Why Politicians and Corporations Don’t Want You to Know the Truth About What They’re Doing to Your Community
Each year, state and local politicians across America hand out a combined $80 billion worth of tax breaks, subsidies and other incentives, mostly to large corporations. They justify this massive transfer of public resources to private companies in the name of “job creation” and “economic development.” If we don’t participate in this arms race, we’re told, economic growth will pass our communities by.
The problem is that this simply isn’t true.
We know it’s not true because history, economic data and mountains of independent academic research from across the political spectrum tell a different story. Once you get beyond the overoptimistic press release talking points and start looking at the entire picture, the truth about development incentives is:
- They Cost a Lot: The average state could cut its corporate taxes by a third or its personal income taxes by almost 10 percent if it stopped subsidizing a few favored companies.
- They Weaken Communities: Money that goes to incentive deals isn’t available to fund local schools, police & fire departments, roads and other public services on which people depend.
- They Don’t Work: The evidence shows incentives generally don’t change companies’ plans or create any more jobs or economic growth than would have existed without them. They can even hurt local economies, reducing entrepreneurship and innovation and increasing inequality.
If this is all true, why do these deals continue to exist and expand? It’s simple: Economic development is an industry where people in power have incentives to use that power for their own personal benefit. Politicians have an incentive to take credit with voters for economic growth and job creation. Businesses have an incentive to keep the free money flowing and increase profits. Bureaucrats have an incentive to create job security by approving more and bigger deals. Everyone involved has an incentive to keep the deals coming, regardless of whether they benefit communities. This is why the economic development industry has come to triple in size since just 1990, while rejecting transparency and reform.
That’s where the Center for Economic Accountability comes in. We are an independent and nonpartisan educational organization that works with researchers and experts from around the nation and across the political spectrum to help spread the truth about economic development incentives. We present real evidence, we account for both costs and benefits and we shine a light on secret dealings. Our goal is to ensure Americans have all the information they need to demand meaningful transparency and accountability from their local business and government leaders.
When informed citizens and consumers can hold them accountable, politicians and businesses will support economic development policies and make deals that are good politics, good business and good for the entire community. That’s our mission, and we hope you’ll join us.