Daniel J. Wilson's Competing For Jobs

State and local tax incentives and tax breaks have become a widely used and acceptable economic development tool to attract new businesses to an area. There is much debate whether this is an effective method to stimulate economic growth, or just another loophole corporation’s use to increase their bottom line and avoid paying taxes on their earned revenue. Proponents of tax breaks and incentives argue that it is an effective use of tax payer money to create new jobs and promote growth to an area. They contend that businesses have a choice of where they will locate, and that governments should offer incentives to entice a company to locate within their region. They contend that the long term economic benefits to their area will out way the …show more content…
Wilson compares and contrasts the methods government use when submitting subsidies and tax breaks to prospective companies in his article titled “Competing for Jobs: Local Taxes and Incentives.” He explains that there are two types of incentives that a government can use. The first one is called nondiscretionary, which means the tax incentives or breaks are available to any business that qualifies for them. For example, when two companies are similar in expected income and expected revenue then the city should offer each company the same incentive. The second incentive is called nondiscretionary. This type of incentive is not offered in an equal manner as the discretionary incentive is. The city will create a package that is specific to that particular company and make an offer to win its business. This type of deal creates much of the debate that surrounds subsidies and incentives because of its lack of transparency …show more content…
Companies now use that same tool against the cities. When a business can boost the local economy by adding additional jobs and revenue to an area it has leverage over that area, it has something the city wants. This relationship between the two players is what creates a warlike atmosphere between the cities that are vying for that company to locate in their area (Wilson). Cities and states end up in bidding wars against one another and ultimately they may make poor financial decisions and agree to unreasonable terms and tax cuts in order to win the company’s business. The public watchdog website Good Jobs First describes this as “a race to the bottom that benefits no one but the companies.” They explain that cities “fear they will be left at a competitive disadvantage” if they don’t compete to gain the business. But in the end, they lose much more than they gain (Good Jobs