Are all uses of tax incentives or tax exemptions bad?
No. When used selectively and strategically, tax incentives can be an appropriate tool to help finance economic development efforts that move the state forward. However, incentives and exemptions become counter-productive when they dominate a state’s economic development approach and are given out too broadly and indiscriminately. When that is the case, they subsidize businesses for activity that would’ve happened anyway and drain public resources better used for other purposes. Used wisely and within limits, incentives can target resources where they are most needed—like in key sectors of the state’s economy. But recipients should be required to meet community standards by providing fair wages and benefits, creating jobs with advancement opportunities and promoting environmental sustainability. Tax incentives should only be one part of a state’s economic development toolbox and not the sole tool. Their expense and effectiveness must be closely scrutinized and the decision to use them
