Corporate Subsidies and Economic Development
June 30, 2005
Connecticut is planning on giving ING, a private insurance and retirement company, a large subsidy. The Hartford Courant explains:
State economic development officials are prepared to subsidize a move by ING Group. James Abromaitis, the state’s economic development commissioner, confirmed Wednesday evening that his agency is preparing more than $10 million in state aid for the move.
Corporate subsidies are generally poor economic policy, and do not typically strengthen a state’s business climate. The primary aid they provide is not to the public at large, but to the specific company receiving the handout. Rather than picking corporate winners and losers with state aid, states should focus on lowering tax rates and broadening the bases of those taxes to make their business climates less discriminatory and more attractive to all firms. Low taxes with broad bases help eliminate the need for subsidies to begin with by improving a state’s overall economic climate.