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Friday, September 9, 2011 - 1:09pm

What Does Business-Friendly Mean?

President Obama’s American Jobs Act, unveiled Thursday, would reduce some federal payroll taxes on business, which he says will create jobs. Georgia tax code imposes a relatively light tax burden on businesses, earning it praise for being “business-friendly.” But what does it mean that Georgia is business-friendly, and is it boosting job growth?

When cable channel CNBC said earlier this year that Georgia is the fourth best state for business, it didn’t surprise Chris Cummiskey, head of the state’s economic development agency.

“We rank always in the top five to seven places to do business in the country,” he said.

Allan Essig with the Georgia Budget and Policy Institute says it's important to define what business-friendly means, and he's familiar with the phrase's two main interpretations.

“If you define business-friendly by taxes, you don’t get much more business-friendly than Georgia,” he said.

That’s because Georgia firms pay some of the lowest taxes in the nation.

Kelly McCutchen of the Georgia Public Policy Foundation says Georgia’s tax code is fairly friendly to big business. But he says small companies do pay.

“They pay personal income tax -- the startup businesses, those that are really creating the jobs,” he said. “That’s where our tax structure is not competitive. We are competing with Tennessee, and Texas and Florida that don’t even have an income tax.”

And what about the state’s 100-plus sales tax exemptions and tax credits for companies? Both sides agree the state doesn’t know if those breaks actually lead firms to create jobs.

McCutchen questions whether some of the incentives are even necessary.

“We’ve been very critical of the tax incentives that are offered to big businesses in Georgia – very concerned that these tax incentives are not getting us jobs that wouldn’t have already come to Georgia," he said.

But Cummiskey of the state’s Economic Development agency says that's a risk Georgia sometimes may have to run.

“My question would be, how are you going to know exactly which ones would and which ones wouldn’t," he said. "There are times I am sure companies are going to grow here in Georgia that they are going to get a statuatory incentive that they might have been here anyway for. But surely it’s more important to attract 1,000 jobs that wouldn’t be here because of those incentives than give ten extra incentives away because they were going to be here anyway.”

In any event, Essig of the GBPI says low taxes can't be the only factor in making the state truly business-friendly.

“If you look at what businesses are really asking for – a trained workforce and a transportation and communications infrastructure – that’s where we’re failing and that’s what they say they need to succeed,” he said.

It's another area of agreement between liberals and conservatives. McCutchen said the state has to boost investment in education and transportation, and quick. At 10.1 percent, Georgia’s unemployment rate has exceeded the national average for four years.