Do government tax incentives spur economic growth?

A Best Buy store in New York City
A Best Buy sign hangs on a store on August 21, 2012 in New York City. According to data from The New York Times, Best Buy receives at least $59.9 million in corporate income tax credits, rebates or reductions from Minnesota each year.
Spencer Platt/Getty Images

As the session kicks off at the Minnesota Legislature, we'll look at tax incentives and economic development incentives in the state. What are these incentives and do they really work to add jobs and maintain a competitive business climate?

According to The New York Times, Minnesota spends at least $239 million per year on incentive programs. Nationwide, there are more than 1,800 programs receiving more than $80.4 billion a year.

More from NYTimes:

The beneficiaries come from virtually every corner of the corporate world, encompassing oil and coal conglomerates, technology and entertainment companies, banks and big-box retail chains.

The cost of the awards is certainly far higher. A full accounting, The Times discovered, is not possible because the incentives are granted by thousands of government agencies and officials, and many do not know the value of all their awards. Nor do they know if the money was worth it because they rarely track how many jobs are created. Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid.

"How can you even talk about rationalizing what you're doing when you don't even know what you're doing?" said Timothy J. Bartik, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich.

Bartik will join The Daily Circuit Tuesday Jan. 15 to talk about tax incentives. Jeff Chapman, research manager for Pew Center on the States, will also join the discussion.

Before you keep reading ...

MPR News is made by Members. Gifts from individuals fuel the programs that you and your neighbors rely on. Donate today to power news, analysis, and community conversations for all.


Explore Minnesota data (New York Times)

As companies seek tax deals, governments pay high price (New York Times)

Evidence counts (Pew PDF)

The uselessness of economic development incentives (The Atlantic)

Tax incentives only part of picture for state business climates (Governing)

In defense of state tax incentives (CFO)

Pew Study: Some state tax incentives turn into traps (Wall Street Journal)

Avoiding blank checks (Pew)