Tax breaks make a lot of sense when they make previously unprofitable economic activity profitable. Especially if that economic activity is a net good for the l

Tax breaks make a lot of sense when they make previously unprofitable economic activity profitable. Especially if that economic activity is a net good for the local community. Unfortunately, many corporate tax breaks are created to compete with the municipality next door for economic activity that would occur in any case. The key point is that even if all municipalities banded together and agreed not to TIF, then the economic activity would still occur. Concretely, here's a list tallying the value of Wal-Mart TIFs: http://www.walmartsubsidywatch.org/state_tallies.html http://www.walmartsubsidywatch.org/state_tallies.html Now, here's the key question: would Wal-Mart (or a competitor) have built all those stores and distribution centers without TIFs? I.e., is Wal-Mart profitable without tax subsidies? The answer is obviously yes: those stores would still be enormously profitable, so Wal-Mart would still build them. Which means these tax breaks are not creating new value or spurring economic activity that would otherwise not occur! These TIFs are simply a wealth transfer from local taxpayers to Wal-Mart executives and shareholders, orchestrated by playing municipalities off of one another. Hundreds of millions of Americans pay extra taxes and/or receive inferior services because municipalities won't cooperate in a game of prisoner's dilemma. Great for the Waltons, though. TL;DR: because allowing municipalities to compete using TIFs results in wealth transfers from local communities to large corporations without creating new economic activity that wouldn't have occured anyways.