A recent Bloomberg Tax column argues that corporate giveaways need to stop. Claiming that giveaways like tax incentives do not work, that the very idea they could work has been discredited, the article concludes that states cannot afford the tens of billions of dollars they have been spending on these programs. It argues that this is a matter of life and death, because the cost of these incentives is endangering public services that both families and employers depend on.
The specific corporate incentives that the article claims most need to be ended include:
1. Federal Opportunity Zones Capital Gains Deferrals: States actually lose a lot of money from these capital gains deferrals, and this loss is not really made up for by job creation and economic development.
2. The Vendor Discount: This one diverts a lot of sales tax revenue away from public services, where it is sorely needed.
3. Corporate Tax Giveaways: Some corporate incentives essentially divert revenue from personal state income taxes away from the state treasury.
4. E-Commerce Subsidies: Subsidies to e-commerce giants like Amazon were meant to spur economic development. However, these internet retail companies disrupt local brick and mortar retailers, more than offsetting any economic gains. The pandemic has only made the situation worse by shifting purchasing habits even further online.
5. Data Center Subsidies: Data centers theoretically provide a state with a lot of jobs. In reality, they really don’t. While they consume as much as 2% of the electricity in the United States, they often don’t pay any utility taxes.