Michael Lissack calculated that when all is factored in pro sports facilities drained $500 million from governments annually. For whose benefit? For taxpayers everywhere, and society as a whole, it is the ultimate lose- lose situation. The new jobs that are created in one state when a company opens a plant, courtesy of tax breaks, are offset by the loss of jobs in another state, where the company closes a plant. One community gains tax revenue. Another loses it. What’s more, the new jobs often pay less than the old, and they have fewer benefits. As more states and places joined the incentives contest, competitive advantages blurred. However, a negative-sum game (where all bidders lose) did not end the practice. Places are still willing to offer incentives to attract or retain a business. In most cases involving the subsidization of capital and credit (loans, grants, tax abatements tied to capital investments), the cost to the government providing the subsidy exceeds the benefits to the firm. Similarly, the cost-benefit ratios for places generally overstate immediate benefits and, depending on choice of economic multipliers used, often exag- gerate the ripple effect of secondary benefits from business attraction or re- tention. On the other hand, one can point to incentives and programs where costs are minimal, leverage great, and distortion potential low. For example, programs that reduce information costs-where to obtain capital, location specific data, labor force availability, how to facilitate exports, technology transfer, and the like-can be extremely beneficial to places and businesses. From the vantage of elected public officials, inducements initially con- stituted a win-win game, irrespective of what economists and others may think. Should officials fail to grant a concession or play the bidding game, either the failure to attract a business or the loss of a business could cause them to lose the next election. Should they overpay or offer incentives that detract from other values (tax equity) and get a firm to come or to stay, greater short-term political risk still lies with the former rather than the latter. For defensive reasons alone, incentives escalate. One key to this escalating process is the tax industry. It employs tens of thousands of people, accountants, economists, lawyers, academicians, think tank analysts, lobbyists, brokers, computer programmers, government
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