Targeted Tax Incentives: Perverse and Ineffective


State governments need to reform their economic development policies to be market-friendly and attempt to attract all firms by offering greater overall economic freedom. By eliminating targeted tax incentives, states can reduce rent-seeking opportunities and potential political corruption while competing based on real market conditions that firms actually use to make their decisions. A state with a competitive tax system that attracts businesses and protects property across the board as opposed to being targeted or discriminatory will do more to reduce unemployment and generate economic growth than any targeted incentive.
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