Today, the Honolulu Advertiser ran an article on 221/215
. The article is primarily a strong attack on the prudence and viability of the tax credits. The article cites a new 25 page report by the Department of Taxation
that is well worth reading.
The numbers look bad and the public reaction (both in quotes and comments from the community) are heavily negative.
The report states:
- $300 M in tax credits have already been claimed through 2006
- Another $350 M is projected to be claimed from 2007-2011.
- Only 2245 jobs have directly been created (David Watumull estimates over 400 total if independent contractors are included)
- Software companies only claim 16% of the total tax credits claimed
- Performing arts companies claim 33% of the total tax credit claimed
- Depending on what figures you use, the cost to the state per job created is somewhere between $140,000 to $530,000
Ongoing Discussions at TechHui
We have been discussing this issue for months - most recently on Dan's thread about finding and retaining talent
, on the discussion to lobby for 221/215
, and in the original discussion about caring for 221/215
Are the Tax Credits Worth it?
I have not seen anyone in these discussions provided a careful analysis of the benefits of 221/215 relative to the costs. I see a lot of general excitement but not thoughtful examination of why the ROI is really there.
Giving companies large pots of money with little restrictions sounds like a bad idea. None of the reports I have seen shows otherwise.
While I am sure many companies using 221/215 are legitimate and have noble intentions, the program as a whole, seems to be an invitation to fraud and abuse.
I am looking forward to learning from a discussion on this topic.