Charles Bagli has a really good piece about New Jersey Governor Chris Christie losing all his free market convictions when it comes to handing out special tax subsidies to large incumbent New Jersey corporations, noting that without even having served out a full term he’s already dispensed a record quantity of this form of corporate welfare.
Needless to say, there’s nothing wrong with a jurisdiction using low taxes as a lure for business investment. But the correct way to do this is to manage your public expenditures prudently and then offer a relatively low tax environment across the board. The game of maintaining relatively high statutory rates and then handing out special breaks to politically influential firms just opens the door to corruption and abuse, while disadvantaging both small firms and especially the kind of potentially fast growing startups that account for the bulk of net job creation in a dynamic economy.
