Louise Story of the New York Times made an epic journalism effort late last year when she documented the level of state business incentives made to corporate entities. The team arrived at the massive number of $80 billion per year of state and local inducements that go to private firms. From their reporting:
A Times investigation has examined and tallied thousands of local incentives granted nationwide and has found that states, counties and cities are giving up more than $80 billion each year to companies. The beneficiaries come from virtually every corner of the corporate world, encompassing oil and coal conglomerates, technology and entertainment companies, banks and big-box retail chains.
State tax collections totaled $794 billion in 2012. So the $80 billion figure would equal about 10 percent of state tax collections. Does spending 10 percent of state revenues spur economic activity? If it does, it could be a bargain. From the Times again:
A full accounting, The Times discovered, is not possible because the incentives are granted by thousands of government agencies and officials, and many do not know the value of all their awards. Nor do they know if the money was worth it because they rarely track how many jobs are created. Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid.
After the series ran, Kansas Senator Jay Elmer, who was 2012 chair of the Council of State Governments, led a working group of state officials to look at how incentives fit into a larger discussion of economic development. Key findings for the group included: