Skip to content

Paying for Jobs

Updated on

Fork over taxpayer cash, or the jobs go elsewhere. That’s the threat behind the bidding wars among corporations, states and cities for factories, offices and other investments. The tax breaks handed out by U.S. states and cities in these contests have ballooned from hundreds of millions of dollars in the 1980s to between $50 billion and $80 billion a year today. Most efforts to call a truce have failed. What began as small concessions from cities and towns has morphed into a global free-for-all in which corporations and their shareholders gain at the expense of the overall economy and local taxpayers. Now President-elect Donald Trump has raised the issue to a national level by brokering just such a deal.

Three weeks after being elected, Trump announced that Carrier had agreed to keep an Indiana factory open, saving about 1,100 jobs. Trump had threatened to impose a hefty tax on Carrier's Mexican-made products. But the deal was sealed with the help of about $7 million in incentives offered by Indiana, where vice president-elect Mike Pence is still governor. The stakes are often vastly higher. Since 2000, 16 development packages worth more than $1 billion have been handed out, from a deal to retain Nike jobs in Oregon to breaks for Nissan in Mississippi. The state of Washington in 2003 gave Boeing tax breaks worth $3.2 billion, then upped the ante 10 years later with an $8.7 billion offer to keep work on the 777X jetliner in Seattle. Asian countries are turning to tax breaks to lure research and development jobs. Singapore lets companies reduce their taxes by four times their R&D spending in a break that never expires. That’s helped the island top even Ireland, which for years has lured companies with tax breaks on profits from patented products. The European Commission has ordered Apple to pay a record 13 billion euros ($14.5 billion) plus interest in August 2016, saying Ireland illegally slashed its tax bill to lure Apple jobs.