Saturday, September 25

Does economic development in the states use bait and switch?

Some wisdom regarding states’ use of targeted economic development incentives from Jeff Scribner:

“If you have to bribe a company to locate in your state or bribe one not to leave, your taxes and whatever else you are using to bribe them, are too high or otherwise onerous. If this were not so, companies and entrepreneurs would move to your state without being bribed and those already there would not be trying to leave. Low taxes and a favorable business climate, like that of Texas, bring in many companies from other places, like California, where the business climate and taxes are not favorable.”

“The point of the commercial was that it is wrong to treat new customers better than old ones. More importantly, state ‘incentives’ for new businesses, or those planning to leave, may amount to failure to provide equal protection under the (tax) law and may actually be bad for the state’s economy.”

“If a state that you are considering will offer you a ‘bribe’ to move there, how will they treat you when you become one of the ‘old’ companies there? If you are in the economic development office of a state, why do you think you should offer a new company something you would not offer to those already there? If you are a businessman in any state whose government will offer ‘incentives’ to a new company, you should consider suing for equal protection under the law!”

The full article is Bait & Switch: “Economic Development” in the States.