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Opinion: billions are being wasted in economic development subsidy wars

Governments can’t seem to stop offering huge incentives to corporations, even though it's clear they don't have much effect on companies’ decisions. Does paying $288,000 for one job really make sense?

By Michael Farren and Philip St. Jean
| 9:45 a.m. September 23, 2021
| 0 Free Articles Remaining!

Courtesy. Apples has committed more than $5 billion in U.S. investments over five years â€” and has also been helped by subsidies.

Opinion

(Editor's note: this originally appeared on Governing.com)

Seeking to create jobs and help their local economies climb out of the pandemic recession, state and local officials are raising the ante on subsidies to big corporations. But if history is any guide, ever-increasing tax breaks and other economic development incentives will likely lead to slower — not faster — growth. Given state and local governments have already been wasting $95 billion every year in an economic race to the bottom, more subsidies will just dig the hole deeper.

Take New Jersey, for example. It made national headlines when its previous state subsidy program collapsed in corruption and scandal, but the state recently replaced it with an even larger $14 billion program. And this spring North Carolina announced its largest-ever subsidy: $865 million in its successful bid for Apple’s first East Coast research and development center and the 3,000 new jobs the company promises to bring.

Adding thousands of local jobs is great news, but why pay Apple to do something it was probably going to do anyway? It’s a lesson for anyone who values good government over political grandstanding.