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There's the third option of Foxconn building the factory in WI despite there not being tax credits offered. Very few would make the argument that the EITC does
by rtpg 9y ago
There's the third option of Foxconn building the factory in WI despite there not being tax credits offered.
Very few would make the argument that the EITC doesn't cost money because without it people wouldn't have kids. There's likely a correlation, but it's far from an "all or none" situation.
The "simplest" thing to do is to recognize tax credits as expenditures, because it balances things out pretty well and is probably closer to reality. The reality where companies build factories because they need them, and tax credits help but aren't the main reason.
(Thought experiment: we outlaw tax credits for building factories worldwide. Do factories stop getting built entirely?)
- nothrabannosir 9y agoYour thought experiment already alludes to this: states can compete. If anything, the only thing that was “really” lost, practically, is the difference between WI and the second best offer. There is no way a company with choice would ever go for a state which unilaterally put its foot down. You need an authority to say: no more credits. Or to otherwise put a quota on credits. That would balance things out. But until they do, it’s a tragi-economic race to the bottom. Nash equilibrium and all that :(
- oarsinsync 9y agoSee the prisoner's dilemma. In the short term, the most likely way to win is to ensure everyone loses.