States Battle Each Other for Piece of Corporate Pie
Who wins and who loses when states compete for new business and industry,
and what policies are advisable as the use of taxes and other incentives to
lure economic development grows? The July issue of "The Region", the
publication of the Federal Reserve Bank of Minnesota is devoted entirely to
this subject. To get a free copy, write Office of Public Affairs, Federal
Reserve Bank of Minneapolis, 250 Marquette Avenue, Minneapolis, MN
55401-2171, or fax (612) 355-2855. This is a follow-up to a meeting held
May 21st and 22nd, in Washington, DC, by the Minnesota Public Radio Civic
Journalism Initiative and the Ford Foundation on "The Economic War Among the
States".
At the May meeting business representatives, state policy makers, academics,
and representatives of low-income advocacy groups attended the event. The
groups met to discuss the existing competition between the states. The
participants in the meeting came up with their proposed "next steps" to be
addressed on the use of state tax incentives.
The proposals covered a range of options. One group proposed that Congress
should require state attorneys general to issue opinions on the
constitutionality and trade agreement legality of each subsidy or incentive.
The need for good data was a common theme. Participants called for full
disclosure of incentive offers during the bidding process. Some proposed
that a federal agency such as the General Accounting Office initiate a study
to bring consistent data to the table. Others proposed the establishment of
a federally mandated incentives form that would reveal the specifics of
deals. Finally, the establishment of a multi-organization task force was
proposed. This task force would promulgate uniform reporting standards that
would measure and evaluate the costs and benefits of incentives.
Leonard Witt, executive director, Minnesota Public Radio's Civic Journalism
Initiative, noted that the agreed upon proposals were only a middle-ground
for the various participants. Moreover, he noted that the use and value of
tax incentives to companies varies greatly among those same participants but
also believes that all would agree that uniform reporting criteria need to
be established.
For a more complete summation of this conference, please see the June 3,
1996 edition of "State Tax Notes" page 1673 (from which the preceding
summation was made possible). Furthermore, you can get information from the
Minnesota Public Radio homepage at http://www.mnonline.org/mpr/econwar.htm.