Study: Job-Poaching Tax Incentives Do More Harm than Good

Nathan Jensen, a political science professor at Washington University in St. Louis, has found evidence that one of the most popular strategies for state and local leaders to attract new business does not pay off.

The default strategy of stealing away employers from other locations with lucrative incentive packages is almost a default strategy of political leaders in some part of the country, according to an article by J.D. Harrison.

Such incentive packages cost taxpayers around $70 billion annually, according to Harrison, "and there’s new evidence that it’s not particularly effective at a local level, either."

The article describes the findings and implications of a study by Nathan Jensen, which "concluded that there is 'no evidence' that those oft-used tax incentive programs have any positive effect on job creation. In fact, by cutting into public funds that could have been used for other programs that, say, spur private investment or fund research, and by making it harder for employers who do not receive tax breaks to compete in the market, the programs may actually be having a detrimental effect."

Full Story: How an oft-used economic development tactic may actually be hurting the economy

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