Financial incentives not paying dividends for state, local governments.
State and local governments are paying huge prices to companies as they desperately struggle to attract and retain jobs in their communities. New analysis, however, suggests that those incentives may not be paying dividends, and shows that the payouts may actually be more damaging than helpful long-term. In a region like Cincinnati, where its downtown traverses two states, three counties and four to five cities, the problem of wayward incentives is even more apparent. More from the New York Times:
A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them. Many of the officials said they feared that companies would move jobs overseas if they did not get subsidies in the United States. Over the years, corporations have increasingly exploited that fear, creating a high-stakes bazaar where they pit local officials against one another to get the most lucrative packages. States compete with other states, cities compete with surrounding suburbs, and even small towns have entered the race with the goal of defeating their neighbors.
Nationwide, billions of dollars in incentives are being awarded as state governments face steep deficits. Last year alone, states cut public services and raised taxes by a collective $156 billion, according to the Center on Budget and Policy Priorities, a liberal-leaning advocacy group. Incentives come in many forms: cash grants and loans; sales tax breaks; income tax credits and exemptions; free services; and property tax abatements. The income tax breaks add up to $18 billion and sales tax relief around $52 billion of the overall $80 billion in incentives.