Finally, there is no credible evidence that incentives work. In addition, tax breaks for business create an environment where businesses can trade campaign contributions for tax breaks. The climate of influence peddling, corruption, bribery and blackmail fostered by such a relationship does not foster a healthy political environment. These are provisions in the tax code that reduce or eliminate certain taxes. Tax expenditures frequently do not show up anywhere in the state budget and therefore are not subject to legislative or public scrutiny on a regular basis.
Individuals end up picking up the tab for business giveaways.
Since corporate income taxes are more progressive than sales and property taxes, reducing them makes a state's tax system more regressive. As a result, two firms selling exactly the same product with exactly the same costs for labor and raw materials may face very different tax bills. The firm without tax incentives will have to charge higher prices and will be at a competitive disadvantage. Remedies to reduce the damage from state bidding wars A greater federal role. At best, Congress could mandate an end to state bidding wars altogether, as economists at the Minneapolis Federal Reserve Bank have suggested.