An End to Business Incentives

The tax breaks that state and local governments give to businesses have been highly controversial but also highly successful in creating new jobs in North Carolina. After this week, the tax breaks may also be a thing of the past. The Supreme Court is hearing a case that argues the tax incentives are unconstitutional. If the Court agrees, it would be a big blow to North Carolina, who has used the incentives to lure growth to the area. In fact, the new growth is one reason that the state has been able to recover from the downfall of the textile, manufacturing, and tobacco industries. There is a good article about the issue on CNN, but everything that know up to this point can become moot once the Court hears the case this week.


A ruling against incentives

would be positive in my view . . . though short lived in its impact. States would quickly find alternative ways to lure jobs, even if they had to engage in political contortionism to do so.


If the court agrees that states cannot compete with each other over tax breaks, how is it fair that Florida does not charge an income tax but North Carolina does? Why should North Carolina be able to build RTP since it will attract companies away from other states? Every action by a state government is either an incentive or disincentive to investment. Think about education: Not only does it provide education for the children but also provides skilled workers for technology companies.


There are unintended consequences that would ricochet in ways we can't even imagine . . . it will be an interesting decision.