Recently I learned the General Assembly had established a joint House-Senate study committee to evaluate the various tax credits the state offers as economic development incentives. As it happens, I’ve been working off and on for a while now on a piece about Georgia’s Job Tax Credit (JTC) program and can save the committee some time and trouble on that one.

It’s pretty much an abject failure no matter how you look at it. Specifically:

First, the JTC program’s original goal of incentivizing job creation in the state’s least developed counties seems to have been all but abandoned. When the program was created in 1991, it offered $1,000-a-year tax credits to businesses that created at least 10 jobs in a so-called “Lower 40” county and maintained them for at least five years¹. Since then, the program has been steadily expanded to the point that tax credits are available for certain types of jobs created in all 159 counties. And how has that worked out? Based on the latest report prepared by the Georgia Department of Revenue (DOR), Georgia businesses in 2022 took $390 million in state tax credits for the creation of more than 130,000 jobs. But only seven percent of those — 9,269, to be exact — went to Lower 40 counties. What’s more, the vast majority of those jobs — 7,147 — went not to small, impoverished rural counties but to larger population centers that suffer from various economic woes and have dropped into the Lower 40: Bulloch, Clarke, Clayton, and Dougherty. Forty-three of Georgia’s 159 counties didn’t receive a single JTC-supported job in 2022, including 10 of the Lower 40 counties. Probably the two most economically distressed regions in the state are southwest Georgia and the cluster of counties in east central Georgia. The map above puts a bright spotlight on the JTC program’s biggest irony and shows clearly that the program is doing little if any good for the parts of the state it was designed to help.

So, where were the other 120,000-plus jobs created? Well, the 18 counties that make up the JTC program’s most affluent group of counties — the so-called Tier 4 — got 26,645 jobs, nearly three times as many as the Lower 40, and the bulk of the JTC-supported jobs were created in the Metro Atlanta area. The map at left highlights all the counties that, according to the DOR report, got at least 1,000 JTC-supported jobs in 2022 (the number shown below each county name is the number of JTC-supported jobs created in that county). Nearly 84,000 of those jobs were created in a chain of 11 contiguous counties running from Carroll County on the west through Metro Atlanta to Hall and Jackson counties on the east. The businesses creating those jobs claimed $253.7 million in tax credits. Fulton County alone got 38,930 JTC-supported jobs in 2022. In other words, instead of creating jobs in the counties the program was originally intended to help, Georgia businesses have flocked instead to counties with better-educated and healthier workforces and with critical building blocks like good schools and hospitals — even though it means smaller tax credits.²

The table below summarizes the number of jobs created and tax credits awarded by JTC tier in 2022.

The table at left shows the number of JTC-supported jobs created in each JTC tier, as well as the sum of the tax credits awarded for those jobs, in 2022. I’ve divided Tier 1 into two groups. Tier 1A is the so-called “Lower 40” group of counties, the least developed in the state; Tier 1B is made up of 31 additional economically distressed counties that have since been added to the Tier 1 group.

Second, it’s far from clear that job tax credits actually trigger the creation of many new jobs — or that they’re a good investment of tax dollars. The Georgia JTC program and others like it have been subjected to wave after wave of economic studies aimed at gauging their actual effectiveness. In 2021, three economists associated with Georgia State University’s Fiscal Research Center (FRC) subjected the Georgia program to the equivalent of three disparate academic colonoscopies and published a 15-page paper in Regional Science and Urban Economics that concluded, in part: “In summary, our three approaches provide little to no support for the hypothesis that [job creation tax credit] programs cause an increase in net employment.” In 2022, one of those GSU FRC economists, David Sjoquist, and another colleague, Peter Bluestone, put together a 54-page report on the JTC program’s effect on Georgia’s overall economy and its fiscal impact on state government. Their conclusion? It’s a money-loser for state government and has only a “very small” impact on overall state employment.

Third, one unhappy takeaway from all this is that the state may have wasted nearly $350 million on the Job Tax Credit program in 2022 alone. In their 2022 study, Sjoquist and Bluestone analyzed the JTC program’s fiscal and economic impacts based on an assumption that only 11.4 percent of all the jobs for which the state awarded tax credits would not have been created without those tax breaks. That 11.4 percent figure was a high-end estimate that emerged from a review of numerous studies of job tax credit programs in Georgia and other states. Apply that number to the 2022 jobs and tax credit data and what you get is that only about 15,000 of the 130,000-plus jobs for which the state awarded tax credits in 2022 would not have been created without those tax credits — and that the tax credits awarded would have been a little less than $45 million. That means the other 115,000 jobs probably would have been created anyway and that the state would have had about $345 million to either spend elsewhere or return to the taxpayers.

Now, admittedly, it’s difficult to know which 15,000 of the total 130,000 jobs would not have been created but for the tax credits, but you’d think there has to be a better way of running such a program than simply opening the doors to the state treasury to just about anybody who creates a job anywhere in the state. Indeed, at this point, perhaps the most charitable assessment of the JTC program is that it’s one of those government programs that was born of good intentions but somehow got away from the state’s leaders and snowballed into an essentially bottomless trough of tax dollars.

Put perhaps less charitably, the JTC program has been expanded over the years to the point that businesses claiming JTC-eligible jobs anywhere in the state have what amounts to private and essentially unsupervised access to the state treasury. Their tax returns are confidential, so it’s impossible to know who is receiving these tax breaks, or for how much. Plus, as nearly as I’ve been able to determine (and I’m willing to be corrected), there’s no practical way of confirming that jobs claimed for tax credits actually exist; the state apparently relies entirely on the word of the businesses claiming the tax credits.

Now, as it happens, your humble scribe here at TIGC isn’t the only one who’s been poking around at the state’s Job Tax Credit program. The Georgia Budget & Policy Institute (GBPI) has conducted an even more wide-ranging study of the program and found, among other things, that Georgia has perhaps the least transparent JTC program in the nation. Staci Fox, GBPI’s president, testified at the most recent hearing of the joint House-Senate panel studying the state’s tax incentive programs and cited a 2022 study by a Washington group called Good Jobs First that gave Georgia a transparency score of zero-point-zero and ranked it in a tie with Alabama for dead last among the 50 states — and even Alabama has now passed a law requiring its Department of Commerce to put online the names of companies that receive economic development incentives.

One of GBPI’s key recommendations was to require automatic state audits on recipients of tax credits of $1 million or more. By my count, there have been 280 tax credit claims of at least $1 million since 2017, including 102 — far and away the record — in 2022.

So, bottom line, Georgia’s Job Tax Credit program suffers from a world-class case of mission creep; apparently doesn’t actually stimulate very much job creation; and has exploded over the years into a potful of business tax breaks that is now approaching $400 million a year and is essentially protected from public view. I’m pretty sure this is not exactly what the program’s creators had in mind.

1. Each year, the Georgia Department of Community Affairs ranks all 159 counties using a formula based on county-level PCI, poverty rates, and unemployment rates, and then splits the counties into four tiers. When the JTC program was created, it only provided tax credits for jobs created in the 40 least-developed counties in the state — the so-called Lower 40. Over time, the program has been expanded to the point that certain jobs in all 159 counties can qualify for tax credits, and the number of jobs required to qualify has generally been reduced and the tax credits themselves have been fattened up. For more state information on the JTC program, click here. For a good history of the program, click here. ↩︎
2. The numbers in this paragraph are based on my analysis of the Department of Revenue’s 2022 JTC report, and building that analysis was no easy matter. DOR would only provide this report as a static PDF document and not as an Excel spreadsheet, which I need to analyze the data. Ordinarily, I can take a PDF like the one DOR provided and use an Adobe program to export the data to Excel, but DOR’s documents are apparently Adobe-proof. All I get when I run DOR’s JTC reports through the Adobe program are buckets of digital spaghetti. DOR cites “security reasons” for not providing the data in a spreadsheet and says that, in any event, it couldn’t do that without making some kind of “system change.” When I asked DOR to tell me what kinds of “security” concerns they had in mind, I was told the use of PDFs was intended to keep “third parties” from “manipulating” DOR data. Well, they’ve got me there. Manipulating their data is exactly what I needed to do, and sure enough they slowed me up and made my work harder. Luckily, however, I am a mostly retired old guy with too much time on my hands, so I have typed the entire 25-page 2022 report into an Excel spreadsheet, a process that required approximately 2,500 keystrokes. The problem here is that you can’t make 2,500 keystrokes in copying a document like that and not make some mistakes. Or at least I can’t. Despite being careful in the initial keystroking and conducting a fairly rigorous review process, I haven’t been able to match my numbers exactly to DOR’s. But I’m close. The DOR report put the number of jobs created at 130,988; I came up with 130,354. It put the amount of job tax credits claimed at $388,821,645; I came up with $390,286,154. In each case, I’m off by less than half a percent. Close enough, I submit, for government work. My numbers may be off just a hair, but I don’t think that changes the overall picture. ↩︎

(c) Trouble in God’s Country LLC 2023