US

Local Tax Incentives

Question A:

Giving tax incentives to specific firms to locate operations in a city or state typically generates local benefits that outweigh the costs to the city and/or state providing the incentives.

Responses weighted by each expert's confidence

Question B:

The US as a whole benefits when cities or states compete with each other by giving tax incentives to firms to locate operations in their jurisdictions.

Responses weighted by each expert's confidence

Question A Participant Responses

Participant University Vote Confidence Bio/Vote History
Acemoglu
Daron Acemoglu
MIT
Agree
5
Bio/Vote History
Alesina
Alberto Alesina
Harvard Did Not Answer Bio/Vote History
Altonji
Joseph Altonji
Yale
Uncertain
4
Bio/Vote History
Auerbach
Alan Auerbach
Berkeley
Agree
3
Bio/Vote History
Autor
David Autor
MIT
Uncertain
5
Bio/Vote History
Baicker
Katherine Baicker
University of Chicago
Uncertain
3
Bio/Vote History
Banerjee
Abhijit Banerjee
MIT
Uncertain
1
Bio/Vote History
Bertrand
Marianne Bertrand
Chicago
Uncertain
3
Bio/Vote History
Brunnermeier
Markus Brunnermeier
Princeton
Uncertain
3
Bio/Vote History
Chetty
Raj Chetty
Harvard
Uncertain
8
Bio/Vote History
Chevalier
Judith Chevalier
Yale Did Not Answer Bio/Vote History
Cutler
David Cutler
Harvard
Uncertain
7
Bio/Vote History
Deaton
Angus Deaton
Princeton
Agree
1
Bio/Vote History
Duffie
Darrell Duffie
Stanford
Agree
3
Bio/Vote History
If it was not to the benefit of the local government, why would they do it?
Edlin
Aaron Edlin
Berkeley
Disagree
7
Bio/Vote History
The competition is fierce and the benefits uncertain. Winners curse is likely.
Eichengreen
Barry Eichengreen
Berkeley
Uncertain
5
Bio/Vote History
Einav
Liran Einav
Stanford
Uncertain
6
Bio/Vote History
Fair
Ray Fair
Yale
Uncertain
5
Bio/Vote History
Finkelstein
Amy Finkelstein
MIT Did Not Answer Bio/Vote History
Goldberg
Pinelopi Goldberg
Yale
Agree
5
Bio/Vote History
Goolsbee
Austan Goolsbee
Chicago
Uncertain
1
Bio/Vote History
Greenstone
Michael Greenstone
University of Chicago Did Not Answer Bio/Vote History
Hall
Robert Hall
Stanford Did Not Answer Bio/Vote History
Hart
Oliver Hart
Harvard
Agree
5
Bio/Vote History
If it's done carefully--the firms can't get the tax benefits and then leave--this can pay off for a city or state.
Holmström
Bengt Holmström
MIT
Agree
7
Bio/Vote History
Hoxby
Caroline Hoxby
Stanford Did Not Answer Bio/Vote History
Hoynes
Hilary Hoynes
Berkeley
Uncertain
9
Bio/Vote History
Judd
Kenneth Judd
Stanford
Disagree
7
Bio/Vote History
It is difficult to believe that taxation decisions are consistent with cost-benefit analysis.
Kaplan
Steven Kaplan
Chicago Booth
Uncertain
5
Bio/Vote History
Kashyap
Anil Kashyap
Chicago Booth
Disagree
3
Bio/Vote History
Of cours deals differ but usually the taxpayers get fleeced for a limited number of jobs that get relocated
Klenow
Pete Klenow
Stanford
Uncertain
4
Bio/Vote History
It has local benefits, but the costs can outweigh them (e.g., if far enough beyond the peak of the Laffer Curve).
-see background information here
Levin
Jonathan Levin
Stanford
Uncertain
4
Bio/Vote History
Maskin
Eric Maskin
Harvard
Agree
6
Bio/Vote History
Nordhaus
William Nordhaus
Yale
Uncertain
1
Bio/Vote History
Saez
Emmanuel Saez
Berkeley
Agree
6
Bio/Vote History
Samuelson
Larry Samuelson
Yale
Disagree
5
Bio/Vote History
Benefits are wildly exaggerated in the popular press, and we lack definitive scientific evidence either way.
Scheinkman
José Scheinkman
Columbia University
Strongly Disagree
7
Bio/Vote History
Well documented that subsidies to sport stadiums yield negative returns and no reason to believe that it is better for other industries
Schmalensee
Richard Schmalensee
MIT
Uncertain
5
Bio/Vote History
I doubt it but don't recall seeing anything rigorous on this.
Shapiro
Carl Shapiro
Berkeley Did Not Answer Bio/Vote History
Shimer
Robert Shimer
University of Chicago
Agree
4
Bio/Vote History
See Greenstone, Hornbeck, and Moretti (JPE 2010) for some evidence of large positive spillovers
Thaler
Richard Thaler
Chicago Booth
Uncertain
1
Bio/Vote History
I don't see how anyone can have an opinion about this without data. A $1 tax break is worth it. $100B not. In between?
Udry
Christopher Udry
Northwestern Did Not Answer Bio/Vote History

Question B Participant Responses

Participant University Vote Confidence Bio/Vote History
Acemoglu
Daron Acemoglu
MIT
Uncertain
5
Bio/Vote History
Such competition helps for local political economy reasons but may shift too much otherwise-public resources towards footloose companies.
Alesina
Alberto Alesina
Harvard Did Not Answer Bio/Vote History
Altonji
Joseph Altonji
Yale
Disagree
5
Bio/Vote History
Auerbach
Alan Auerbach
Berkeley
Disagree
3
Bio/Vote History
Autor
David Autor
MIT
Uncertain
5
Bio/Vote History
I would agree if I were certain that governors had their states' long term interests in mind when cutting tax deals. Not sure that's true.
Baicker
Katherine Baicker
University of Chicago
Disagree
3
Bio/Vote History
Banerjee
Abhijit Banerjee
MIT
Disagree
6
Bio/Vote History
Bertrand
Marianne Bertrand
Chicago
Disagree
4
Bio/Vote History
Brunnermeier
Markus Brunnermeier
Princeton
Disagree
3
Bio/Vote History
Chetty
Raj Chetty
Harvard
Disagree
10
Bio/Vote History
Chevalier
Judith Chevalier
Yale Did Not Answer Bio/Vote History
Cutler
David Cutler
Harvard
Strongly Disagree
8
Bio/Vote History
Deaton
Angus Deaton
Princeton
Agree
1
Bio/Vote History
Duffie
Darrell Duffie
Stanford
Uncertain
3
Bio/Vote History
On its face, this sort of competition is useful. I can imagine that experts on this issue may suggest some unintended related distortions.
Edlin
Aaron Edlin
Berkeley
Disagree
7
Bio/Vote History
Eichengreen
Barry Eichengreen
Berkeley
Disagree
8
Bio/Vote History
Einav
Liran Einav
Stanford
Uncertain
5
Bio/Vote History
Fair
Ray Fair
Yale
Disagree
5
Bio/Vote History
Finkelstein
Amy Finkelstein
MIT Did Not Answer Bio/Vote History
Goldberg
Pinelopi Goldberg
Yale
Disagree
5
Bio/Vote History
Goolsbee
Austan Goolsbee
Chicago
Uncertain
1
Bio/Vote History
Greenstone
Michael Greenstone
University of Chicago Did Not Answer Bio/Vote History
Hall
Robert Hall
Stanford Did Not Answer Bio/Vote History
Hart
Oliver Hart
Harvard
Disagree
7
Bio/Vote History
There is no social benefit to the US as a whole unless the firms would have located abroad. There is a social loss from lower tax receipts.
Holmström
Bengt Holmström
MIT
Agree
4
Bio/Vote History
Hoxby
Caroline Hoxby
Stanford Did Not Answer Bio/Vote History
Hoynes
Hilary Hoynes
Berkeley
Disagree
8
Bio/Vote History
Judd
Kenneth Judd
Stanford
Disagree
7
Bio/Vote History
Kaplan
Steven Kaplan
Chicago Booth
Uncertain
5
Bio/Vote History
Kashyap
Anil Kashyap
Chicago Booth
Strongly Disagree
5
Bio/Vote History
This is almost entirely zero sum, with the companies gaining and the taxpayers losing.
Klenow
Pete Klenow
Stanford
Disagree
5
Bio/Vote History
It could help if tax rates tend to be too high for political economy reasons.
-see background information here
Levin
Jonathan Levin
Stanford
Uncertain
4
Bio/Vote History
Maskin
Eric Maskin
Harvard
Uncertain
6
Bio/Vote History
Nordhaus
William Nordhaus
Yale
Disagree
6
Bio/Vote History
Generally a waste of revenues in negative-sum game.
Saez
Emmanuel Saez
Berkeley
Strongly Disagree
8
Bio/Vote History
Samuelson
Larry Samuelson
Yale
Disagree
8
Bio/Vote History
Such competitive does enhance allocative efficiency, but its primary effect is to transfer surplus from other taxpayers to firms.
Scheinkman
José Scheinkman
Columbia University
Uncertain
7
Bio/Vote History
Would agree if cities compete with uniform lower taxes for all firms.
Schmalensee
Richard Schmalensee
MIT
Strongly Disagree
7
Bio/Vote History
Unless the firm would otherwise locate abroad, the only net effect is less tax revenue. The EU bans state aid for this reason.
Shapiro
Carl Shapiro
Berkeley Did Not Answer Bio/Vote History
Shimer
Robert Shimer
University of Chicago
Uncertain
5
Bio/Vote History
There is a clear zero-sum aspect to tax competition. But nothing else can restrain the leviathan. The balance is unclear.
Thaler
Richard Thaler
Chicago Booth
Disagree
1
Bio/Vote History
Again data would be nice. Competition is good but unraveling is bad. Which is this? Transparency would help.
Udry
Christopher Udry
Northwestern Did Not Answer Bio/Vote History