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End Bidding Wars for Corporate Relocation

The recent circus surrounding Amazon’s HQ2 project should highlight how damaging the practice of allowing localities to “bid” for investment from corporations can be to our country, and how important it is for us to find a solution to this problem.

You can’t blame the corporation for trying to save money, and you can’t blame the localities for trying to attract investment and new jobs. Because no one has an incentive to stop this practice, it continues unabated.

However, it amounts to up to $90b a year of tax breaks and cash grants. Since states and other localities can’t run a deficit or print money, these subsidies amount to money that could otherwise go to school, road repair, and other important functions. These incentives are meant to steal jobs and investment from other states, not from offshoring or to entice businesses to expand when they otherwise wouldn’t.

There’s also evidence that corporations start with an idea of where they want to move and then use a public bidding war to get tax breaks from those locations. Considering Amazon’s business, DC and NY were likely locations for HQ2 even before they received 238 proposals from cities across the country.

This form of corporate welfare needs to stop, and only the federal government has an incentive to do so. We must end it by considering any financial benefit provided to a company to entice local investment, or relocation, to be special income that is taxed at 100%. General investment by a locality to be more business-friendly is fine, but no more bribing companies to do something they were already planning to do. The only ones who win are the companies.

It makes no sense to have communities bidding against each other to have companies move within the country - from a national point of view we don’t care in which city or state a company is based. The only winners are the companies that get sweetheart deals to move places they were likely going to move anyway. Meanwhile communities break their backs trying to get companies to move there in a race to the bottom. Companies should make decisions based on their business and not which community they can hold over a barrel.

Problems to be Solved

  • Localities feel the need to ‘bid’ large amounts of corporate welfare in order to entice businesses to invest in their towns/states, when this provides no net job growth in the US. Many of the promised benefits often do not materialize as well.
Guiding Principles:
  • Efficiency
  • Fairness
Goals
  • End corporate welfare provided by localities to entice specific corporate relocation and investment

As President, I will…

  • Work with Congress to pass a law that treats any incentive provided by a locality to a specific business already based in the US as special income to be taxed at a rate of 100%.
  • Publicly call out any corporation that tries to entice tax breaks or other forms of corporate welfare from states.
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