The box office smash The Avengers has officially made more than $1 billion worldwide, after setting the record for largest opening in film history. This revenue dwarfs the film’s $220 million budget, and makes one wonder why the state of New Mexico felt the need to subsidize the movie to the tune of $22 million:

Marvel’s The Avengers has already raked in $1 billion worldwide, but News 13 has learned the state shelled out some serious cash to shoot the movie in New Mexico.

According to the Taxation and Revenue Department, the state paid $22,413,469 in credits to Marvel Worldwide, Inc., the company that produced The Avengers.

“This was spent on a movie production project that is now gone. It was here temporarily,” said New Mexico state Rep. Dennis Kintigh (R). “We could have spent that $22 million on all kinds of things like education for our children, we could have spent it on roads.”

New Mexico is far from the only state that provides film and television subsidies, but as the Center on Budget and Policy Priorities found, they are wasteful and ineffective, subsidizing activity that would have happened anyway:

State film subsidies are a wasteful, ineffective, and unfair instrument of economic development. While they appear to be a “quick fix” that provides jobs and business to state residents with only a short lag, in reality they benefit mostly non-residents, especially well-paid non-resident film and TV professionals. Some residents benefit from these subsidies, but most end up paying for them in the form of fewer services — such as education, healthcare, and police and fire protection — or higher taxes elsewhere. The benefits to the few are highly visible; the costs to the majority are hidden because they are spread so widely and detached from the subsidies.

43 states currently subsidize film and television production, to the tune of $1.5 billion in fiscal year 2010. Meanwhile, “the revenue generated by economic activity induced by film subsidies falls far short of the subsidies’ direct costs to the state.”

2011 was a bad year for public sector employees, with an average of 22,000 public sector jobs disappearing every month. And the two years before it weren’t much better. In fact, “the last three years of job losses at the state and local government level has been the most dramatic since Labor Department records began in 1955.”

According to the Wall Street Journal, the unemployment rate would be a full point lower — at 7.1 percent — if these job losses hadn’t happened:

The Labor Department’s establishment survey of employers — the jobs count that it bases its payroll figures on — shows that the government has been steadily shedding workers since the crisis struck, with 586,000 fewer jobs than in December 2008. Friday’s employment report showed the cuts continued in April, with 15,000 government jobs lost. [...]

The unemployment rate would be far lower if it hadn’t been for those cuts: If there were as many people working in government as there were in December 2008, the unemployment rate in April would have been 7.1%, not 8.1%.

These cuts have occurred because of state budget cuts as well as budget cuts at the federal level. President Obama addressed this issue today, saying, “the only time government employment has gone down during a recession has been under me. So I make that point just so you don’t buy into this whole bloated government argument that you’re hearing.”

Americans for Tax Reform President Grover Norquist has held most Republicans by the scruff of the neck during recent tax debates due to their having signed the ATR anti-tax pledge, which states that the signees will not vote for a tax increase any time, for any reason. Texas Gov. Rick Perry (R), who received accolades from Norquist during his presidential run, is aiming to start a similar pledge in the Lone Star State:

Borrowing a page from anti-tax crusader Grover Norquist’s playbook, Perry said on Monday, “Each and every member of the Legislature or anyone aspiring to become a member of the Legislature should sign on.” And right on the Governor’s website, individuals and lawmakers can sign on to the Compact: Yes, I stand with Governor Perry and I support his Texas Budget Compact. I want my state representatives in the Texas Legislature to sign on to Governor Perry’s Texas Budget Compact.

The compact calls for complete opposition to tax increases, as well as constitutional spending limits and restrictions on using the state’s Rainy Day Fund (which Perry previously plugged using federal money meant for education). While Perry isn’t personally tracking who signs his pledge, he said that outside organizations might.

Part of the compact calls for legislators to eschew budget gimmicks, even though Perry himself is quite fond of using such gimmicks to balance his budget. As Texas State Rep. Mike Villarreal said in a statement, “Governor Perry loves to talk about his principles in the abstract, but he doesn’t want to discuss the disabled kids who lose health services when he won’t close corporate tax loopholes, or the students crowded into full classrooms when he won’t touch the Rainy Day Fund.”

Fortunately, several lawmakers at the federal level have broken with Norquist and his anti-tax pledge. “I think anybody who doesn’t indicate their willingness to look at revenues — expiration of tax loopholes, tax credits, increase in contribution to Social Security, which is a tax, and otherwise — would be disingenuous and irresponsible,” said GOP Rep. Timothy Johnson (IL).

It seems that Wisconsin Gov. Scott Walker (R) might have been overreaching when he promised to create 250,000 new jobs in his first term. While Walker has spent the last twelve months slashing state budgets and busting unions, Wisconsinites have been dealing with the consequences. New data from the Bureau of Labor Statistics show that Walker’s state saw the largest decrease in jobs over the last year, dropping nearly a full percentage point:

Over the year, nonfarm employment increased in 45 states and the District of Columbia, decreased in 4 states, and was unchanged in Alabama. The largest over-the-year percentage increase occurred in North Dakota (+6.5 percent). The largest over-the-year percentage decrease in employment occurred in Wisconsin (-0.9 percent).

Walker, meanwhile, told Newsmax this week that, “We ultimately saw a net increase in jobs this year.” That is incorrect, unless by ‘we’ he means a group other than Wisconsinites.

This just adds more evidence to an already existing trend: states with the most drastic budget cuts are seeing the most job losses. Budget slashing at the state level is stalling growth and reducing GDP.

Supplementing that argument are the employment totals for just the month of March. Ohio, which is led by austerity-happy Gov. John Kasich (R), lost 9,500 jobs. New Jersey Gov. Chris Christie (R) saw his state drop 8,600 jobs. And Wisconsin dropped 4,500 last month.

The era of austerity clearly hasn’t worked. Instead, these statistics show that conservative budgets have made things worse in the states where they were supposedly going to turn economies around.

According to a new report by Good Jobs First, an organization that promotes accountability in economic development, a growing number of companies are collecting their workers’ income tax payments and keeping them, with the approval of state governments. Instead of having their taxes go to pay for public services like schools or roads, these workers are, quite literally, handing their tax payments to their bosses:

For some people, the personal income taxes they see deducted from their paychecks aren’t supporting public services. Indeed, this is true for workers at more than 2,700 companies in 16 states.

Nearly $700 million is getting diverted each year. And it is very unlikely that the affected workers are aware, given that no state requires that the diversion be disclosed on pay stubs.

Where is the money going? To the employers of those workers. A growing number of states are diverting revenue traditionally devoted to funding essential government services to pay for lavish subsidy awards to corporations for job creation or sometimes simply job retention. The practice of redirecting large portions of the state personal income tax (PIT) withholding deducted from paychecks means many workers are, in effect, paying taxes to their boss.

Some states, such as Kentucy and Missouri, allow companies participating in certain programs to simply keep their own workers’ tax payments, never remitting them to the state. Others, such as New Jersey and North Carolina, hand the tax payments over to the state and then receive a check later.

As Reuters’ David Cay Johnston noted, allowing companies to keep their employees’ tax payments is a simple way for politicians to hand out corporate goodies without having the government itself write a check. “These deals typify corporate socialism, in which business gains are privatized and costs socialized,” he wrote. And the programs often turn into boondoggles, with states not delivering on the jobs they promised in return for pocketing their employee’s taxes.

As we’ve noted time and again, providing corporations with subsidies in order to entice them into creating jobs is a failed strategy. The fact that companies are being allowed to directly pocket their own workers taxes is just adding insult to injury.

The jackpot for the upcoming Mega Millions lottery drawing has grown to a whopping $640 million. This sky-high total has some state legislators hoping for a big payday via the tax bill that would come from one of their residents taking home the prize. “I’d love it if a Rhode Islander wins,” said Rep. Helio Melo, the chairman of his state House’s Finance Committee.

If a Rhode Islander were lucky enough to win, the state’s take would be more than $20 million. But the fact that state legislators are giddy at the prospect of a lottery-financed tax windfall merely shows how foolhardy it is that states depend on lottery revenue at all. As Elizabeth Winslow McAuliffe pointed out in Public Integrity, “while lotteries were initially perceived as fiscal saviors, they have not generated the anticipated revenue.” Many states earmark their lottery revenue for a specific purpose, most often education, but it turns out that that formula isn’t workable:

The educational “bonus” appears to be nonexistent. Miller and Pierce (1997) studied the short- and long-term effect of education lotteries. They found that lottery states did indeed increase per-capita spending on education during the lottery’s early years. However, after some time these states actually decreased their overall spending on education. In contrast, states without lotteries increased education spending over time. In fact, nonlottery states spend, on average, 10 percent more of their budgets on education than lottery states (Gearey 1997).

The National Gambling Impact Study Commission has found that “there is reason to doubt if earmarked lottery revenues in fact have the effect of increasing funds available for the specified purpose.” The Nelson A. Rockefeller Institute of Government also found that “new gambling operations that are intended to pay for normal increases in general state spending may add to, rather than ease, state budget imbalances.”

As Citizens for Tax Justice put it, “it becomes a case of diminishing returns as neighboring states introduce new and better lotto games. Then, states either lose business to another state or hit a ceiling for how many lotto tickets a population can buy. That is, as a revenue source, it’s a short or medium term quick fix but not a long term solution.”

And then there’s the simple fact that the lottery is, in essence, a regressive tax, with about a 38 percent tax rate (a rate usually reserved for the very richest Americans). According to the Bloomberg News “Sucker Index,” residents of Georgia are doing the most damage to their own finances through the lottery, followed by residents of Massachusetts.

Florida’s GOP dominated legislature, along with Republican Gov. Rick Scott, has already decided that it would be prudent to pay for a corporate tax break by slashing the state’s unemployment insurance program, even though one of Scott’s aides admitted that the tax break likely wouldn’t create jobs. And evidently thinking that Florida’s problem was not enough corporate welfare, the Sunshine State’s legislature was back in action last week, doling out more corporate tax breaks, while closing a $2 billion budget hole via cuts to higher education and public sector layoffs:

The 60-day legislative session that ended Friday was largely dominated by small reforms on a few pocketbook proposals. Gov. Rick Scott and the Republican-led legislature honored their pledge not to raise taxes, an article of faith for them in an election year. But to fill a $2 billion budget gap, they cut $300 million from universities and colleges, $1 billion from state worker pensions, and made another round of deep spending cuts in prisons, health care and social services…The $70 billion budget eliminates an estimated 4,400 state jobs and continues to rely on a three percent reduction in state worker salaries.

The budget includes a grab-bag of giveaways to various industries, including aviation companies, real estate brokers, and fruit packinghouses. It also increases the size to which a business needs to grow to qualify for the state’s corporate income tax. All told, the tax cuts will cost $2.5 billion over the next three years.

Scott has promised that these tax cuts will help jobs “grow like crazy.” However, that confidence belies the fact that Scott has been walking back his job creation promises since coming into office. He even flatly denied promising to create 700,000 jobs, in addition to those created by natural economic growth, despite video evidence showing that he most certainly did.

Goldman Sachs is one of the U.S.’s most profitable companies, making, in the last three years, profits of $13.9 billion, $8.5 billion, and $4.4 billion, even as the country grappled with the effects of the Great Recession. But despite these sky-high profits, the state of Utah is still seeing fit to give the mega-bank tens of millions of dollars to create jobs:

Goldman will receive an estimated $47.3 million from Utah over a 20-year period in the form of a 30 percent tax rebate, according to Governor’s Office of Economic Development.

In exchange, the bank agreed to maintain at least 1,065 employees in Salt Lake City and pay them at least 150 percent of the average local county salary.

State legislatures can’t seem to help themselves when it comes to doling out tax breaks in order to create or preserve jobs, but the history of such policy should act as a warning. For instance, Illinois doled out millions in subsidies to Sears, only to have the retailer layoff 100 workers last month. Boeing not only received a slew of tax credits from Wichita, Kansas, but had Kansas lawmakers lobby for it to receive billions in federal contracts: the company will leave Wichita at the end of 2013, costing thousands of jobs.

And the list goes on and on. The Des Moines Register found that “15 [Iowa] companies enjoying tax credit dollars given to them by the state have defaulted on the job-creation requirements tied to those credits.” Louisiana doles out hundreds of millions in tax credits to businesses, with no clue as to whether or not they create jobs.

As Citizens for Tax Justice noted, “the reasons for these failures should be obvious. When the economy is weak, businesses generally can’t sell as much of their product as they used to. You can throw money at them and ask them to hire more people, but ultimately it doesn’t make sense for a company to bring on more employees unless there’s some new, unmet demand that needs to be filled.” But states continue to try this failed strategy, with Utah giving a humongous investment bank millions of dollars in the hopes that it will bring some of “god’s work” to the Beehive State. (HT: Jess Kutch)

As Stateline reported today, former Reagan supply-side economics guru Art Laffer (who has had an unkind word for ThinkProgress from time to time) is working with GOP governors in several states on tax cut packages. Laffer is going from state to state insisting that, despite the fact that states are still grappling with the low revenues and budget cuts that followed the Great Recession, lawmakers should be cutting their taxes to spur economic growth:

From Florida to Kansas, governors have embraced Laffer’s theory that if tax rates become too high, they lead to less, not more, tax revenue…Laffer’s work is being touted in tax-cut campaigns not only in Kansas, but also in Oklahoma and Missouri as a brief for drastically reducing the state income tax or eliminating it altogether. He has visited all three states recently in different capacities to discuss research he says shows that states without an income tax generally enjoy stronger economic growth…Laffer also served on Florida Governor Rick Scott’s tax advisory board. He worked with Ohio Governor John Kasich last year to abolish the estate tax, and is doing the same now in Tennessee.

Comparing the Bush era (when taxes were cut) to the Clinton era (when taxes were increased on the wealthy) in terms of economic growth should have put Laffer and his supply side theories to rest. However, he is clearly still going strong. But as the Institute on Taxation and Economic Policy pointed out, Laffer’s new “research” showing that states should cut their income tax rates to spur growth is little more than snake oil:

While the results are no doubt attention-grabbing, the underlying regression used to produce them is deeply flawed. For starters, the analysis uses a misleading measure of “tax rates” that includes federal rates, thereby distorting what is intended to be an analysis of state tax policy and economic performance…Furthermore, 2002 was by far the worst year for U.S. economic growth in the eight-year period in the analysis, and 2001 also saw low growth nationally. Following the deep post- 9/11 trough, personal income predictably grew at a relatively fast rate, just as cuts in federal tax rates were coincidentally going into effect. By creating a bogus measure (federal and state tax rates combined) and mapping it onto an exceptional moment in economic history, Laffer creates the illusion that cuts in state tax rates between 2001 and 2003 fueled economic growth later in the decade.

As ITEP’s Carl Davis wrote, “the bottom line is this: no-tax states aren’t booming, and lawmakers should not expect their states’ economies to improve if they join the no-tax or low-tax club.” Former Wichita State University economics professor William Terrell called Laffer’s work “empty,” adding that it’s “amazing” that states are taking his work to heart.