Rolling out the red carpet for corporations with tax incentives often comes at a steep cost to cities and states, according to a new study that tracks 25 years of such incentives. But the agreements ultimately leave states in worse financial condition than they were in to begin with, Fast Company reports.
The study—titled “You Don’t Always Get What you Want”—examined the 32 states that provide 90% of the country’s state and local tax incentives, from 1990 to 2015, and evaluated both state and local tax incentives, while controlling for demographic, economic, political and governmental data. An algorithm assessed whether attracting and retaining businesses offset the incentives.
Overall, researchers concluded that the incentives “draw resources away from states” and “negatively affect the overall fiscal health of states.” Just two types of tax incentives proved valuable: job creation tax credits and job training grants, which both bring more people into an area and create long-term investment. Read the full story.
