Chris argues that these kinds of deals are both incredibly common and incredibly problematic as a policy matter precisely *because* of their one-off nature. Instead of figuring out what across-the-board state and local policies are good for economic development, state and local officials tax-break-and-wheel-and-deal their way to one good-looking project after another.
What would it mean if state and local governments could not offer such packages in the future?
Some say it will mean the end of tax reform as we know it. But if unable to offer firm-specific incentive packages, state tax laws may be forced to address broadly the question of what tax structures promote investment and growth.
No longer would there be the distortions that are generated by project specific incentives. There will even be less need for lobbyists whose sole job is to promote particular projects and gain government support. The savings from that alone could be incalculable.
Chris doesn't draw the connection between Cuno and a better-known (or infamous) recent case -- Kelo v. New London, the case that narrowly upheld local authorities' discretion to define circumstances under which condemnation of private property was appropriate. The cases arise under different parts of the Constitution, but they raise similar questions for local development authorities: Are there any legal limits on what tools those authorities can use to promote development? From that point of view, condemnation and tax credits are flip sides of the same coin. The Supreme Court may not look at the problem as an integrated one, but if it does, you might see Cuno decided like Kelo was -- and investment tax credits restored. On the other hand, if you didn't like Kelo, then -- maybe -- you should like the idea of banning one-off tax subsidies for specific projects.
Meanwhile, Chris couldn't have expected that the P-G would run his piece on the top half of a page that also carried this letter from local investor Robert Capretto, praising Rick Santorum for intervening with federal authorities to come up with a $4.8 million federal highway subsidy to make the Tech21 project -- Medrad's new corporate home -- a reality. So much for abandoning government subsidies that distort overall policy judgments about growth!
UPDATE (1/18): Chris Briem's piece is now online.