Chip Taylor

Milking the economic development incentive cash cow

Paul Caron discusses an Ernst & Young presentation that was used in advising large corporations in the best ways to get the largest location incentives possible from state and local governments.

Paul Caron summarizes:

Ernst & Young delivered the PowerPoint presentation at a recent meeting of the State Government Affairs Council, which bills itself as "the premier national association for multi-state government affairs professionals of over 120 major US corporations, trade associations and service providers." Ernst & Young made the pitch to a who's who of leading companies -- Alcoa, Anheuser-Busch, Bank of America, Bayer, BellSouth, Best Buy, Capital One, Coors, Goodyear, Home Depot, MBNA, Microsoft, Nextel, Nissan, Pfizer, Toyota, Verizon, and Wal-Mart.

Ernst & Young acknowledges that taxpayers don't like corporate welfare but suggests ways to "provide government with justification" for giving tax incentives to businesses. A key strategy is to identify "public benefits" while making a threat of dire consequences if the deal is not made. At the same time, the PowerPoint presentation suggests techniques to prevent states from rescinding the tax incentives if the promised public benefits do not materialize.

The presentation is pretty brazen, but I can't imagine that anyone really finds this shocking, other than in the Claude Raines sense of the word. I mean, the incentives have hardly been a secret. Surely no one thought that states and cities were just throwing cash at the companies with no effort on the part of the businesses.

(Hat tip: Gail Heriot guest blogging at the Volokh Conspiracy)