Conservatives are often accused of favoring wealthy individuals and corporations over those in poverty. While some social welfare programs are undoubtedly doing more harm than good for Mainers, corporate welfare programs that give tax breaks to large corporations are also ineffective and should not be created by government at any level.
According to the Portland Press Herald, IDEXX is slated to receive up to $16 million in tax breaks for opening their new Westbrook headquarters this year. The company will receive $800,000 in tax credits annually over a 20-year period. To qualify for the Major Business Headquarters Expansion Program, IDEXX must employ an additional 80 employees every year for the first 10 years of the program and must maintain the 800 employee threshold to continue receiving the annual tax credit.
Senate President Troy Jackson said the corporate tax break program was passed specifically to benefit IDEXX and to facilitate the growth of the company but noted that other corporations would be able to take advantage of it as well. Both Republicans and Democrats supported the measure in the 128th legislature.
Not only is it irresponsible for the legislature to create laws with a specific company in mind, but government should not be in the business of picking winners and losers by giving out tax breaks.
The Major Business Headquarters Expansion Program has a limited scope — only companies that have 5,000 full-time employees worldwide and employ 25 percent of their workforce in Maine are eligible for the tax credit. Further, the company has to show that it will make a qualified investment of $35 million or more to “design, permit, construct, modify, equip or expand the applicant’s headquarters.”
In other words, there are few companies that could qualify to receive this tax credit in Maine. Worse yet, the Maine Legislature passed a similar bill that would benefit large food manufacturing companies this session.
Maine lawmakers need to ask themselves why some companies might leave if they are not offered incentives. Here’s a hint: It might be because it is expensive to do business in Maine, and the overall tax and regulatory burden does nothing to soften the blow.
While the new IDEXX facility will likely create 800 new jobs in Maine, there are other avenues that would likely facilitate similar growth. For example, increasing economic freedom by reducing the state’s tax burden across the board would attract new Mainers and businesses to the state. In addition, removing regulations that burden or prevent individuals from starting a business or obtaining a license to practice their trade in Maine may help create more jobs throughout the state.
According to the Tax Foundation, “a lower corporate tax rate also means that new investments face a lower tax burden on future returns, so at the margin, firms are encouraged to pursue more investments.”
Put simply, if lawmakers focused on how to make Maine less expensive to do business in the first place rather than compensating certain businesses or industries through tax credits, it might be easier to attract and retain new businesses and investments in our state.
Maine’s top marginal corporate income tax rate is 8.93 percent and generated $185.7 million in revenue in 2018. Reducing the corporate income tax for every corporation in Maine would produce far more growth and job creation than corporate welfare programs that benefit a few industries and corporations at the expense of other taxpayers.