Prioritizing Approaches to Economic Development in New England: Skills, Infrastructure, and Tax Incentives
By Jeffrey Thompson, Political Economy Research Institute (PERI) at the University of Massachusetts, Amherst
August 11, 2010
The recession has put many Vermonters out of work. So policymakers are looking for an economic boost that will get Vermonters working again and give their families ongoing stability.
What’s the best way to do that? Vermont has used tax credits and other incentives for companies to do business here. At the same time, Montpelier has cut investment in public infrastructure and services, calling it “unaffordable.”
But this strategy is backward according to an in-depth analysis by economist Jeffrey Thompson who studied the best research on how to build and sustain healthy economies. Indeed, rebuilding Vermont’s neglected roads, bridges, and water systems and robustly funding education, from preschool to adult worker education, will benefit the state’s economy far more than tax credits and other business incentives.
“The available evidence suggests that the most effective options for creating jobs, in the short and long term, are the same options that support public services: investing in infrastructure and building the skills of the current and future workforce,” says the report.
“The tax cuts and business subsidies approach to economic development, on the other hand, does little to create jobs in the short run, and is not the most effective approach to generating growth over the long term.”
Investing in Vermont’s public structures is the best way to give the economy a needed boost and create lasting prosperity for all Vermonters.