Question:
It has now become common for companies situating assembly plants (e.g., Ford, Toyota, Honda) to make states compete for their business; states and local governments often race to offer the most generous tax benefits, infrastructure improvements, and other forms of assistance to attract companies promising to provide jobs to people within a given locality. Is such competition for business healthy? What is the short-term and long-term impact of such competition? Should Washington enact rules and regulations that prevent states from racing to provide the most generous benefits to companies seeking to employ workers? Is there a danger that ultimately this competition will be a "race to the bottom," with states and localities paying far more in tax incentives than they will ever receive in the form of job creation or money reinvested in the community?