Michael Lissack general recession, or lower costs elsewhere. Business profits and jobs decline. Real estate prices fall. Infrastructure deteriorates. These developments ac- celerate the outward migration of residents and businesses and cause a sharp drop in tourism and convention business. Banks tighten credit, causing an increase in bankruptcies. Joblessness leads to more crime and drugs, and social needs increase. The city’s image becomes further tarnished. The gov- ernment raises taxes to maintain or improve infrastructure and meet social needs. But the higher taxes only accelerate the out-migration of resources. Urban states forced to bear the burdens of Medicaid, welfare, big- city crime, illegal immigration, and crumbling transportation infrastruc- ture can’t keep their fiscal heads above water in a federal system that lets less-developed states turn themselves into tax havens and skim the nation’s economic and demographic cream. A profitable multinational corporation sets off a bidding war among several states to see which will come up with the most generous tax conces- sions to subsidize construction and operation of a new plant. A profitable multinational corporation closes a plant with higher-paid workers in one city, and the state arranges subsidies to help it open a new plant that will employ lower-paid workers in another city. Corporate-takeover artists, who acquired an airline and transformed it from a moneymaker to a money loser, pit state against state to see which will finally hand over the most tax subsidies. Even the tax breaks offered foreign companies to move to the United States produce illusory benefits. In 1978, Volkswagen, the German car maker, opened a plant in New Stanton, Pennsylvania, just south of Pittsburgh. It was built after the state came up with $70 million in incentives, including tax abatements and money for new infrastructure. Ten years later, in 1988, the plant closed. The 5,000 people who were once employed there were out of work. No one keeps a running count of the value of all the tax concessions and assorted incentives that local and state governments extend to corpo- rations. But it is easily in the tens of billions of dollars. If you are a typical middle-income or working-poor taxpayer in any of the fifty states, its your tax money that state and local officials are handing out. And they are hand- ing it out in ever larger amounts.
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