Tom Corbett, Economic Dunce: But It's For The Jobs!

Math is not his strong suit....

"Some say Pennsylvania should not invest in our future. They say the gas is here and Shell will come here regardless," the Republican governor said at a Capitol news conference. "They are wrong."
Underlining arguments he's made more than once in the nearly two weeks since news of the credit became public, Corbett argued that the state is competing with Ohio and West Virginia for the so-called "cracker plant" that Shell has tentatively said it will build in Monaca, Beaver County.
He called on lawmakers of both parties to swiftly approve the credit, which the administration has described as an "essential" part of the 2012-13 state budget.
"This is not about politics, this is about jobs," he said.

Right, right, they won't come here and take the extremely profitable gas out of the ground, because they only want our gas if they can pay 5% less than what they pay next door, right? I mean this is a stupid argument.

He goes on:

In a brief question-and-answer session, Corbett deflected when asked why the administration had relied on a study by the American Chemistry Council to buttress its claims that the cracker would crate 20,000 new jobs in western Pennsylvania.

According to the specialty gas news site State Impact Pennsylvania, the council is an industry trade group that counts Shell Chemical as a member. The state has not conducted its own research into the jobs figure, the site reported.

The industry won't get the credit if it doesn't create jobs or products in the state, Corbett said, adding that he believes the plant will attract smaller manufacturers to western Pennsylvania and the rest of the state. 

That's a nice little 20,000 number, but let's be serious- the study only predicts 2,396 direct jobs from the plant- so let's stop using it.

I'm by no means ripping the idea of a plant, or the jobs, or the union and business leaders arguing for the plant- the plant itself is not a bad thing at all. The problem is very directly Corbett's "tax credit." Let's call it the giveaway it is. He's giving $67 million a year, for 25 years, is $1.675 Billion dollars in credits. On the annual, for 2,396 jobs, Corbett is giving them $27,963.27 a job in credits. Pennsylvania's income tax rate (to the state, not the Fed's) is 3.07%. This means if all of those jobs paid $100,000 a year (which I am not betting on) and were taxed at that rate, the state would collect $3,070 a year back, leaving it $24,893.27 short per job. At $1,000,000 per year, per worker, the state would collect $30,700 a year back, making it profitable. I'll bet you a steak anywhere that's not the case though. For those of you who want to argue we should use the full, overall, tax burden of 9.8%, that presumes that all new people move in and buy new houses, buy cigarettes, and make use of all taxable items. We should be hoping the workers are not all shipped in, but what if they were? You would still fall $18,163.27 short on every worker for the credit. The math doesn't work. It's not worth running the state further into debt to create 2,396 jobs in one county. For the record, even if Corbett got his 20,000 jobs, it's not working. It's $3,350 a job, per year, and again, at $100,000 salary, per job, you're $280 short, per job. The deal is not a good deal.

States have to balance their budgets annually, by law. While I think this is a great idea to build it here in PA, and I hope it happens, the state should not be cutting a deal that is so generous that it sends the state into a hole that good revenue collections can't even get it out of. By the way, this is the second tax credit given to these guys- they already have a 15 year deal done. This is a crappy deal for Pennsylvania's citizens.