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“How can you even talk about rationalizing what you’re doing when you don’t even know what you’re doing?”

A Times investigation has examined and tallied thousands of local incentives granted nationwide and has found that states, counties and cities are giving up more than $80 billion each year to companies. The beneficiaries come from virtually every corner of the corporate world, encompassing oil and coal conglomerates, technology and entertainment companies, banks and big-box retail chains.

The cost of the awards is certainly far higher. A full accounting, The Times discovered, is not possible because the incentives are granted by thousands of government agencies and officials, and many do not know the value of all their awards. Nor do they know if the money was worth it because they rarely track how many jobs are created. Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid.

By 1993, governors were regaling one another at a national conference with stories of deals beyond the auto industry, including a recent bidding war for United Airlines that drew more than 90 cities. The airline had set up negotiations in a hotel, and its representatives ran floor to floor comparing bids, said Jim Edgar, then the governor of Illinois.

. . .

Soon after, economists at Federal Reserve branches were questioning the use of incentives. One, in Minnesota, used mathematical proofs and game theory to show that competition between states did not increase overall economic value. Several other economists have since called the practice a zero-sum game.

This is a practice that is almost unanimously discouraged by economists, but there are a lot of state and local leaders who seem to do very little other than offering bribes to businesses in order to get them to locate (or stay) in the area. Essentially, what these assholes are doing is taking money from the taxpayers in order to buy votes. The genius of this from the politicians' standpoint is that indirectly buying votes in this manner might be more effective than simply using tax dollars to bribe voters directly. Not only are the recipients of the bribes thankful, but many of their poorly informed neighbors are likely to be swayed as well. (Often those will be the same people swayed by "buy local" campaigns.)

Every time you hear a politician talking about spending tax dollars, including giving away tax credits, to attract businesses to the area, you should assume they're stealing from you in order to further their own career.

Pinky wrote:This is a practice that is almost unanimously discouraged by economists, but there are a lot of state and local leaders who seem to do very little other than offering bribes to businesses in order to get them to locate (or stay) in the area. Essentially, what these assholes are doing is taking money from the taxpayers in order to buy votes. The genius of this from the politicians' standpoint is that indirectly buying votes in this manner might be more effective than simply using tax dollars to bribe voters directly. Not only are the recipients of the bribes thankful, but many of their poorly informed neighbors are likely to be swayed as well. (Often those will be the same people swayed by "buy local" campaigns.)

Every time you hear a politician talking about spending tax dollars, including giving away tax credits, to attract businesses to the area, you should assume they're stealing from you in order to further their own career.

The very worst example of this is local sports teams. If your local sports team ever tells your government, "We're building a new stadium, you guys should totally pay for it or give us tax breaks or something or we might move," the answer should always be, "Shove it." A much better option for everybody involved.

Oh my. They implying that politicians are getting kickbacks from the bribes? That's not right. Is it?

Tax structures are in and of themselves an incentive. It's easier to give a tax incentive than to change an entire tax structure. When you consider other relative advantages/disadvantages (costs relating to labor laws, prevailing wages, weather, transportation) sometimes it becomes even more necessary to compensate for them.

Turdacious wrote:Tax structures are in and of themselves an incentive. It's easier to give a tax incentive than to change an entire tax structure. When you consider other relative advantages/disadvantages (costs relating to labor laws, prevailing wages, weather, transportation) sometimes it becomes even more necessary to compensate for them.

I believe the whole point of the article was this assertion is unverifiable at best and disproved by economic models at worst.

I'd Hit It wrote:

Turdacious wrote:Tax structures are in and of themselves an incentive. It's easier to give a tax incentive than to change an entire tax structure. When you consider other relative advantages/disadvantages (costs relating to labor laws, prevailing wages, weather, transportation) sometimes it becomes even more necessary to compensate for them.

I believe the whole point of the article was this assertion is unverifiable at best and disproved by economic models at worst.

As I understood it, they were talking about tax incentives targeted to individual businesses-- not to general incentives built into the tax code (ex. state business tax rates in TX vs. IL. All other things being equal TX would be a better place to have a business, and IL would have to compensate.).