Can States Just Say No to Corporate Giveaways?

Missouri and Kansas are on the verge of a landmark deal to limit the use of tax incentives to lure companies across the state line.

Comments: 197

  1. Yes states and local governments within them should reach a compact with other states prohibiting the offer of tax incentives to businesses for investing therein. States and local governments have annual structured budgets to meet expenses. Their workforce’s, land, lending, zoning, infrastructures, expenses, and taxation policies are their existing resources and are all finite accountabilities. When a serious business suitor comes calling they’ve already done the research and know what’s before them. But all a government knows is speculative or what the business promises to deliver. So governments should not compete against each other by incurring new liabilities when what they individually possess is sufficient. The Beggar/Donor paradigm—one asks the other chooses.

  2. I find this humorous, and just a bit telling with regard to the ineptitude or dishonesty of politicians. Because this is not neither. Ignore the facts and your inept unless you ignore the facts for some specific purpose then your dishonest. I thought the purpose of tax incentives for business were really to allow the politicians to signal their loyalty to the corporate cause and their indifference to the people.

  3. Do you really think that the Republicans will stop wanting to give welfare payments to corporations even when it shows the taxpayers get no benefit from them?

  4. @Philip Greider Hey, most Democrats are in the same boat. Think about the struggle to get Amazon to locate its second headquarters. States and cities with Democratic majority governments were just as guilty, if not more so, than states with Republican governments.

  5. @James Ward There is something to that, but I think you're mistaken about something. Name one other location besides NYC that refused to bribe Amazon.

  6. @Thomas Zaslavsky New York didn't refuse to bribe Amazon. Our governor and mayor were perfectly happy to give Amazon whatever they wanted. Amazon ended the deal, because in addition to tax breaks, they also wanted everyone in NY to talk about how great and awesome they are for accepting New York as their HQ in exchange for a our tax dollars, and when we refused to do that they got all upset and called off the deal. Good riddance.

  7. The problem is that the public is hardly ever aware that this even goes on! NPR’s planet money did a great podcast on the Kansas City dumpster fire. Ultimately, tax payers basically end up funding someone’s job.

  8. The concept sounds good. However, the execution is not broad enough and may run afoul of antitrust laws. This should be a Federal policy with appropriate amendment of the antitrust laws to ensure that it doesn't run afoul of same.

  9. Think regionally. The one positive outcome of the Amazon contest was the creativity that some regions used in their proposals. Detroit and Windsor, Philly and surrounding burbs and CINCY/Northern KY. As for tax incentives, the only way to avoid them is to make sure the other attributes of your community is stronger than other places. Things like education, infrastructure, housing, transit etc. Google, Facebook and Beyond Meat are based in the most expensive region in the country and it’s not for tax breaks.

  10. Tax incentives are a giant waste and should be sworn off. If only there was a way to legislate them out of existence. Wouldn't it be nice if this also applied to stadiums and convention centers - cities compete with each other for sports teams and convention business. The Twin Cities area in Minnesota have a fiscal disparities program where the fiscal benefit from new development is spread across the entire metro area. As a result, St. Paul and Minneapolis don't end up competing against each other for the same corporate HQ - if it ends up in Minneapolis, St. Paul still benefits, and vice versa. This would be harder to execute across state lines in the Kansas City area but should be considered - it was a very forward thinking idea in Minnesota.

  11. In the mid- to late 70s, a columnist for Forbes Magazine commented, if the only selling point of an investment was some tax advantage, it was probably a bad investment. For company locations this is also true: if the strongest reason for a location is tax abatement, there is something wrong with the location.

  12. Not a million miles, in concept at least, from tariffs and trade wars.

  13. Umm...those are tax revenues that wouldn’t exist without those companies present. First and foremost, hold accountability to how that money is being spent, rather than take it out on those who provide jobs.

  14. Guess you didn’t really absorb the article. In the end, job losses and job increases end up balancing each other out. The author isn’t blaming the companies. He is pointing out that the incentives do not lead to net benefits in many cases, and often lead to substantial overall fiscal losses for the state’s and cities that offer them.

  15. Tax rebates and other corporate incentives are a total wast of taxpayer dollars. The total absurdity of the Amazon boondoggle being perfect example. States and Cities have much better uses for their scarce financial resources than padding the bottom lines of already fat corporations. If these giveaways were put up for a vote, the results would be a flat NO from taxpayers.

  16. Isn't this socialism, or "redistribution of wealth"? How about "free stuff"? Giving a tax break to a particular business is the same as a government giving it a cash grant from the taxes other people pay for public services, in effect redistributing the wealth of homeowners, workers and other businesses who pay their full share of taxes. Those new businesses and industries get police and fire protection, public schools, highways, public hospitals, water and waste systems, either free or at a deep discount for the period of the tax break. There's no such thing as a "free lunch" when it comes to public services we all use.

  17. Congress should do this on a national level -- prohibit states from offering incentives for interstate moves and prohibit companies from requesting or accepting such incentives

  18. @Bob It might not be something Congress can do. The Constitution might not allow it. It's called States Rights.

  19. @Bob Uum? Remember that war we got ourselves into because of Taxation without Representation? We need to reverse engineer that into a movement called "No representation without taxation".

  20. @hen3ry Where, pray tell, does the Constitution enshrine "State's Rights"? The only thing that concept gets in the Constitution is the Tenth, which basically says "Any power that we didn't explicitly give to Congress, the states can have." Congress has the power to regulate interstate commerce, as defined in Article I, Section 8 (Enumerated Powers). I would say this qualifies.

  21. Each time any locality gives a corporation tax breaks they are raising taxes on their residents. When companies sue to reduce their taxes they too are hurting the communities they "reside" in. That in turn raises taxes even more until the reasons a company had for locating itself in a specific area often disappear. The shortfall in revenue is made up on the backs of the residents. Property taxes are increased to meet school budget demands. People start to move out because they can't afford the taxes or the rent. That in turn leads to empty storefronts on Main Street. Companies play a clever game at our expense. They promise jobs to local people. Oftentimes those jobs don't materialize or are given to their own relocated employees. The companies don't stay as long as they promise to. Or they aren't as profitable as they projected in their original estimates and they downsize. If companies "care" about their customers and the communities they inhabit they ought to be more than willing to pay the taxes that keep the schools going, pave the streets, provide for good public services, and keep the people living in the area. It's called being a good corporate citizen and it's long past time for states and the country to demand that corporations BE good citizens. It benefits all of us when they are because it means we can be productive citizens. 7/10/2019 12:45pm

  22. What a concept, investing in the community and its needs rather than pandering to companies that would have moved there, anyway. Any wonder why we have the largest income and wealth gap since the 1920s.?

  23. Why not take a chance with Bernie? We listened to Obama and we still stayed on the road of inequality. We thought Hillary was the answer, the speeches to the banks were probably great, they made her wealthy and we never heard them. Bernie took Amazon on and won. I am talking to the center left that are trying to get by, there are many of us. Really, how much difference could it make to give Bernie a run? Maybe a huge difference. with Biden, none. Sanders/Warren

  24. @s.whether It wasn't just Amazon, it was also Whole Foods, Walmart, Disney, McD's. and more. Assisting Fight for $15, Sen. Sanders help raise the min. wage at the largest employers in America. Not a tax break, not a *plan*, not incrementally, maybe, someday; but NOW~! A doubling of wages to the corp.s that employ more POC than any others. Candidate Sanders did this from the bully pulpit, speaking out on the floor of congress. When that didn't work he wrote punitive bills for congress. He spoke at their Union halls, at their rallies and his, he went into Walmart boardrooms and talked to the board of directors. He walked the picket lines with those workers demanding a fair share and a raise. And they won~! Sanders is and has always been for the Working wo/man. America could do a lot worse than electing the mensch in the rumpled suit; and could do so much more with him as Pres.

  25. @s.whether: Bernie is a flake.

  26. @Dobbys sock Wow! Thanks. Beautifully written.

  27. Interesting that Republicans aren’t clamoring for an end to THESE entitlement programs. This is one more example of the Republican theory of trickle up economics in which lower and middle class citizens are negatively impacted. This is the neocon version of Robin Hood, in which they steal from the poor to give to the rich.

  28. @Greg Shame on you. This isn't a partisan debate, this is rampant across the country and has been for decades. Blue states, and especially blue urban areas are guilty. The local politicians are never held accountable for their false predictions and promises to constituents. Yes, you can vote them out, we did here in GA after the city council gave our tax dollars to a baseball team, but they just moved on into big jobs in the private sector as a reward for ripping off the tax payers, keeping their hefty pensions and benefits for life.

  29. States, have a good in the mirror. BE the place where the CEO would want to live. Instead of tax incentives, why not try good schools, excellent public transportation, charming affordable neighborhoods, cultural assets, and recreational opportunities?

  30. Some politicians have been criticized for opposing the placement of a corporate HQ in Long Island City by Amazon. But from the beginning I thought it made little sense to provide 100s of millions (billions) in incentives to a corporation with a market capitalization of $800 billion and a CEO with a net worth of $150 billion. Let Amazon and others pay their own way.

  31. @koyaanisqatsi Like everything else in NYC, this was at heart about real estate. When and if the full story ever comes out, it will be clear that this deal was in the works for years, with Michael Bloomberg as an intermediary to fellow billionaire Bezos. It also helps explain de Blasio's seemingly nonsensical multi-billion dollar streetcar line to nowhere, which he proposed at the behest of developers. It would have run from the luxury housing on the Brooklyn waterfront to LIC, where Amazon was planning to locate. De Blasio couldn't come out and state the real purpose of the line, so it has languished. Not even bringing in Chuck Schumer's daughter as the head of the developer's front organization has been able to rescue it.

  32. But you missed the point. The taxes that Amazon would not have paid were taxes that currently do not exist in the state's and city's tax base. In other words - Without Amazon no money comes in. With Amazon a discount on the formula is given for a specified period of time. You can be sure, the population of Queens will continue to rise. However, without Amazon the number of high paying jobs and peripheral business which also pay taxes will be fewer.

  33. @Suburban Cowboy Amazon pays no federal taxes... but you just made the assumption that Amazon employees would live in Queens or NYS. If not living in NYC, they would not pay city taxes on income. Our public transit in fact is subsidized; ditto infrastructure. I don't know what sort of NJ/NYS/CT tax reciprocity laws exist. There was no gain to the already crowded city in having them here -- and perhaps Amazon should have paid for the privilege of most likely displacing various residents and businesses already in situ.

  34. Corporate incentives should be outlawed unless they are available to all applicants, small or large. Otherwise the government is selecting winners and losers, a form of corporate socialism.

  35. Time to look at the (admittedly not perfect) European version: Opportunity Zones allow all new businesses tax incentives etc. Outside those zones, or any incentives to specific individual companies, are viewed as anti-competitive and as illegal government support enforceable at Federal level (like the EU's case against Ireland for allegedly under taxing Apple). The US doesn't get richer by playing "beggar thy neighbour" with other US States and cities. It gets richer by competing with those outside the US.

  36. "Paying the furniture to rearrange itself." Classic. Best line in the piece. Tax incentives are a political drug best used sparingly by local/state governments. The problem is it is very easy for the political class to become addicted to the quick high of it. And then they chase that high like all addicts do. What Kansas/Missouri are attempting to do is a reasonable, logical, process I think should be implemented nationwide. Tax abatements and the like should come with black labels on their policy binders, and be used only in exceptional circumstances due to the tendency towards user abuse. John~ American Net'Zen

  37. I’ve seen my employers exploit these incentives during office moves. The office location was dictated by the needs of the business and the commute of the cfo and ceo. Then they bargained with the state to get incentives by threatening to move across the line. The government was no match for their negotiating skills. It’s foolish for government to invent one company at the expense of all its other employers who haven’t yet figured out the game.

  38. @Tom Scott and a bit of basheesh…. Corrupt men who never go on trial... in the USA no matter who is president....

  39. Why can't all the states agree to a shared standard between them, like Kansas and Mo. in a way, to simply offer start-up tax reductions to all new businesses say for two to five years? After the agreed start-up reductions, normal tax rates return sort of like a variable mortgage. We are always citing the Scandinavian countries for their happiness factor, infrastructure and great universal healthcare, but they almost all have very low Corporate tax rates but higher marginal rates on wealth. And how many corporations here, like Trump World and so many super-wealthy tech corporations somehow make billions, and taking advantage of our permissive tax codes as to write-offs, pay no taxes? They have high-speed rail all over Europe and Japan. Why don't we have it too? Like the Brobdingnagian myths we are the greatest country in the world, have the greatest armies and no known enemies and the corporations carry us all in their pockets.

  40. The oligarchy runs for it's own interests, this rarely includes the public interest and largely benefits only them.

  41. Corporate tax incentives are ALLWAYS at taxpayer expense and a race to the bottom. They make as much sense as stadiums and arenas at taxpayer expense. When a politician says "Look what we did!" and points to another taxpayer boondoggle, look and then vote accordingly.

  42. This is such an important topic which should be highlighted repeatedly. I wish Kansas and Missouri the best in stopping these money grabs by corporations which never benefit the locale and its citizens.

  43. Let’s face it. This sort of thing has been going on on way or another for centuries. Opportunistic pump priming by vested interests is a old as the hills, takes place in all forms of government and always involves someone at the top of the food chain making some absurd amount of money. BTW...the very wealthy biggest employer in my town, a university, pays no taxes. If democratically elected officials and a free press can explain to the public that these tax breaks produce no tangible economic benefits then the system should self-correct. Perhaps that’s why my state has no major league professional sports teams...although the highest paid state employees are coaches.

  44. As a newspaper reporter in northwest Indiana I saw the State of Indiana hand out what was believed to be its first ever tax incentive, to an auto parts maker based in Gary. The law was specifically designed to bar breaks for anyone relocating in-state, yet this firm was awarded them even though it moved just one county over, to Michigan City. State officials explained that they broke their own rule because the firm had threatened to move across the state line, to Michigan. Fat chance. Why would they leave low tax Indiana for higher tax Michigan. Decades - and hundreds of billions of dollars, later - we see the same thing happen over and over as companies are awarded incentives for doing what they were going to do in the first place. Corporate America can be forgiven for lapping to this trough, but political America should not. The other 48 states can profit by what Missouri and Kansas are attempting.

  45. I was surprised not to see the editorial did not mention the WI gift of tax incentives and relaxed land use regulations for Foxcon to build on lands important to the SE watershed areas.

  46. Remember Sam Brownback? He and the Republican legislature were going to show the world the miracle of cutting taxes on the wealthy and corporations. Of course now they are waking up to the nightmare of their experiment. Good for them for this.

  47. Wherever this "tax incentive" game is being played the public should be provided with the information that justifies such sweet arrangements. While it is expected that politicians act as cheer-leading agents for tax giveaways the public should be entitled to an independent economic analysis of these schemes. This requirement should be clearly spelled out in a clear unambiguous law.

  48. Yep. On Wikipedia.

  49. It's hard to conclude that these regions 'lost' tax dollars. Tax breaks or not, had these companies gone elsewhere Missouri & Kansas would not have had any of the economic benefits created by these new jobs. Their employees certainly had incomes that were taxed, building landlords likely enjoyed more lease income, ancillary businesses probably enjoyed more revenue; the area still had a net benefit. It's certainly the prerogative of any local municipality as to what they are willing to do to compete for employers. Taxes are a cost of doing business. Any intelligent owner would include a tax analysis in making a decision on a new location. While critics like to point at Sam Brownback & Kansas as an example of how tax breaks allegedly did not help the state, California, New York, New Jersey, and Illinois are likewise the four horseman of the apocalypse (along with Connecticut and a couple others....) when it comes to high taxes. As much as Kansas can be labeled as a problem, the failure of the these states to retain businesses and wealthy residents due to absurd taxes also illustrates the dangers of tax rates that are too high and hence prohibitive.

  50. @Once From Rome Get rid of hated taxes and institute tariffs!

  51. @Once From Rome Except that all four of these evil high-tax states in fact DO have strong economies and generally provide more to the federal government than we receive in benefits, compared to Kansas which is one of the biggest welfare leeches in the entire nation (I think Louisiana and Mississippi are bigger). You can talk about the "failure" of New York and California until you're blue in the face, but it's still New Yorkers and Californians whose taxes allow Kansas to take in something like $1.30 in federal benefits for every $1.00 it pays in federal taxes. Maybe we wouldn't be losing businesses so much, if we weren't required to support welfare states in the south.

  52. @I Once From Rome HUH? the actual problem was that taxes in KS and MO was/is that taxes are too low … Amazon should relocate mid country not coastal -- spread the wealth/jobs. Altho there's limited support for public transit in the US-- where the buses and trains are seems to be where business wants to be.

  53. The Times didn't have to go as far as Missouri or Kansas. Right next door in New Jersey Governor Murphy has appointed a committee to investigate awards of the Economic Development Authority under Republican Gov. Chris Christie with the assistance of Democratic State Senate President Steve Sweeney. The pattern is the same: real or phony threats to leave the state, ridiculous cost per job created figures(if the jobs are actually created), no follow up on the actual jobs created, and purported lies on the applications for the tax breaks. To add insult to injury, the recipients are then allowed to sell the tax incentives to other entities who can, in turn, sell them again with little to no oversight. The topper is when officials who promote these plans state "we don't have a revenue problem, we have a spending problem.

  54. This will not change as long as corporations can spend unlimited money to influence (buy) our politicians. “Citizens United” needs to be overturned.

  55. Here is a campaign issue for the Democrats. We need a federal law that stipulates that all similar entities should pay similar taxes in a taxing jurisdiction. This would put an end to property tax abatements and sleazy deals where retailers get to keep some or all of the sales tax they collect. It is time to put an end to "incentives" and let localities compete based on the quality of their workforces, local services, and infrastructure. This form of tax favoritism is an insult to existing businesses and residents of a jurisdiction. It is time to put a halt to this race to the bottom.

  56. You are on to something. Most people realize one needs to reward or discourage the behavior (from government and anyone else) that one wants to see. If governments could get it through their heads that investing in infrastructure, good schools, cultural amenities, quality of life and the like is more likely to attract good employers, it would be a win win for everyone. I worked in Michigan’s state government, watching administrations of both parties trying to woo employers with tax incentives, while the state struggled to pay for basic services. The thinking was, “if we don’t cut their taxes, they’ll go to ________.” Until it occurred to someone to look around at places like Minneapolis (which also has freezing cold winters) and relatively high taxes, only to realize that employers go there because people want to live there.

  57. How do we find out which businesses are keeping sales tax, ie lying to us about where it goes, and the rest that pass the sales tax on to the community? Knowing who defunds the community and who doesn't is important information that consumers can put to good use.

  58. This cycle has been going on in this country since it was born, ie the extremists on both sides getting the squeaky wheel oil. In the circa1970s it was unions who ran the show, putting onerous restrictions on business till they were approaching bankruptcy, mostly notably in the auto industry. Then the perverters on the other side came in, the neo conservatives ie the corporation shall be considered gold and pay no taxes and the employee should work for slaver wages a la 1900. The answer to all the boom and bust havoc that is caused is to stay in the middle. It is ironic that republican states like Kans. and Mo. are doing this. Liberal states like NY actually play the corporate welfare game too, ie giving Amazon a sweet heart deal in LIC that was on the list of top ten corporate welfare give aways. Even with this, Amazon balked, expecting to pay no taxes and to be royally brought in to LIC on a red carpet.

  59. The Editorial Board can sleep well tonight, comforted by the knowledge that Alexandria Ocasio-Cortez stands ready to chase away from New York City any big company that would dare to take advantage of tax incentives. After all, what good is wealth redistribution when it leads to more employment instead of increased dependency on entitlements ?

  60. @Objectivist If you are referring to Amazon imposing 50,000 people on a community, Boston said No thanks! Any corporation talking about a 50,000 employee facility is not thinking. It will just compete with itself for employees and cause chaos for the community. Ten 5,000 employee facilities scattered around the country would make more sense. AOC is correct in her opposition as should be other community leaders.

  61. @John Warnock Yes, well, if Thelma wouldn't want 50,000 jobs then maybe Paintville would. First, you have all the facts wrong, it was 25,000 jobs and that included service jobs in the community. And chaos in the community is a myth; Long Island City has the required infrastructure. last, it was a headquarters. No one with any common sense carves a headquarters up into ten pieces and scatters it around the country.

  62. @Objectivist Take a look at what happened to Seattle. Being A HQ does not require all management employees to be in the same location. In some corporate environments, those sitting in cubicles within sight of each other communicate less than with people many miles away. 25,000 in two locations adds up to 50,000. Even 25,000 is going to put a strain on a place like western Long Island. Rural areas would strain to accommodate 500 employees without causing havoc.

  63. On the other hand, one could ask why are businesses taxed at all ? Or the question why are businesses not taxed based on the remuneration they offer their employees, the better you pay our residents, the less taxes you pay ? Or the more government services you use, the more you pay ? I wouldn't mind reading an article on the rational for tax rates in general. Of course, it would be impossible to write, since there is no underlying quantitative principle, it's just the way it is.

  64. Debating whether incentives are effective or wise misses the point. Setting up and winning a contest gives an incumbent governor bragging rights. Consider the efforts states expend on relocating professional sports teams. Professional sports teams are a net loser for any state. The only economic development they bring are a few parking lots, bars and restaurants surrounding the stadium. The fans, almost al local residents, may choose to buy tickets, pay for parking and buy dinner and drinks but they are just diverting their limited discretionary spending from other entertainment options to sports. Nevertheless, every time a sports team wants a new stadium and sees additional revenue opportunity in another city, governors and mayors leap at the opportunity to bring a team to their state and city, build a stadium with tax incentives, government subsidized financing and even pubic expenditures. The media beat the publicity drums and every incumbent who fights for a team in the big leagues is a big winner. Competing to win a new corporate citizen is what our politics is all about. Corporate citizens are just so much more important than human citizens.

  65. According to Pat Garofalo’s wonderful book THE BILLIONAIRE BOONDOGGLE, the only reason for politicians to give away billions in our tax dollars is because they see a political benefit to claiming they “bring jobs” to an area, although jogs are rarely brought.

  66. Let's use our imagination. There is also the situation where a cousin or an important donor will benefit with a contract or a land sale dependent on where a new business locates.

  67. This editorial is correct that direct cash incentives seldom deliver the development benefits they are intended to achieve. What the editorial misses is the reason these incentives are necessary in the first place. More often than not, incentives are offered to compensate for other shortcomings the State may present as a prospective operating environment. Smart companies calculate the financial consequences of relocation decisions down to the final fractional penny. In those calculations, factors such as liberal labor/employment and tort laws, liberal and unpredictable courts, crazy or poorly performing regulatory agencies, and the like are huge negatives to overcome. The long-term operating environment is the key to corporate relocation decisions, and States with grandstanding, anti-business legislatures do not appear welcoming UNLESS they come bearing huge envelopes of compensatory cash. To put a finer point on the argument, it is the very policies that this editorial board would tend to advocate that necessitate the giveaways.

  68. One should look at the long term viability of a corporation's business plan if the deciding factor in a location are tax incentives. Sound corporations locate facilities primarily for access to markets, employee availability, infrastructure and transportation resources. Climate, and employee satisfaction within an area for such things as public safety, education, cost of living and recreational opportunities will enter into the equation. If an area has a good reputation for making a coordinated effort to assure that infrastructure connectivity to a new location is done in a coordinated and methodical basis will also lure business. Right from the beginning if a corporate entity understands it needs to pay its fair share in order for public services to be available, it will be a benefit to the community. Otherwise when will the freeloading stop, when they relocate to China or Vietnam?

  69. @John Warnock your last sentence illustrates the need for tariffs -- too late, my brother…. With technology things are changing very quickly --looking forward is not that easy. But how is government intervention using tax incentives to create jobs -- not socialism?? -- (critical thinking.) -- According to me 340,000 per job (Foxcomm) translates into 34K for a non-working person for ten years. (Time to get at least a couple of uni degrees.) (Of course, I think we should put law school courses up online!) Of the billions made by Mercedes in AL -- what are workers paid- pensions? healthcare? job security? It's always about more than simply $$ amount. Where does the $$ go??

  70. I wonder if this suggestion applies to New York State and its ungodly tax incentives for media such as broadcasters and movie-makers? Implied in all these "incentives" is the expectation of campaign contributions to the political party that gives away other people's money. This backroom game is called pay-to-play, which is an euphemism for bribery.

  71. Of course states can do anything they want. Including living with the consequences of their decisions.

  72. "Incentives" are bribery and the ones it hurts most are taxpayers.

  73. As when they take credit for “the economy,” when politicians talk about creating jobs I become suspicious. Jobs should be the by-product of good policy, not the object. When “jobs” are the object you get gimmickry like these tax incentives.

  74. Maybe it’s time to stop investing in and otherwise patronizing companies that accept tax incentives.

  75. Reasonable infrastructure improvements are fine, but IF subsidies are almost always losing bets for all parties except the direct beneficiary (including taxpayer-funded stadiums), we should consider (and weigh the unintended consequences of and likely workarounds for) a significant federal "excise" tax on state subsidies, in order to de-escalate the incentives race. Or, perhaps there's a better way to limit them. Subsidies and incentives warp the free market, so we should be very careful when using them.

  76. This analysis is technically correct but the Editorial Board either misunderstands or underestimates the politics. I spent two years working on these issues. The politicians aren't necessarily buying the companies. Politicians are paying to associate themselves and their party with economic development. Economic development is a very valuable political commodity. Every governor wants to point to their Adobe or Amazon or whatever. Weather the transaction is actually beneficial to the public is a secondary consideration. The business is a marketing tool intended for other ends. Businesses aren't seeking an incentive so much as selling a service. Politicians are buying a seat at the economic table. That's why you can find examples like Fargo.

  77. I'm so glad that Elizabeth Warren supports the tax break that I get that allows me to get 10's of thousands of dollars back from the government every year and is reserved for wealthy folks like me. I personally am opposed to it, but Elizabeth told me herself that I'm a 'job creator' so I shouldn't have to pay taxes. I wish the NY TIMES would ask all the presidential candidates where they stand on this issue which keeps the rich getting richer.

  78. @kevin Wow, I'm baffled.

  79. Whether tax incentives offered by states or municipalities are in the interests of the entities proffering same, is not a matter in the short term, that can be determined. Plainly, if a business enterprise ha selected a site for relocation, or expansion, there would appear, at first blush , to be little incentive for the state to offer tax breaks. Picking the worst and least representative case to establish the bonafides of its ant-capitalist agenda, the Times, as per its leftist orientation, appears to have made a strong case against the practice. On the other hand, with respect to New York City's economic growth and well-being, Amazon has elected to withdraw its consideration of New York as the locus of its expansion because of the campaigns of likeminded naysayers, pursuing their own leftist agendas.

  80. THe counter-factual isn't KS and Mo not swapping jobs - it is that those jobs re-locate somewhere else in a manner that the 'net' is a job loss. The counter-factual poster child is NYC with a net loss of thousands of well-paying Amazon jobs and all of their spin-off jobs. This is how the market for employers actually works - indeed this is how markets work generally - there are winners and losers. I realize that all of us really want a world where no one ever wins or loses and that Wobegon reigns supreme. You want to see a success story - one carefully avoided by the opinion piece to the left? Look at the results in RTW states down south - look at Alabama of all places - n 1993, Alabama lured in the German automaker Mercedes-Benz with more than $250 million in incentives, a jaw-dropping offer at the time.. Over 20 years, local policymakers are projecting a $5.6 billion return on investment for Alabama. Funny thing about counter-factuals - they often don't reflect reality on the ground.

  81. @lee4713, SteveRR: Maybe the problem isn't deals, it's bad deals. It sounds like the N VA deal was a good deal and the Amazon deal was a bad deal.

  82. @lee4713 Once again - you are hypothesizing the results from FoxConn while I am quoting "actuals' from Bama - they are not the same. mlbex - I agree - I think we are saying the same thing. The movement to remove the 'market' from free markets and to insulate all of us from winning and losing is plainly silly.

  83. @SteveRR if Alabama's economy is so great after luring businesses down there with lucrative tax breaks, why does it still take in more federal money than it contributes? Why is Alabama a net welfare state, compared to an evil high-tax state like New York that contributes more than it receives? If states like Alabama actually had to stand on their two legs instead of receiving welfare from states like New York and California, perhaps the "success story" you're citing wouldn't seem quite so successful.

  84. Can we talk about buying sports stadiums for billionaire team owners?

  85. One needs only to look at Scotty Walker and Trumps, $4.5 billion dollar Wisconsin's Foxconn giveaway to look at corp. welfare and those who pay for it. The cost per job created would be about $346,000. if fully employment of 13000 is achieved. Estimates are now less than half that, meaning the costs per job will more than double that too. Wis. has given away environmental safety reg. Resident guarantees' meaning many workers will come from out of state. For a supposed breakeven point not occurring till 2043. For an electronic factory, that on avg. don't last 10yrs. to due to technical advancements. https://www.bloomberg.com/opinion/articles/2018-11-06/wisconsin-s-deal-with-foxconn-is-the-worst-of-corporate-welfare

  86. Corp giveaways by elected officials are not irrational. Our elected officials hope that massive tax breaks generate jobs, but, even if they don't, officials know that they will generate gratitude of corp officials and wealthy affiliates, not toward the jurisdiction, but toward the officials themselves, who are always thinking of the next office or the Big Cashout.

  87. Reminds me of sports teams that threaten to leave if they don't get a big new stadium and a bunch of tax dodges. Then they gouge the poor saps that sit in the stands. The other even more egregious scheme is give public unions a great benefits and retirement package while you're running for office then the bill comes due after you've left for your lobbyist job. Not sure why the public keeps buying into this stuff.

  88. @Samuel. The politicians who offer these deals know they aren't giving their money away. It's taxpayers who get stuck with the bill after the politicians have moved on.

  89. These tax incentives are simply more welfare for the rich, paid for by the rest of us. It doesn't take a Nobel prize winning economist to figure that out.

  90. When I lived in Idaho, the city of Twin Falls lavished tax breaks on the greek yogurt maker to attract it to the area, when it was likely the manufacturer was coming anyway. The area had a large dairy industry and the move brought the company closer to markets in the West. I wrote several letters citing studies found on the internet, that incentives did not work and mostly cost the government money, but the tax breaks went through anyway. The TF government wanted to show that it had brought jobs to the area, and needed a centerpiece. I am pleased to see the NYT board clearly state the case and hope it reaches a few open ears, perhaps even some within shouting distance.

  91. Applebees moved their HQ to California? That flies in the face of the anti-Calfornia narrative. Has anyone told Texas about this?

  92. Talk about wasting tax dollars, job training programs have proven to be an absolute black of corruption where tens and hundreds of millions of dollars find their way into the pockets of politically connected folks with nothing to show for it. Job training program is just another way of saying fraud.

  93. Make bribery illegal again. Put crooked corporate executives in prison for a very long time and makes sure that when they get out they are broke. Both of these would be a good start, corporate criminals have destroyed our Democracy.

  94. Corporate socialism is the only republican value.

  95. Wait... This sounds like .... limiting capitalism! Collective gasp! When are we going to give up this sham? The system is rigged. Exploit tax breaks meant to help people, fund deplorable capitalists. But wait... this is the best system on earth to provide common wealth to the most people... Sad.

  96. The US states are a circular firing squad that send drones to Washington to avoid any common adult supervision. The Commerce Clause in the Constitution empowers Congress to suppress all destructive state vs. state competition such as described here. Congress can put a stop to this nationally, but people need to elect federal representatives who will govern the nation as a whole.

  97. Talk about socialism! Our elected "representatives" give away our U.S. taxpayer money to corporations and the rich elites as fast as they can. But, there is no tax payer money to protect children, education or healthcare.

  98. Perhaps Amazon's well publicized, high-handed dismissal of NYC, after that municipality refused to completely abase themselves before Amazon's corporate tax-rebate extortionists, tipped the balance and politicians will no longer kowtow to corporate threats of job removals (or promises of endless jobs) that usually end in just draining public coffers to the detriment of most of their constituents. These corporate pirates feed on these public entitlements until they run dry and then just move on to another sucker across state lines that will buy into to their seldom realized golden visions of future job growth. Corporate welfare must end.

  99. @Samuel Thanks for clarification. By saying NYC, rather than NYS, I meant to differentiate the City Council and that the municipality of Long Island City did not "completely" abase themselves (like Cuomo and the State did) because those council members, and thus the city, determined the outcome with their demands, among others, for guarantees from Amazon about local job recruitment.

  100. @Gowan McAvity That's not entirely accurate. De Blazz and Cuomo (and a sizable percentage of New Yorkers) were entirely willing to debase both themselves, and New York, to lure Amazon into the city. Thankfully there are a few people in the City Council who actually have spines though.

  101. This is an outrageous editorial. Our government exists to transfer wealth from the masses to the masters.

  102. @Rick. And apparently to take care of illegal aliens and the poor of the world as well. No wonder there is no middle class.

  103. Let’s see... The idea of merit no longer exists. When referring to business, it’s called ‘incentives’ and must be used to stimulate the economy When referring to people it’s called ‘welfare’ and must be eliminated. And when referring to the Rich, it’s called ‘tax cut’ and must be implemented annually

  104. @PC. Gotta take care of those "job creators".

  105. @PC It's all a big scam by the plutocrats. They're always whining about the 'terribly high tax rate' that corporations never pay and there's always about half the voters, of modest means, who sympathize with them and vote for big tax cuts for the wealthy and corporations. Wake up folks!

  106. @Al & Gina, Very good points. I forgot to mention farmers and ‘subsidies.’ Can anyone think of more?

  107. Some perspective would be helpful. If the incentives had actually worked (they didn’t) and brought more business into the states, the legislation wouldn’t have been proposed. The horses left the barn a long time ago.

  108. The poster child for this is of course Scott Walker's $4 billion in tax breaks for Foxconn to build a factory in southeast Wisconsin. Even if the promised 13,000 jobs eventually materialize (which is looking increasingly unlikely), the deal works out to $307,692 per job. Meanwhile the Republican state legislators who supported this boondoggle balk at our new governor's move to increase school funding by less than $100 per student. But as long as politicians are free to spend other people's money on "job creation" schemes for which they can claim credit come election time, they'll keep on doing it.

  109. Can states say 'no' to corporate giveaways? Sure. Will states say 'no' to corporate giveaways? Not a chance. It's all about the political legacies and 'look what I did' when Monty Hall is up for reelection.

  110. It is about time local governments smartened up, as this scam has been around for years. Below is a description of how a decades old tax break worked out for the public after 550 Madison Avenue in NYC was built AT&T had been granted a tax break of $42 million, under the condition that the company would keep its headquarters at 550 Madison Avenue and not rent out the space to other tenants. Having decreased in size substantially, AT&T signed a 20-year lease agreement on 550 Madison with Sony and relocated its headquarters to 32 Sixth Avenue, between Walker and Lispenard Streets. Sony was granted an option to purchase the building. AT&T returned $14.5 million to New York City to compensate it for tax abatements made as part of a 1987 renegotiation (not exactly generous because of the differences between the initial amount and the fact that the remaining people were largely clerical. Most of the high salaried people whose payroll taxes they wished to retain went to NJ)

  111. One thing this editorial fails to emphasize is that even when "successful," even when the incentives result in a net gain to the local economy, the same gains would have been gone to one of many areas who declined to be so giving. Presumably there is some socially optimal placement of various economic activities, and without tax incentives the exalted free market should find it. Local tax incentives inhibit this.

  112. Not when corporations and concentrated capital have a stranglehold on the democratic process-- not for a New York minute. This problem's nothing new, it's called capital flight or "the Virtual Senate." Corporations have literally playing this game since Day 1 (that's why we had Standard Oil of New Jersey, not New York). Even middling corporations can play state governments against one another: "give me more subsidies or I'll move to a state that will." When you get to the mega-corporations and conglomerates, they can play entire countries against one another. Bill Gates straight up told the federal government that if they pursued anti-trust action against Microsoft he'd move elsewhere. The only way to solve this problem is to address the source: this perverse plutocracy we like to call "capitalism."

  113. Quick quiz: Name the city whose tax rates are low and coffers full because of its success luring business with tax incentives. It does not exist. Now list prosperous cities where wages are highest. What do New York, Minneapolis, Pittsburgh, and San Francisco have in common? Great universities. Invest in education, and over the course of half a century, all else equal, prosperity will follow. It may not be sufficient, but on the evidence it is clearly necessary. On the same evidence, tax incentives are useless.

  114. @James K. Lowden. Are you claiming Texas, Florida, Arizona, and Tennessee don’t exist? Are you denying the mass migration from high tax states like Illinois, New York, New Jersey, Connecticut and California?

  115. The only incentives for businesses to relocate should be the locales permanent business climate re. taxes and regulation available to ALL. Taxpayer largess should also be denied sports franchise owners. If they had to pay for these palaces perhaps the multi million dollar salaries paid to big time athletes, as well as their own take, would much more accurately reward their value.

  116. I realize that the left cannot grasp the inviolable laws of supply and demand, but jobs are a limited resource and there will be competition for them. Always has been, always will be

  117. @Larry What you don't realize is that states that hand out huge tax breaks to "lure" investors are just being played one against the other by these investors. Result being everyone else pays more to make up the short fall. Just stupid, always has been and always will be.

  118. @Larry I realize that the right cannot grasp the inviolable laws of supply and demand, but labor is either needed or it is not. If Amazon or any company needs to hire people to meet demand, they will, incentives or not. Thus corporate incentives are largely unnecessary and are actually counterproductive to free and open markets.

  119. @CB Conservatives don't actually care about free or open markets. It's the same as "state's rights", the entire concept is a scam that they use to push their illogical beliefs. Free markets are great when they allow the wealthy to subjugate everyone else, but when the free market actually produces a different result, we see how quickly conservatives object to the idea and attempt to impose controls. When they talk about "free markets" it has nothing to do with the actual markets, and it's all about a mechanism by which to impose their ideology on everyone else. The same way that the South absolutely hated "State's Rights" right up until the minute that Lincoln won the Presidency, and then somehow that value became their pretext for war.

  120. Maybe the problem isn't the deals, it's the bad deals. Are there some deals that work out well for the municipalities? Is there an enforcement mechanism if the company doesn't live up to it's contractual agreements? Is there a mechanism to ensure that the officials who make the deals a) know enough about the business to make good decisions, and b) make decisions based on their responsibility to their constituents, and not their own self interest. Get all that right and the deals might not be so bad. Get it wrong, and it's a corporate giveaway.

  121. @mlbex I don't think anyone knows what a good deal looks like. If corporations want to save money, the would move to places with a pool of available labor and capital. The rust belt is full of them. If corporations, as they say, do no have enough trained individuals in these areas, they should provide training to meet their labor and demand needs. Why is the government expected to provide this money/training/land? Why do employees have to take on all the risk when corporations are swimming in capital? We live in bizarro land.

  122. This is classic Game Theory. States like Missouri and Kansas would be opting out of playing Prisoner's Delimma. Those who opt out suffer the most, because the game is involuntarily imposed. If your state takes this route, tax bases will crater, jobs will evaporate, and the politicians who chose this "high road" will be spat out like persimmon seeds. All the while, rival states will be laughing at your stupidity.

  123. @George Which is why it needs to be instituted on a National and International Level No Corporation may get a tax break to move into an area, it directly deprives the locals of Fair Taxation and Representation with the obvious Representing of ONLY the untaxed CorpRats. It is time to stop allowing Corporations to make rules on their operations that come into effect as if they were law, and it is time to stop giving big corporations give-aways in order to get them to move there. Rarely do they actually give anywhere near as much to the community as they say they will. Too often the CorpRats come in, demand concessions and say they will hire, but then hire only their own people (segregated either by religion, race or locked-in economic conditions and graft) at a much lower wage than expected and thus the tax rate for the local government ends up being Lower than it was before, with Corporations racing to the bottom on wages, cutting corners yet expecting long hours with little recompense aside from pamphlets on how to negotiate Public Assistance; in a Corp that pays it's Rats Billions in Profits per year, while the Real Workers HAVE to get public assistance for survival. Playing the CorpRat's way to the bottom is the losing game, ditching them and their ability to do this odious practice and make the clean up their act, OR Remove their ability to Do ANY Business, treat them like any Nation and Sanction their bank accounts and all who buy from them. We would see the changes!

  124. @B. Honest This is really something. You're right about one thing, maybe without meaning it. That is, how corporations are acting and accreting power like nation-states. I may live to see the day when the biggest ones claim geographic territory and field armies. Aside from that speculation, though, you suggest sanctioning them like countries and going after their customers. This could get into some difficulties since there is not the clean dividing line between them and individuals you may imagine. They make everything we eat, burn, drive, wear, and ride in. They employ us and we invest in them. Going after and destroying them would be to destroy ourselves. Yes, you'll get changes all right, good and hard.

  125. Upon expiration of its 25yr no-tax original deal, a company I once worked for sued successfully to significantly reduce its local tax assessment. At the time of the suit gross profit on the main product line was around 50%; it had been around that level for a decade. Within the corporation this site was known for controlling costs. Within the community it was known for paying the least. The local school district bore the brunt of the lost tax revenue.

  126. Despite the Left’s assurances, people do make decisions based on taxes. That includes the people who run businesses. Just look at the massive exodus of people from failed high tax states like Illinois, Connecticut, California, New York, New Jersey to low tax states like Texas, Florida, Arizona, Tennessee.

  127. @Larry You are correct and also completely wrong. Yes, I live in Florida. While I lived in St. Lucie county, I watched the city fathers give away millions in tax incentives and millions more to build the facilities for these new businesses. This was around 2015. It is now 2019 and all those businesses pulled out or went under. The most egregious one was called Digital Domain. The city built the $40 million facility for what was to be a production company for animated movies. It lasted one year. The county finally sold it for $13 mil to a church that now pays no taxes. Kind of explains why St. Lucie County has some of the lowest paid public jobs - teachers, police and fire.

  128. @Larry People and corporations who do not pay their fair share of taxes are doing a great disservice to their state, federal government, and their fellow man. While it is reasonable to dislike paying high taxes, it is dishonorable to avoid paying your fair share. Taxes are necessary so our country can function, and nothing will change that.

  129. @Larry You fail to mention that nearly all of your listed "failed" high tax states receive less federal funds than the federal taxes they pay in and thus to some extent subsidize the low tax states on your list.

  130. Corporations take advantage of community resources and infrastructure. They should be grateful and PAY THEIR WAY! Enough of the ridiculous political giveaways scams.

  131. But we must repeal President Trump’s brilliant SALT deduction limits, right? Right?

  132. @Larry SALT deductions are ideologically conservative. Doesn't the right think that money should be in local hands closest to the needs and the voters? Just demonstrates the repeal the punitive, no policy based.

  133. @CB. Stop lying. The immoral SALT deduction was a way for rich leftists to vote themselves goodies and force others to pay for them

  134. They wouldn’t offer tax credits to individuals to move there. But they will for a business - that will also make significant contributions to political campaigns. This only benefits big business and supports political corruption. It also undermines proper local government and community funding. This is the dark side of capitalism. Also exacerbates inequality. Also we need to get money out of politics so politicians will look to interest of constituents rather than their benefactors.

  135. @APM from PDX The GOP doesn't seem to understand that growth in capitalism is based entirely on demand. They do everything they can to take money away from those who create demand and give it to those who couldn't possibly demand more. They are so blinded by the supply side nonsense they cannot see the reality of the last 40 years.

  136. It's hilarious. If it weren't so painful, we'd all laugh. Even when conservatives make a sound argument; they ignore it at will, just like they when a sound argument is against them. What is more conservative than the trope: government has no business deciding winners and losers? That one is used against any possible interference in the market they object to. But when it's payments to rich individuals; well that's a different story. Baby boomers are so lead poisoned (hormone dizzied?) that this just flies in one ear, twice and joins the pile up at the outgoing ear. Is this a great country or what? (Hint. If you need a hint, this is you.)

  137. Tax incentives for corporations are a shameful waste. They only serve to give pols something to lie about.

  138. New York State, knock wood, has a robust, multi-billion dollar Film and TV industry. Georgia does over $10 billion/ year as well. That is a great deal of wealth that gets rapidly and fairly distributed through these economies via state, local and property taxes, spent crew salaries, rentals, police salaries and location fees, etc. There are also secondary benefits like increased tourism, from a clean industry that leaves no scar on the landscape. These success stories are due entirely to incentives. When they are gone, so is this industry. Overnight. Like it or not, that's the game, currently being won in NY. NJ has just added incentives. For good reason. "Florida Girls" is shot in Savannah, Ga. Let that sink in. Many other Fl based stories also now shot in Ga. not Fl. And those production dollars spent there. Fl is dead. Its entire production industry has disappeared, along with the supporting infrastructure, thanks to the Koch Brothers who managed to get all incentives killed in Fl. (They are connected in Ga, to which they purposely redirected that industry.) Most skilled workers who made their living in Fl have relocated to Ca, Ga and NY, myself included. There is a great deal of vibrance and prosperity (real middle class, union jobs with benefits prosperity, not the Koch Brothers' astro turf "Americans for Prosperity" kind) injected into the NY economy by the Film and TV industry, Do not throw the baby out with the bath water.

  139. @Ben K "Despite mixed results, state government use of targeted economic development programs has escalated. This study evaluates the impact of motion picture incentive programs, an array of tax incentives employed by over 40 states to entice film and television productions out of California and New York, on labor and economic conditions from 1998 through 2013. Results suggest that sales and lodging tax waivers had no effect on any of four different economic indicators. Transferable tax credits had a small, sustained effect on motion picture employment levels but no effect on wages. Refundable tax credits had no employment effect and only a temporary wage effect. Neither credit affected gross state product or motion picture industry concentration. Incentive spending also had no influence. These findings demonstrate the heterogeneous impacts of different incentives offered under a single program and should inform future economic development policy design." Abstract of "Lights, Camera, but No Action? Tax and Economic Development Lessons From State Motion Picture Incentive Programs " by Professor Michael Thom, Univ. Southern Calif. (2016)

  140. well another set of tax payers are heading to FL those affected by tax increases in NY & NJ. Many are looking at Miami as a great place to locate and get rid of part of their tax burden, and warmer weather. If you are of a certain age you know you are gong to make it and only be there for 20-30 years before it goes underwater. High income individuals who want a short trip to NYC and also do not want to get sucked into the great socialist experiment that CA has become.

  141. I live in Austin. Year after year the city and State offer up tax abatement and free infrastructure to various businesses such as Simon Properties, F1, a soccer franchise etc, etc. It's focused primarily on giving away property tax revenue in exchange for the promise of jobs. Generally all this accomplishes is loading the tax burden onto individual homeowners and residential landlords and by logic, renters. We have some of the highest property taxes in the country which effectively destroys affordable housing opportunities and gentrifies every neighborhood remotely close to the city core. In effect people are being taxed out of their homes. The unintended consequence is the opposite of the desired affect. Concentrate population at the core to reduce pressure on our already miserable transportation problems. Traffic congestion is among the very worst in the country. As has been mentioned very often, the people that have always made the city unique, musicians and restaurant workers, cannot afford to live hear for the cost of housing. Meanwhile any homegrown business will receive no incentives for their entrepreneurial efforts. The so called Texas Enterprise fund is nothing more than a slush fund for well place politicians to play favorites, grab a headline and feather their campaign donations. Ironically many of the wealthy tech companies locating in Austin, (and there are plenty) are coming here for abundant tech talent and "lifestyle". They would come anyway.

  142. Let’s not overlook the kickbacks that politicians receive in the form of donations to their party or their re-election campaigns. As was mentioned by another commentor, this tax abatement practice should be illegal as a interference in interstate commerce.

  143. Once upon a time in a community not far from you when a developer wanted to create a big housing expansion they were also required to support the development of infrastructure and schools. Now it is the other way around. What changed? Is it the pervasive ideology of supply siders or just the power of single bottom liners. Too often these deals either do not generate the growth they promised or the cost of the incentives was dispropirtional to the gains. This system of pitting communities or states against one another is extortion. This is the way business operates. No it is the way we tolerate businesses operating in our communities. It is past time the these super wealthy corporations learn to be good citizens since they have been granted personhood status.

  144. The US Congress is in total abrogation of its sweeping Commerce Clause powers to stop states from undermining each other.

  145. Notice not one mention of CT? CT "takeaways" forced out GE, Travelers, Aetna, several pharmaceutical companies, countless other small and mid-size companies, and then had to give Sikorsky a giveaway (ie, we won't takeaway as much) to stay. New York promised a tax abeyance for new companies, but the oppressive taxes forced the owner of the Buffalo hockey team to move to Florida. The taxation is oppressive on the New Yorker so it makes sense that you have to sucker other businesses to go there. Heaven forbid you try not abusing your own. Does the cycle of taxation abuse end? Na, CT raised taxes on medicine & basic food (taxing the sick and the poor), and is putting in tolls under a mathematical delusion that it will help the state. (CT claims it will bring in $400 million from outside of the state. OK. CT is already receiving $258 million from the Federal gov't for Not having tolls, so that leaves a net $142 Million. The cost of the tolls is $100 million per year for 10 years, so that leaves $42 million. Now subtract the amount of revenue the State will take in from other sources since people do not have unlimited income and the toll money will come from somewhere, subtract the revenue from people in New York, MA, & RI who won't cross the border for daily products as the tolls will change behavior, subtract the trucking companies who will not now choose to go through CT to avoid the MA tolls, etc). All CT did was find a way to lose $258 Million plus a year.

  146. @Constance Underfoot Big companies pay very little in taxes. Employees pay taxes and tolls. States without income taxes still raise tax money through a variety of user taxes and sales taxes, and they also provide fewer services to citizens. Finally, for many companies the allure of moving south is to states that have no unions and lower minimum wages. Corporations are not the victims here. They rely on political pressure--politicians who need to say to voters "I brought jobs to your state"--even when the arithmetic doesn't support it.

  147. The worst enemies of any state are other states in this fractured land of unequal laws.

  148. @MEM Funny, you're talking to the owner of a corporation, who left. CT has 9% extra corporate tax on top of the Federal. So with Trump's tax cut, it's down from 44% to 30%. Ah, but CT also has an additional 20% tax on big companies, those that make $100 million or more, so yeah 50% is reasonable. But wait, there's more. CT also has limited the carryover loss to 50%. So if a company loses $1 million the first year, and makes $1 million the second year, the company made $0, it still owes 29% of that million, or $290,000. Don't tell the business owners and bigger companies that are leaving that they don't know why they're leaving CT. You don't know what you're talking about.

  149. Many years ago, my ex worked for the Fantus Corp., a division of Dun and Bradstreet, that helped corporations find their locations for new offices or factories and also helped localities attract businesses. The most important things for businesses to locate were educated employees who could show up regularly and on time, a facility or location that was proper for their needs, and housing for executives. When I lived in Georgia and was on the Chamber of Commerce, our Economic Development Corp. had facilities that were available that were modern and excellent, had virgin land for a song, tax giveaways as inducement, but couldn’t get a taker to move the business there because the zoning was so weak that a family with a McMansion could have a neighbor put their trailer on the next lot and fill it with junk cars (and this happened). Also, how many times have we seen cities and states give away those tax inducements, leaving residents to make up the difference in the budgets, only to see the corporations (and sports teams, too, who reap ridiculous benefits from this policy) move away a few years later? Corporate socialism must end.

  150. I love it when companies complain about there inability to find qualified workers while demanding tax breaks that starve schools of funding. The corporate tax breaks should be banned federally.

  151. @Rich Brenden the only thing depriving schools of funding are insane salary demands from greed-crazed instructors, like Elizabeth Warren’s demand for $350,000.00 to reach one class

  152. Having been in the "eco devo" business, including assembling incentive packages, I mostly share the sentiments of the editorial. Incentives are a game that shouldn't be played; if there is a problem with the business climate for a particular industry in a particular place, the climate needs to be adjusted for all businesses there, existing and new. There was a provision in the Colorado constitution when I was doing these things there about it being prohibited to treat one company different than others. I asked, given this, how we could put together incentives packages for one company, and was told the Atty General must "look the other way" when signing off on them. This leads to a possible Federal role in prohibiting one company being treated differently than others - perhaps eliminating the incentives game between states and localities nationwide? Should that be a 28th Constitutional amendment? Well-managed businesses don't manage for tax incentives here or there - if so, they aren't likely serving their stakeholders well since in most cases, taxes are a small part of their cost structure and competitiveness picture. The US needs a consistent business climate that maximally incentivizes and enables all enterprises, for- and non-profit, to be more profitable while being more sustainable (maximizing social and environmental performance, including employee ownership) while being internationally competitive. Case by case deal making should be eliminated if possible.

  153. You did not mention the jobs that did not meet the agreements or within a few years diminished. Please write about all the federal subsidies to billion dollar corporations and include the loopholes they receive. How much do they total a year that we tax payers pay for?

  154. Many of these incentives result from the desire of politicians and development officials to play with the big boys of corporate America. Why sit in an unimpressive office doing boring things when you can be flown around the country and hob-nob with the people that really make things happen?

  155. Recently, Arizona offered Nike tax incentives to come to the state. The offer was withdrawn over their Betsy Ross sneaker. The governor said Arizona did not need their business. Governor Ducey - why did you offer Nike the incentives in the first place?

  156. . How about that other fun game rich folks love to play: Build me a stadium PLUS that tax break and then, well sure, we'd be proud to be your "hometown" team!

  157. This is the first column that has ever spelled out the real result of Corporate Welfare and costs to communities and States alike, not to mention the Corporate Welfare of the Federal Government. One case comes to mind in Massachusetts. Boston enticed Digital Equipment Company(now defunct) with outlandish tax incentives to move to Roxbury, Mass, because of what they thought would be good jobs in a low income neighborhood and over time the taxes paid by the company would be a boon to Boston and State. Within 5 years Digital closed down. That almost happened again when GE moved to Boston. There is not a reason that Government should not create the jobs we need for Infrastructure and housing.

  158. We do the same thing in Minnesota with sports stadiums. Rather than have the Timberwolves play in St. Paul at the Xcel Arena (Home of the NHL's Wild), the city leaders in Minneapolis insisted on a $150,000,000 improvement of Target Center to keep the Timberwolves happy. The best place for a football stadium for the Vikings would have been the 400 acre site just north of Minneapolis/St. Paul in Arden Hills (site of a former Army ammo depot), considering the Vikings only need the facility 10 out of 365 days a year. Instead, city leaders in Minneapolis came up with $500,000,000 to build a stadium dedicated to the Vikings. St. Paul did get the Minnesota United soccer complex (one of the world's best called Allianz Field)...but they didn't give a dime to team owners. The team wanted to be in Minneapolis, but the Mayor was unwilling to give them access to dead land in Minneapolis so the people in St. Paul came through with a 50 year old piece of land that hadn't been taxed in decades. Minnesota also passed on giving Amazon an incentive to move HQ2 to the Twin Cities, but only after then Gov. Dayton was reminded that Best Buy and Target corporate headquarters are here and bringing in a subsidized pariah wouldn't be good for local business...let alone his fellow trust fund siblings drawing on the Dayton /Hudson/Mervyn's/Target trust.

  159. please NY, continue to drive businesses out of your state. And you'll never get my tourist dollars

  160. We hear all the time that luring Big Business and rich people to New York City, for example, will benefit the people—so give them tax breaks. NYC has more billionaires than any other city in the USA. So why isn’t our transit system the envy of the world? And our roads? And our schools? And CUNY?

  161. Amend the Internal Revenue Code to tax these "incentives." Also make taxable the interest on bonds used to fund these "incentives." The American taxpayer should not subsidize economic cannibalism.

  162. @Garak Good term: that is exactly what it is "economic cannibalism."

  163. Good article but you neglected to mention the probable corporate contributions to the reelection campaign coffers of governors and state legislature leaders that also factor into the decision to give a tax break for relocating. And on the subject of politics, imagine a political party platform that wants to control corporate spending in politics and invest in education, infrastructure, healthcare and job training. Oh yes, there is one already......

  164. We need a Federal law that mandates companies get NO tax incentives to move to a state. Many of these companies are foreign owned to boot! While I agree states should have rights to enact their own laws and taxes, they must never be about giving tax dollars, credits, or tax avoidance to a company. Not ever. And we need a Federal law because most states will not back away. Those in local government are never held accountable to their bad decisions and outright lies to their constituents.

  165. @Ma Good point about local government accountability. Most smaller governments around the country are not composed of economically sophisticated personnel. Many also have their fingers in the development troughs and so get some of the goodies ostensibly for corporations. I'm reminded of the 80s stories about the savings and loan rubes taken in by hot shot big city traders roaming the country for gullible banks.

  166. If Kansas and Missouri sign a truce, other areas will use incentives to attract businesses to locate elsewhere and to move from the K.C. metro area. If the feds encourage a truce nationwide, other countries will use incentives to lure businesses from the U.S. With corporate taxes, this is already happening; accountants and finance people place a corporation's income in locations where it is least taxed. It is just basic economics that competition within a sector (and government is a sector) is bad for those within the sector and good for those dealing with the sector. When businesses compete for workers, the workers benefit. When businesses can manage not to compete for workers even when good workers are scarce (and there are ways to do this even when it is supposedly illegal) they all win and the workers lose. Similarly, when governments compete for businesses to locate there, they all lose and the businesses win. People who justify tax incentives must make the insights of basic economics disappear. They are well paid by the business sector and have been very good at their job.

  167. @sdavidc9 I'm sure the FEDs could impose or enforce a truce. IMO voters have to enforce spending discipline on their city and state by un-electing or recalling those who'd give tax dollars to employers and especially boot out those who give tax dollars to pro sports teams owned by billionaires.

  168. @Mike My apologies for leaving out a key word. Line one should say: I'm NOT sure the FEDs could impose or enforce a truce.

  169. @Mike Billionaires who do not get tax dollars threaten to move their teams, and sometimes do it. Perhaps teams should be owned by the cities or metro areas where they play; Green Bay does something in this direction, I think.

  170. But improving infrastructure or high speed internet or schooling requires leadership. Tax incentives give a photo op for proposed jobs created (even if temporary) and then no more thought by those elected....but not leading.

  171. America has learned to hate its government and to embrace its corporations. As a result, wages remain stagnant, pollution is on the rise, taxes for the wealthy and the corporations is going down and healthcare and infrastructure get ignored. You get what you vote for.

  172. @Jim Dennis So true. ...And government is the only thing between us and the abyss. Yes, there is corruption in government but its usually the corporations doing the corrupting. So, I tell people who want to make kneejerk commentary, "Which would you prefer, the Corrupters who "we" have no control over OR the Corruptees who have to respond to us when we rise up to make our voices heard?" It is that simple. Corporations only respond when we stop buying their products. ...And they have a big interest in shrinking government SO it will then shirk its regulatory duties and, thereby, get off the backs of the Corps. WHY DO WE FALL FOR THIS SPIN??? Therefore, we should absolutely think of and treat our government as a beautiful pearl growing in the oyster, irritated on all sides, but still working and growing in lustre as it does its assigned job - to get rid of the irritant. That irritant is the 1% and any other group that wants to pillage and ravage at the expense of others. So everyone, please praise and acknowledge our government for the good it has done and for the potential under the right leaders to do so again for the good of all. ...And let me not leave out a big part of that equation is that we must take responsibility for ourselves, our families and our country and recognize that there are some who will need support and government safety nets to rise above or maintain in the face of difficulties. Government should work for the weak and the strong.

  173. Just yesterday hearings were held in Trenton by a new commission recently established by Governor Murphy to look into New Jersey's Economic Development Authority, that under the previous administration was run like a corporate welfare program, giving hundreds of millions of revenue away to profitable companies threatening to cross the Delaware as incentives to stay. Murphy has come under attack for even suggesting appropriate oversight and reasonable limits for this program. In the meantime N.J. small businesses like mine are left to suffer the consequences of lost revenue or pick up the slack in never ending tax increases that never seem to catch up to legitimate needs like infrastructure investment, education and health care- not to mention a gimmick free balanced state budget. New Jersey needs an Economic Master Plan that could include tax incentives that are sensible, transparent and accountable. Come to think of it every state should have such a plan in place. That way voting taxpayers could hold those in charge, or as has been the case in New Jersey, those absent, accountable when corporate welfare fails to measure up.

  174. These tax incentive programs are a path to influence peddling, graft and corruption. Instead state governments should be addressing high taxes, excessive regulation, infrastructure and education. These economic development agencies are anything but transparent and get the job of picking winners.

  175. Kansas was also the state that Republican Governor Sam Brownback - advised by the trickle-down-0.1%-tax-cut bankruptcy expert Arthur Laffer - nearly bankrupted with 0.1% welfare. They love their wealthy and corporate welfare queens in the heartland. Taxes are the cost of civilization, and rich corporations and rich folks need to cough up their fair share. It's okay, Kansas....taxes are not evil....in spite of the Republican gospel of greed. Evolution is possible......(yaaaaaaaaaaaay !)

  176. @Socrates. Taxes, like atomic weapons, government subsidies or guns are just things. It's what they are used for that can be bad.

  177. Investing taxpayer money in long term public good is what the primary obligation of a democratic government is, and not to extend discretionary tax incentives to the chosen corporates, as Trump did with the federal tax kitty to benefit the big corporates last year, which is nothing but stealing public money to further enrich the cronies- a crude form of crony capitalism allowed to thrive on public cost.

  178. And then there's the fact that successfully bribing a company to relocate can have some nasty side effects: https://www.washingtonpost.com/business/2019/06/13/amazons-hq-is-already-making-arlingtons-housing-prices-skyrocket/?noredirect=on&utm_term=.0b90411783d7 Amazon's new headquarters are driving up housing prices -- and Amazon hasn't even moved yet! I was so glad Amazon didn't choose Boston for its new location - housing prices are insane already and we didn't need any promised 50,000 new employees to make it worse. But I've always wondered...if a city or state has millions to pursue a company with the promise of jobs - why not just use the damn money to employ people already living there?

  179. "...politicians under pressure to “do something” to promote economic development would do much better to invest in education and infrastructure,..." California has done that for decades. It is not a coincidence that they are now the 8th largest economy in the world and one of the primary economic engines that make America go. "At four-year universities, about 60 percent of students in the 23 campus California State University system, and the same share of in-state undergraduates in the 10-campus University of California system, attend tuition-free as well." Source: https://edsource.org/2018/getting-free-college-tuition-in-california-a-quick-guide/599039 Taxpayers get what they vote for and what they pay for. Voters in low-tax, small-government states like WV, MS, etc, get what they vote for: poverty, obesity, diabetes, meth, opioids, early death.

  180. I favor a level economic playing field. That means no jurisdiction competes for job creation by offering tax incentives to corporations. The prohibition needs to be Federal.

  181. I wish new York would stop giving tax breaks to companies to companies to move to New York City, particularly when these companies would move to NYC just the same. Better give money to build infrastructure to house the poor and homeless.

  182. States probably shouldn't be taxing corporations at all. The residents of a state ought to pay for the government services they vote for instead of offloading that cost onto out-of-state residents (the shareholders). Even if a company pays no direct corporate income tax, all of its local employees pay state taxes, and all of their local spending gets taxed again through sales tax and as the income tax of those whose jobs their spending supports. The Editorial Board has never seen a tax it didn't like, no matter how much it encourages jobs to leave. Do they ever wonder how many former NYT employees would still have their jobs if New York didn't extract so much money from their own enterprise?

  183. @Troglotia DuBoeuf Do you really think corporations use no taxpayer-funded services or infrastructure, and gain no benefit from well-supported communities?

  184. The Federal Government should pass laws preventing the states from enforcing laws, including their tax codes inconsistently. Such laws would then allow citizens and other business to sue their state in Federal court when they make these corporate giveaway deals.

  185. The Other thing not mentioned in the article is the motivation for corruption. Why does it persist when the benefits are doubtful? Because the politicians can get rich from those deals. Direct kickbacks if they are brazen/stupid or indirectly through revolving door positions in industry or side deal "investments" in ancillary industries. Part of the point of the Federal government in its inception was to prevent the states from undercutting and undermining each other economically! That was a problem between the individual states in the US before a federal constitution. Corporate giveaways are a new version of that problem. They should be banned. It's idiotic for states to "compete against each other" in this way. It is hard to ignore the plainly obvious effect that it is a race to the bottom for state revenues and therefore the well-being of citizens. Again, the reason we have this problem is most likely sociopathic politicians and corruption. Certainly corporations are going to act as sociopaths. That is already well documented and understood. If they are going to have "personhood" we should at least be aware of what kind of persons they are going to be. When the Phoenix of honest representative democracy rises from the ashes of our national Trumpster fire at the election of an anti-corruption populist president...Warren or Sanders, and political corruption by the financial elite is understood as the enemy of democracy...the very nature of incorporation must be changed.

  186. Let's not forget that Michael Bloomberg, as Mayor, gave $1 billion in incentives to Goldman Sachs to keep them in NYC after they made the absurd threat to relocate to Jersey City. Pure theater, apparently, Bloomberg was the only human on Earth who believed them. A better orchestrated case of bribery at the public expense probably doesn't exist.

  187. @stan continople, The Washington State legislature gave Boeing a $9billion tax break after threatening to move operations out-of-state back in 2012. I think this qualifies as a pretty good case of bribery. Oh, and you know, the legislature refused to fund schools or transportation bills for years ahead of this, but it only took them 3 days to cough up the incentive. Go figure.

  188. @mrfreeze6 Good example, though with Bloomberg it seemed pretty much a one man operation. And this is the guy who wanted to be President... From what I've read, Boeing's fortunes have only suffered after they moved many facilities out of Washington and has culminated in the 737 debacle. Huge disparities in quality control have been found between the Boeing factories in Washington and Alabama. Well, I guess you get what you pay for, and Boeing will end up paying through the nose.

  189. @stan continople I wasn't aware of a quality difference between Boeing locations. Thanks for mentioning it. 500 dead won't change that, though.

  190. What larger organizations need more than tax incentives, more than just about anything is a workforce. The investment that states need to make is in high schools and junior colleges in order to promoted workplace literacy. As a nation we are wasting tens of billions of dollars on for-profit, post-secondary work-preparedness education. These schools are absurdly expensive and the outcomes are terrible. States can effectively pull the plug on the scam by providing the same skills at public institutions. This in turn will attract companies to relocate.

  191. @David Cary Hart Agreed!

  192. Incentives to corporations by municipalities or states should be illegal as a restraint on interstate commerce. If a business makes a decision to locate in a certain area, it is for longer term reasons. It has been documented that the areas almost never recoup the monies that they provided.

  193. I live in a small town on the edge of Appalachia. Local officials are desperate for jobs to prop up our declining economy. In the last 15 years a dozen small industries with 40-60 employees have come here, lured by tax holidays for 10 years. All of them have moved out at the end of the grace period. They got a free ride, and we got jobs, but little revenue. A big Cracker Plant down river in Beaver County has gotten billions in tax relief. And then there is Foxconn in Wisconsin. A sad story of greed and corruption.

  194. This is a really big deal. These corporate giveaways are usually in the form of property tax reductions which are the primary funding source for schools, police, fire, really important stuff. We have seen companies move across the line to benefit from these deals and as soon as they expire, move back again to gain another round from the other state. Meanwhile, small businesses have to compete against these larger companies and get no preferential tax treatment. As stated in this article, the long term gains are nil. Each state loses out on a ton of much needed tax revenue. It's really an insane way to run a community. Of course, homeowners get no such breaks to move across the state line.

  195. @Bruce Rozenblit it happened in one of the towns in Westchester County. A well known company demanded and got a tax break. This tax break affected the schools. Two years later this same company had the nerve to complain about the quality of the schools. Local officials can't raise taxes too high because they drive away residents and the smaller businesses. But they have to provide a good education. No one wins yet this goes on all the time.

  196. @Bruce Rozenblit Ironically my tiny state has actually starting giving $10K tax rebates over 2 years to individuals to move here. The idea is to encourage independent consultants who can work remotely to choose VT and it's high quality of life. It has not fared well in the court of public opinion. It certainly does attract highly educated folks and a place like VT is not going to attract large companies due to limited transportation infrastructure, high electricity costs etc. I don't think it's a great idea- seems more likely to me that folks who move for a tax break are less likely to put down roots than folks who move here because it fits their lifestyle.

  197. @Bruce Rozenblit, this also recently happened between two neighboring suburbs in St. Louis. A Walmart's tax breaks were expiring, so they set the two neighboring towns in a bidding war, ended up moving to the second town, just down the street, ON THE SAME STREET, no job increase, employees just had to drive a half mile further, but Walmart gets 10 years more tax breaks.