State lawmakers are considering a bill that would use some taxes to invest in businesses. The goal is to create jobs but critics say it would mostly benefit investment companies, not the state.
Under the proposal, the state would earmark up to $125 million of insurance companies’ taxes.
The tax revenue would go to private money managers who would then invest it in start-up companies.
Rep. Ben Harbin, a Columbia County Republican, sponsored the bill. He says private companies sometimes need state help.
“I’m all for the free market doing it," he said in a phone interview. "But the free market economy right now is not growing the way we want it to so the expertise of both the state and the private sector working together, hopefully that will be the right answer.”
Harbin said insurers in Georgia pay some of the highest insurance premium taxes, which under the bill, would provide the seed capital. He said he would prefer to cut the taxes. But in lieu of that, this plan would provide tax credits for insurers and aid other promising companies at the same time.
Critics say the state can find better ways to invest in startup firms. Alan Essig is with the Georgia Budget and Policy Institute. He says there's no guarantee the plan would create jobs. Other states have had mixed results with similar programs. And he says the biggest winners are the insurers and the investment companies, not necessarily the startups creating jobs.
“The simplest description is, it’s the equivalent of you or I hiring someone to manage our 401(k) program and then allowing that manager to keep the 401(k),” he said in an interview.
The bill passed the state House during the last legislative session, but not the Senate. State lawmakers are likely to revisit it when they convene in January.