Companies: Pay Up, or We'll Open Somewhere Else

Taxpayers foot the bill to lure big business

By Neal Colgrass,  Newser Staff

Posted Dec 1, 2012 4:15 PM CST | Updated Dec 1, 2012 4:45 PM CST

(Newser) – Want a big business like GM or Shell Oil to open up shop in your area? So do state and local officials, who try to lure corporations with incentives like free buildings, tax breaks, and outright cash payments—to the tune of $80 billion a year—but it's hard to prove that the money actually creates jobs, the New York Times reports. And if the business decides to liquidate, it doesn't refill government coffers. "It just gives me a sick feeling in the pit of my stomach," says an official in Kansas. "It sounds like I’m talking myself out of a job, but there ought to be a law against what I’m doing."

Big businesses do, of course, boost local economies and raise tax revenues, sometimes for generations. But they also play hardball with local officials, at times threatening to move jobs overseas—although it's often not true—and even milking cash-strapped states for big bucks. Michigan attorney Doug Winters has sued GM twice for closing factories despite government support, but neither lawsuit has gone anywhere. "They’ve done a lot of damage to a lot of people and a lot of communities, and they’ve basically been given a clean slate," he says. "It’s a 'get out of jail free' card." For more, see the Times' state-by-state database of incentive spending.

State and local officials offer sizable incentives for corporations to open up shop in their areas.
State and local officials offer sizable incentives for corporations to open up shop in their areas.   (Shutterstock)
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