Study Questions Tax Incentives

The study was conducted by the N.C. Department of Revenue.

The Lee Act, which allows N.C. businesses to qualify for tax incentives in order to create more jobs and increase company revenue, currently is being revised by the N.C. General Assembly.

The Senate has already made revisions, but more changes are anticipated when it goes before the House next week.

"We feel revisions will sail right through the House and will be passed without much debate," said Greg Sampson, author of the study.

Sampson's study attempted to explain the act's implications as a cost-benefit analysis.

"The evidence is not compelling on any number of features within the act. The benefits are not outweighing the costs," he said.

Sampson said metropolitan areas are receiving a greater amount of incentives than rural counties.

"There is a clear bias between incentives to poor counties and large cities," he said. "The benefits are going to the areas that least need them."

But Sampson's goal still remains the same. "We are taking existing data and attempting to ask hard questions about how the act needs to be revised," he said.

"We want to flesh out the costs and benefits to see if this act can work well throughout the state as a whole," he said.

But Tad Boggs, a N.C. Department of Commerce spokesman, said the act has accomplished its goals thus far.

"The act has been an effective tool for North Carolina and has generally accomplished its goals as far as creating new jobs and investments," Boggs said.

He said tax breaks are being carefully administered.

"We do not hand out money left and right, only to businesses that qualify for such incentives," he said.

But lawmakers are pushing for definite revisions of the qualifications.

"The study suggests that the act does not work at all," said Paul Luebke, D-Durham.

Luebke vowed to support revisions to the act that would grant more incentives to poorer counties.

"We feel that the tax breaks in wealthy counties are unnecessary because businesses are already attracted to these areas," Luebke added. "We want to find solutions that will benefit the poorer counties."

The State & National Editor can be reached at stntdesk@unc.edu.