Pharos-Tribune

Community News Network

December 26, 2013

States should rethink big tax breaks to companies, economists say

Sometime early next year, Boeing will make one state very happy and more than a dozen others very sad. It will select the location for a new manufacturing plant to build its 777X airliner, gifting what it promises will be thousands of good-paying jobs to the winner.

Those jobs are shaping up to be one of the most sought-after economic development prizes of 2014. Every state that covets them is, at Boeing's urging, preparing a package of tax breaks and other government incentives, reaching into the billions of dollars. It's the latest example of a decade-long trend: As good jobs have become harder to find, states have approved bigger economic handouts to attract or keep individual companies.

New economic research suggests that's often not a good idea, and it implies that states could be bidding too much to attract the Boeing plant.

Two economists — Owen Zidar, a doctoral candidate at the University of California at Berkeley, and Juan Carlos Suarez Serrato, a postdoctoral fellow at Stanford University — write in a forthcoming paper that companies aren't nearly as mobile as economists have long assumed. Cutting taxes, they conclude, might not be the best way to boost firms' bottom lines and keep them around.

As Zidar put it in a recent interview, the research "throws some cold water" on the idea that higher tax rates on businesses always push companies away, whether to other states or other countries.

"Corporate taxes," he said, "aren't as bad as we thought."

Economic models have long assumed that taxing businesses hurts workers and local economies because companies can operate more or less anywhere and workers can't always move to follow the jobs.

The growing concern that any big employer could pack up and leave town has led states to approve lucrative incentive packages to attract or retain companies. Indiana recently cut corporate taxes and has aggressively courted companies from neighboring Illinois, following the example of Texas. Oregon, on the other hand, called a special legislative session last year to approve a tax-incentive package mainly targeted at retaining Nike's headquarters.

Text Only | Photo Reprints
Community News Network
  • Sunburn isn't the only sign of summer that can leave you itchy and blistered

    You've got a rash. You quickly rule out the usual suspects: You haven't been gardening or hiking or even picnicking, so it's probably not a plant irritant such as poison ivy or wild parsnip; likewise, it's probably not chiggers or ticks carrying Lyme disease; and you haven't been swimming in a pond, which can harbor the parasite that causes swimmer's itch.

    July 30, 2014

  • Survey results in legislation to battle sexual assault on campus

    Missouri U.S. Sen. Claire McCaskill joined a bipartisan group of senators Wednesday to announce legislation that aims to reduce the number of sexual assaults on college campuses.

    July 30, 2014

  • An alarming threat to airlines that no one's talking about

    It's been an abysmal year for the flying public. Planes have crashed in bad weather, disappeared over the Indian Ocean and tragically crossed paths with anti-aircraft missiles over Ukraine.

    July 30, 2014

  • Sharknado.jpg Sharknado 2 set to attack viewers tonight

    In the face of another "Sharknado" TV movie (the even-more-inane "Sharknado 2: The Second One," premiering Wednesday night on Syfy), there isn't much for a critic to say except to echo what the characters themselves so frequently scream when confronted by a great white shark spinning toward them in a funnel cloud:
    "LOOK OUT!!"

    July 30, 2014 1 Photo

  • 20140729-AMX-GIVHAN292.jpg Spanx stretches into new territory with jeans, but promised magic is elusive

    The Spanx empire of stomach-flattening, thigh-slimming, jiggle-reducing foundation garments has expanded to include what the brand promises is the mother of all body-shaping miracles: Spanx jeans.

    July 29, 2014 1 Photo

  • Medical marijuana opponents' most powerful argument is at odds with a mountain of research

    Opponents of marijuana legalization are rapidly losing the battle for hearts and minds. Simply put, the public understands that however you measure the consequences of marijuana use, the drug is significantly less harmful to users and society than tobacco or alcohol.

    July 29, 2014

  • linda-ronstadt.jpg Obama had crush on First Lady of Rock

    Linda Ronstadt remained composed as she walked up to claim her National Medal of Arts at a White House ceremony Monday afternoon.

    July 29, 2014 1 Photo

  • Can black women have it all?

    In a powerful new essay for the National Journal, my friend Michel Martin makes a compelling case for why we need to continue the having-it-all conversation.

    July 29, 2014

  • Dangerous Darkies Logo.png Redskins not the only nickname to cause a stir

    Daniel Snyder has come under fire for refusing to change the mascot of his NFL team, the Washington Redskins. The Redskins, however, are far from being the only controversial mascot in sports history.  Here is a sampling of athletic teams from all areas of the sports world that were outside the norm.

    July 28, 2014 3 Photos

  • 'Rebel' mascot rising from the dead

    Students and alumni from a Richmond, Va.-area high school are seeking to revive the school's historic mascot, a Confederate soldier known as the "Rebel Man," spurring debate about the appropriateness of public school connections to the Civil War and its icons.

    July 28, 2014

Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide
Poll

Should grocery and convenience stores be allowed to sell cold beer?

Yes
No
Unsure
     View Results
Featured Ads
AP Video
Texas Scientists Study Ebola Virus Smartphone Powered Paper Plane Debuts at Airshow Southern Accent Reduction Class Cancelled in TN Raw: Deadly Landslide Hits Indian Village Obama Chides House GOP for Pursuing Lawsuit New Bill Aims to Curb Sexual Assault on Campus Russia Counts Cost of New US, EU Sanctions 3Doodler Bring 3-D Printing to Your Hand Six PA Cops Indicted for Robbing Drug Dealers Britain Testing Driverless Cars on Roadways Raw: Thousands Flocking to German Crop Circle At Least 20 Chikungunya Cases in New Jersey Raw: Obama Eats Ribs in Kansas City In Virginia, the Rise of a New Space Coast Raw: Otters Enjoy Water Slides at Japan Zoo NCAA Settles Head-injury Suit, Will Change Rules Raw: Japanese Soldiers Storm Beach in Exercises Raw: Weapons Fire Hits UN School in Gaza Raw: Rocket Launches Into Space With Cargo Ship Broken Water Main Floods UCLA
Parade
Magazine

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.