On a single day’s notice, the Mississippi Legislature passed a bill that will give two private corporations $274 million, along with hundreds of millions in tax incentives. The bulk of the funding ($263 million) and incentives will go to a German tire manufacturer with annual revenues that exceed $38 billion.
In exchange, these two companies promised to produce 3,500 jobs by the year 2028. The Legislature will fund
these projects by taking out loans that taxpayers must pay back. These deals come on the heels of recent budget cuts and calls by some for tax increases of as much as $375 million/year to fund infrastructure.
Legislators are admittedly in a tough spot when asked to vote on these projects. A vote against could lead to the criticism that they are not doing enough to spur the economy. The secrecy of these deals, and the speed at which they are considered, means that little investigation and deliberation can occur. Legislators certainly are not given time to hear from their constituents.
While promised future jobs are understandably enticing, analysis of their impact often ignores the fact that these new employees are most frequently being taken from existing Mississippi businesses that don’t have the advantage of being subsidized.
It also ignores the economic growth that would occur naturally if taxpayers were allowed to keep and spend their own money. Instead of truly growing the economy, we are redirecting resources away from taxpayers and to the detriment of businesses who don’t receive subsidy.
Mississippi is not alone in this “economic development” model. States are increasingly spending exorbitant sums of taxpayer dollars to encourage mega-corporations to relocate. As packages become more lavish, states are engaging in a race to the bottom—one that in the long term is not good for the economy.