David Cay Johnston has written an interesting article that references studies that show tax incentives do NOT lead to job creation. He also explores why, despite the existence of empirical data showing that tax incentives don't work, businesses continue to get them:
The answer, I believe, lies in three areas:
- A failure by news organizations to aggressively or even adequately explore these deals, which from my experience would never have survived scrutiny in the 1960s when newspapers were still a mass media read by nearly all homeowners.
- The success of corporate America in implementing the recommendations of the Lewis Powell memorandum from 1971 urging the U.S. Chamber of Commerce to bring news organizations to heel and thwart consumer advocate Ralph Nader and others. The future Supreme Court justice's memo prompted the creation of institutions such as the Heritage Foundation. Powell took aim at news coverage critical of tax incentives for business, writing that those news reports "undermine confidence and confuse the public."
- The campaign finance system, which increases the power of the well-off to influence who runs for office and who has the money to become known to the public, and ensures access for donors while reducing accountability to the majority.
This is particularly interesting reading right now as Greensboro and North Carolina consider getting into a bidding war for Boeing's newest project.