Tax Breaks for Businesses and Sports Teams – Boon or Boondogle?

By Chris Adams

Donald Trump touts his ability to convince companies to stay in the U.S. or come to it. Among the tools politicians use to accomplish that are state-level tax incentives – such as in the well-publicized case of air conditioner maker Carrier, which said it would keep some jobs in Indiana rather than move them to Mexico.

Those kinds of company-specific goodies are often popular with hometown workers and politicians. But are they worth it?

Elaine S. Povich, a senior staff writer for Stateline, often finds that the reality doesn’t come close to matching the promises. Stateline is a project of The Pew Charitable Trusts, and Povich shared her expertise with NPF Paul Miller fellows.

“One man’s incentive is another man’s bribe,” Povich told fellows. “These deals are multi-multi-faceted. It’s not all good or all bad.”

One thing seems true, she said: States that award these tax breaks often don’t evaluate them to see if they actually provided an economic return.

Among resources Povich pointed reporters to:

__A primer from the think tank Tax Foundation on the history of tax expenditures;

__An analysis from Pew about economic development tax incentives and whether they work as intended;

__A separate Pew analysis on state efforts to evaluate their tax incentives, and a Pew video on what states, the public and the press can do to analyze the deals.

Povich talked about the Carrier deal, incentives offered by Massachusetts to General Electric to relocate its headquarters, and the range of incentives offered by cities to convince sports teams to come or to stay. The sports deals are rarely worth it for local taxpayers, she said, despite their popularity (more on that here).

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