The Problem:

While states expend resources attempting to poach businesses from one another, municipalities within states often do the same thing. For example, Panasonic received more than $100 million to move its headquarters nine miles from Secaucus, New Jersey, to Newark, New Jersey.[1] Billtrust received $12 million to move five miles from Hamilton, New Jersey, to Lawrence, New Jersey.[2] Fidelity Security Life Insurance received $7.5 million to move about a mile within Kansas City, Missouri.[3] These moves simply shuffle economic resources around within a state, producing no new economic activity. They merely increase the opportunity for corporate rent-seeking and political corruption, as corporations play city councils and state economic development officials against each other.

The Policy:

About 40 states already ban intrastate piracy in at least one of their corporate incentive programs.[4]Those bans should be adopted across the board.

Model bills: HB0211, Illinois, 2021

Notes:

[1] Bagli, Charles V., “Christie Leaning on Tax Subsidies in Hunt for Jobs,” The New York Times, April 4, 2012, https://www.nytimes.com/2012/04/05/nyregion/christie-gives-new-jersey-firms-tax-breaks-for-short-moves.html.

[2] Rojas, Cristina, “Company gets $12M in tax credits to move 5 miles away,” NJ.com, Aug. 23, 2017, https://www.nj.com/mercer/2017/08/company_gets_12m_in_tax_credits_to_move_headquarte.html.

[3] Davis, Miranda, “Kansas City gives $7.5 million tax break to Fidelity Security Life for new offices on prime real estate,” KCUR, Dec. 10, 2021, https://www.kcur.org/news/2022-01-04/kansas-city-gives-7-5-million-tax-break-to-fidelity-security-life-for-new-offices-on-prime-real-estate.

[4] LeRoy, Greg, Kasia Tarczynska, Leigh McIlvaine, Thomas Cafcas, and Philip Mattera, “The Job Creation

Shell Game: Ending the Wasteful Practice of Subsidizing Companies that Move Jobs From One State to Another,” Good Jobs First, Jan. 2013, https://www.goodjobsfirst.org/sites/default/files/docs/pdf/shellgame.pdf.