4 ms·

Did the study conclude these deals are a cost to the states that provide them? I guess what I mean is are these tax incentives a net negative over 20 years?

• cbsmith 12y ago
  Yes, over 20 years they probably are a net positive for the states (though perhaps not always in direct revenue for the employers). However, that's looking at the deal in isolation, rather than the the impact this has on the market as a whole. It becomes a huge competitive advantage for larger, national & international companies, not to mention a huge distortion on the market and in the end substantially cuts down state revenues (the company was going to set up shop somewhere even if they weren't offered a cent).
  • Dwolb 12y ago
    I guess I'm not so sure it's a negative for the market as a whole. It allows for some sort of company-buying-market where a non-attractive-location-state can really pull in valuable employers which they otherwise they would not have.
    • cbsmith 12y ago
      You mean if we can funnel tax friction on local businesses to distort the market enough so that the national & international employers they compete with have reduced friction if they make otherwise suboptimal decisions for locating parts of their business, everyone wins? ;-) In isolation maybe, but in aggregate it means national & international employers have an additional advantage over local employers, state coffers are thinner, and far more jobs lack long term prospects (because hey, if it only made sense to set up shop when there was a big windfall attached to it, sooner or later it makes sense to go after another windfall somewhere else and shut down what you are doing there).
      • Dwolb 12y ago
        Haha yeah pretty much your first paragraph sums up what I was thinking. I wouldn't word it so drastically, but I like the point you make at the end: if there's no real investment by business in the community, then why not just relocate when the conditions are optimal? (e.g. another tax break)