Because there are positive externalities to a company choosing to do that in your city. If a big corporation chooses to place a HQ in your city, you get an influx of people into the housing market, of consumers into your service industry, of tax payers into your district, etc. While I agree, a lot of these payoffs end up being small compared to the giant sums offered, the theory behind incentivizing companies to come to your district absolutely makes sense, and is exactly what politicians and government workers should be doing. Their job is to plan for the next 30+ years, not the next 6 months where the price point for the incentives is all negative.

If you're going to make $5B in the next 10 years because of a corporation, and giving them $1B now to incentivize them to come to New York instead of Chicago makes a ton of sense. I'm making those numbers up, but that's the thinking.

Except politicians don't stick around for 30+ years, nor do voters or their memories, and it's impossible to make any accurate calculation about how much one is going to make over the next however many years.

So now you have a few people in control of a big pot of future taxpayer money who have the ability to make up numbers however they see fit. There's only one way that story ends.

Not to mention the race to the bottom it causes as time goes on since there are fewer and fewer big organizations being courted by more and more desperate governments.

Where does the 5B come from? They dont pay federal tax, they are getting state and local tax breaks, and providing jobs that have suffered wage stagnation since the bailouts. Politicians do this because they get their pockets stuffed, and then in turn Amazon and Bezos make bucket fulls of cash too. It is crazy to allow tax breaks for company's that largely don't pay taxes to start with, especially extremely profitable companies.

>Where does the 5B come from?

These were thousands of SWE jobs. Amazon would have paid significant payroll taxes (which are federal but that doesn't fit the narrative so people ignore it) and their employees would have paid millions a year in city and state income taxes, property taxes, etc. Getting a high-paying company like Amazon in your city is a huge economic boon and is totally worth up front tax breaks. Remember, it's a tax break, you're just agreeing not to take money you already don't have.

>It is crazy to allow tax breaks for company's that largely don't pay taxes to start with, especially extremely profitable companies.

Again, Amazon pays tens (maybe hundreds) of millions in taxes every year. You're just repeating a political talking point based solely on what they pay at federal income taxes (due to loss carry-overs).

> there are positive externalities to a company choosing to do that in your city.

I get that that's the theory, but does it ever actually work in practice? Do you know instances when massive subsidies attracted big corporations that actually created enough jobs, externalities etc. to compensate for the handouts they received?

It is because of a provincialism and incentives resulting in the culture of "bringing home the bacon" selfishly seeking local benefits without regards to their impact on others. It lets politicians claim benefits where just private corporations doing stuff that helps they can't even if being hands off lead to it.

The bringing home the bacon culture is a larger toxic phenomenon given the "bandit towns" doing things like lowering highway speed traps and the town being vastly composed of traffic cops.

To misquote Ronald Wright's apocryphal quote of John Steinbeck, capitalism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.

More seriously, the problem is one of moral hazard: The politicians making these decisions aren't playing with their own money. The people whose money it is aren't buying seats at their $500-a-plate fundraising breakfasts, either.

> The politicians making these decisions aren't playing with their own money.

Exactly. This applies no matter who else is involved.. whether it's billionaires looking for incentives, city unions looking for better deals, or candidates offering to pay for college, healthcare, and cell phones.

When you're spending someone else's money, cost isn't a problem and accountability is punted to someone else.

I think the difference here is that it's easy to name & shame one entity than millions.

That's still better than the injustices people will allow to take root and endure when they view themselves as a temporarily embarrassed bolshevik central planner.

> The politicians making these decisions aren't playing with their own money.

True that!

Btw, the (apocryphal) Steinbeck quote I think is about socialism/communism. I don't think we need to go as far as that to figure out that giving billions in subsidies to mega corporations is maybe not a good thing.

It helps explain why we do it. Everybody imagines that it's going to make them rich, because rich is their natural state of being, and they're only poor now because of some external influence. Corporate subsidies (among other things) seem reasonable when you think it's going to create "good jobs" and that you (of course) are destined for one of those.

For people to say, "Turns out that I'm not ever going to be rich, and maybe we ought to work on a system that allows even poor people to live tolerable lives instead" would require a major rewrite of the American character.

> ...would require a major rewrite of the American character

I wouldn't be that pessimistic. As far as I understand it, when polled Americans are significantly to the left of what mainstream politics has become. At least when it comes to economic issues.