Wednesday, July 28

Sad pragmatism and tax incentives

From David Brunori in Forbes Magazine. There are some good thoughts in this article, such as “Moreover, there is more than ample evidence that many businesses make investment decisions before they even ask for incentives. In other words, incentives generally don’t work.”

Also: “The truth is that tax incentives have been around forever. Politicians give them out because they fear companies will leave and take their jobs with them, because they want credit for economic development and job creation, and because they can’t conceive of alternative economic development policies. Improving education, infrastructure, and market access will lead to more economic development. But those investments take time, and politicians have short attention spans. They give away the public fisc because they are largely unimaginative cowards when it comes to economic development.”

But I don’t agree with this author that we must be pragmatic regarding the abolition of incentives.