Thursday, August 9, 2007

When States Compete, You Win

Many companies make the news for outrageous tax breaks when building large plants in new areas because of the tempting addition of employment to (the target) economies. Examples include Dell, Google, and ThyssenKrupp AG. Those aren't the original articles I read on these deals, but they should give some indication of the tax incentives I am talking about.

Why are states pursuing big game with large tax shelters rather than lowering taxes on average? It's like they've seen something shiny ("my precious") and they're going to fight everybody else to have it. What they don't see are all the other opportunities (opportunity costs) for economic growth passing them by when they drive the taxes up too high for everyone else.

A well thought-out piece in the Advocate that I found when trying to provide the links above takes a similar position.

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