Don Fry Commentary on WYPR
Elected officials refer to just about every kind of government spending as an investment. While this is true, much government spending doesn’t lend itself directly to a traditional dollars-and-cents measurement of return on investment.
But in Maryland there is one type of government investment that is eminently quantifiable: tax credits. They are proven incentives that reliably generate measurable multiples of private business investment and jobs. As I reported last month, the state’s two-year-old biotech investment tax credit has already prompted $24 million in private investment in early-stage bioscience firms here — addressing a critical need to grow an industry that will play a central role in Maryland’s economic progress.
An even more compelling example of tangible return on a state tax-credit investment is this: the $213 million in tax credits that Maryland granted since 1996 for commercial rehabilitation of historic buildings in Baltimore City and across the state generated $1.7 billion in economic development and more than 15,000 jobs, according to a recent Abell Foundation report.
Objectively measured, these tax credits are among the most effective government tools to prime the private-sector economic development engine. That’s part of the reason why Governor O’Malley, during the past year, proposed to significantly strengthen both of these tax credits.
However, the recession and Maryland’s widening budget deficit intervened. The Governor has deferred increasing the amount of available biotech tax credits. And some state fiscal officials and many lawmakers still view the historic rehabilitation tax credit simply as a short-term budgetary cost — something that reduces tax revenue, rather than as a highly-efficient leveraged investment that generates jobs and economic development.
But the value of tax credits is not a vague assertion. The Abell Foundation checked. It found that each historic rehabilitation tax-credit dollar generates more than $8 in private-sector economic output.
I hope that lawmakers eventually shed their skepticism about these and other Maryland tax credits. They’re government investments that deliver. And we’re going to need them as we rebuild our economy.
For the Regional Business Report, this is Don Fry, President and CEO of the Greater Baltimore Committee, for 88.1 WYPR, your NPR news station.