The War Between the States isn't over--it's heating up. Corporate tax and finance execs say state and local governments are increasingly likely to dangle tax credits and rebates as incentives for companies to expand or relocate operations. In a July survey of 203 companies with gross revenues exceeding $300 million, accountants KPMG Peat Marwick found that 79% say they're now getting tax breaks. Enterprise zones are popular: 57% of the companies have operations in redevelopment areas where state and local taxes are sharply reduced.
Governments maintain that tax breaks draw in new facilities that create new jobs. But 19% of the surveyed companies say they're getting incentives on current facilities that haven't expanded. How big a tax break, the survey asked, would persuade your company to move its headquarters? Three-fourths of the executives wouldn't answer. But among those who did, the median price tag was $5 million.