Morning Must Reads: The Participation Trophy In Economic Development Ideas Goes To....

This morning Jane M. Von Bergen details an economic development program in Chattanooga, Tenn. that aims to offer ten $10,000 forgivable mortgages to people who know the computer programming languages Java, Perl, Python and/or Ruby. There is one catch: you have to move to Chattanooga!

"Coming from this town to go there?" asked software developer Chris Cera, 34, of South Philadelphia, in an interview last week. "Maybe if I had family there."

Buying business is nothing new in the toolbox of economic development — consider the Aker Philadelphia Shipyard and the proposed city warehouse operation in the Northeast for Teva Pharmaceuticals USA, the Israeli-based manufacturer of generic drugs.

But these incentives, which often run in the millions of dollars in government grants and loans, typically apply to businesses, not individuals, with job creation as the goal.

The reasons why someone might locate in one city over another are very complex, as are the reasons why a for-profit business might make the same decision. Local government officials don't have the resources to shape those reasons in a meaningful way and should focus their limited resources on making their communities more livable for the people who already live and work in their communities. Education and public safety come to mind as key priorities for all local governments.

Now that I have you sneering at those Mayberrians in Tennessee, I should probably note that at least Chattanooga isn't bankrupt and pondering giving away tax revenue. Meanwhile, real estate developers here in Central Pennsylvania are pushing for the renewal of a property tax abatement in the City of Harrisburg. There is no credible evidence that property tax abatements lead to more economic activity, but they do carry big costs, especially for communities with serious education and public safety problems that also happen to be BANKRUPT.   

The chairman of the House Finance Committee in the General Assembly is proposing to let qualifying companies keep 95% of the personal income tax their employees pay to the state. Representative Kerry Benninghoff argues that there is no direct cost to the state transferring General Fund revenue to private companies.

Pennsylvania could have a new pitch for companies looking to relocate: Settle in the Keystone State, and keep the heaping pile of money your employees pay as state income tax.

It's the concept of a new jobs-boosting proposal from state Rep. Kerry Benninghoff, R-Bellefonte, chairman of the House Finance Committee.

The proposal, called the Promote Employment Across Pennsylvania Program would let qualifying businesses keep 95 percent of the personal income tax that their employees would otherwise pay to the state. The other 5 percent would go to the state...

Benninghoff said the current system of offering tax breaks keeps governments from collecting revenue at all. With PEP, new companies would still pay local property and state sales taxes, and in some cases, state corporate net income taxes.

And, there's no direct cost to the state, he added.


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