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Proposal:
The rule should be that there are no special deals for individual corporations. If a local or state government desires to encourage investment and attract more companies to operate there, it needs to set the conditions to attract companies but treat all of them equally. If it’s going to offer lower tax rates or any other benefits, those should be available to companies already there in addition to any new companies that move in to get those rates or benefits.
Discussion:
In the United States, some localities or states make deals with corporations to lower their taxes for investing in the state. This is generally abused by wealthy corporations to shop around for the locality that will offer the lowest tax and governments end up bidding against each other to attract corporations and “jobs” that might end up adding to the total workforce in that area but also might end up driving smaller businesses out and won’t be paying their fair share of taxes. Furthermore, the correct impression of favoritism and inequality, where wealthy corporations get special advantages that small businesses don’t, hurts the people’s trust in government and violates the right to equal opportunity. This practice needs to be prohibited to protect fairness in taxation, the integrity of government, and the people’s trust in government. The problem is made even worse when a corporation reaps the tax benefit but then doesn’t bring the promised benefit to the local government. In some cases the deal is structured in a way that if the corporation doesn’t deliver, then it also doesn’t get the tax benefits, but in other cases the local government didn’t structure the deal that way and the locals were essentially defrauded but without legal recourse.
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