Economy
The Real Cost of Luring Big Companies to Town
A new economic analysis suggests that when cities and states offer tax deals for large companies, public education suffers and incomes eventually fall.
Are the economic incentives cities and states offer huge companies worth it for local residents? That depends on who you ask. But for the cities and states vying for Amazon HQ2 by bartering bigger and bigger tax breaks, the answer matters.
New research from Timothy J. Bartik, an economist at the W. E. Upjohn Institute, suggests that while incentives do indeed have benefits for local economic development in the short term, negative effects begin compounding as soon as 22 years into an agreement. It’s public education that suffers most drastically from budgetary reshuffling; and vulnerable low-income populations that are afforded the smallest gains.