Tax breaks to encourage economic development in a specific location may benefit the taxpayers, and they may not. This article shows that its very difficult to determine the real benefit to tax subsidies.
One thing often left out of our national conversation is that corporate tax subsidies are CORPORATE WELFARE that directly benefits corporate shareholders. Anyone who owns stock in a company which receives federal, state, or local tax subsidies is themselves the recipient of government entitlements.
People are very quick to judge the entitlements of the poor. Few recognize the entitlements they receive themselves. Even fewer people are willing to question the benefits of the corporate welfare we lavish on fickle companies.
Granting corporate incentives has become standard operating procedure for state and local governments across the country. The Times investigation found that the governments collectively give incentives worth at least $80 billion a year.
Texas cut public education spending by $5.4 billion — a significant decrease considering that it already ranked 11th from the bottom among all states in per-pupil financing, according to recent data from the Census Bureau. Yet highly profitable companies like Dow Chemical and Texas Instruments continue to enjoy hefty discounts on their school tax bills through one of the state’s economic development programs.
But relying on companies does not always turn out well. When Amazon set up a distribution center outside Dallas, it received incentives from the state. Six years later, when the company got into a tax dispute with the state, it shut the warehouse, which employed as many as 2,000 people during its peak season.
NYTimes: Lines Blur as Texas Gives Industries a Bonanza