Georgia’s Job Tax Credit: An Analysis of the Characteristics of Eligible Firms

• FRC Report 8 Version
• 1994 Download
• 0.00 KB File Size
• 1 File Count
• June 1, 1998 Create Date
• February 11, 2020 Last Updated

FRC Report 8, June 01, 1998, Dagney Faulk

The Job Tax Credit (JPC), part of the Georgia Business Expansion support Act, is a tax credit for the creation of new jobs in six qualifying industries: manufacturing, goods processing, warehousing and distribution, information processing, research and development, and tourism. The credit amount is higher for jobs created in less developed countries.

This study examines the characteristics of firms eligible to take the JTC between 1993 and 1995. Only a small portion of the firms that were eligible actually took the JTC. Descriptive statistics show that the largest proportions of firms taking the JTC are small (having fewer than 100 workers) and are located in less developed (Tier 1) counties. A majority of the firms taking the JTC are manufacturing firms. The JTC moderately decreases the tax burdens of participating firms and is an extremely small proportion of a firm's payroll. Other credits offered under the Georgia Business Expansion Act are not widely utilized by firms taking the JTC.

Regression analysis shows that smaller firms, firms with higher tax liabilities, firms located in less developed counties, firms headquartered in Georgia, and firms which took the JTC in a previous year have a higher probability of taking the JTC. Start-up firms relative to existing firms have a lower probability of taking the JTC.

Increased awareness of the JTC among firms and simplification of the application process may increase the level of participation in the program. Additional research is needed to determine if lowering the minimum job creation criteria increased the participation rate of firms and the number of jobs created.