the amount of incentives as a percentage of the value added by a state’s industries, which represents the value of products produced beyond costs of materials. Interestingly, New Mexico was ranked (by a large margin) the state with the highest incentive rate among the three dozen states studied.
See that chart below. Whether it is New Mexico’s generous and economically-dubious film subsidies or other tax breaks and incentives, the economic data shows that government incentives are not very effective. Perhaps it is time for New Mexico policymakers to choose a different path?
