Dearly Special tax breaks and other incentives to lure companies to establish facilities in a particular state or locality burden taxpayers, other businesses and workers. Critics say the practice has gotten out of hand.
Critics say local economies often gain less than they think.
Economists at the Minneapolis Federal Reserve found that states and localities almost always compensate for targeted tax incentives by raising taxes on others or by cutting services. Kansas found tax shelters for new businesses left its older ones paying some of the highest taxes in the region. So individual taxpayers are called upon to make up the difference, and the trend continues to accelerate. Forty states have even added new incentives to attract business in the last four years.