Yes? But you basically just externalized the business's costs for them to simply redistribute wealth to you. It's a net societal negative.
As an outsider, it makes exactly 0 difference to me whether there is a data center in Wisconsin vs. Illinois, the only difference is that some corporation will be more profitable and pay less tax overall, which they are supposed to be paying to offset externalities (at least in a perfect world).
Town A gives tax breaks to Company that pollutes environment. Town B doesn't. Company moves to Town A. Citizens of Town A are better off in the short term, locally speaking, but Company simply pays less for their pollution externalities, creating a net negative from the viewpoint of society as a whole.
You could say the same thing when Town A hires a sanitation engineer from Town B by offering them a higher salary because they want better sanitation. Overall the two towns are now spending more as the same person is getting more money. It’s normal healthy competition, it’s not a problem. Good on the successful sanitation engineer, I say.
I think this lies firmly in a grey area of "healthy competition". Is it healthy competition if one state lets a company dump chemicals and another doesn't? Or if one state lets a company burn coal? No, it's just one state being greedy because they can socialize costs. I'm not saying this is the same thing here but let's not pretend like this "incentives" market is comparable to the labor market.
It's a thought experiment. I'm taking "healthy competition" to the extreme to demonstrate that your conclusion isn't necessarily valid because it doesn't apply to all cases. In either case it seems we disagree on what is and isn't healthy competition.
It's not inherently the case that the area is worse off than under the status quo. If you have a business that would consume $45M in government services, having them pay $50M rather than the $150M they would pay under the existing laws would still put you up by $5M compared to them going somewhere else.
The issue is that designing tax changes for specific companies is ridiculous. If the local area can net $5M by charging lower taxes in this specific case, why is that not just the general rule so they can net $5M a hundred times from a hundred other companies without having to negotiate separately with each of them? And $50K a hundred thousand times from smaller companies?
Cities are already in enough competition the standard market rules apply. Really, cities run very close to break even +/- a few %. You can’t sell commodities at a 66% discount over market prices, and the same is true of cities.
So, in some imaginary realm where the math worked out sure. But, we don’t live in that world.
Cities and states are not fungible. Otherwise they could never charge significantly different tax rates and still expect to retain any businesses, which is obviously not the case. The taxes in New York are higher than they are in South Dakota because at the same tax rate most companies would rather be in New York.
That cities run near breakeven is no surprise because if they were running a surplus then the citizens would immediately demand that it be used to fund programs or lower taxes. But that doesn't tell you anything about whether the programs are necessary or efficient. New York has been well known for massive government waste and corruption for decades and it hasn't made them uncompetitive because of their other advantages (a huge one being population density). Which means the number of tax dollars needed to cover the incremental business is much lower than the amount the average business is currently paying, since the remainder is going to waste and corruption.
Or, for that matter, to other programs that aren't correlated with or are inversely correlated with the number of local businesses. If a new business comes in, the amount the government has to spend on subsidies for low income people doesn't increase, so so the new business imposes no incremental cost. And if the new business hires local people, people who were unemployed or underemployed may get better jobs and reduce the cost of such programs by reducing the number of people who require them.
There is certainly a point where lowering taxes below it means that companies aren't paying their own cost, but the idea that less than half of what they're currently paying is actually going to the additional services they require the government to provide is not at all ridiculous. Especially in places with higher tax rates to begin with.
> But that doesn't tell you anything about whether the programs are necessary or efficient.
That’s irrelevant, if a city spends more money on services for a company than it collects from that company it’s a net loss. Sure, you can argue that they should be more efficient, but collecting less money is not going to help.
> so so the new business imposes no incremental cost.
Every business adds incremental costs associated with transportation etc. Infrastructure is expensive to maintain and becomes more expensive with increased useage. On top of that you have things like food safety inspection which directly relate to business. Suggesting the incremental cost is zero simply demonstrates you don’t understand the specifics.
As an outsider, it makes exactly 0 difference to me whether there is a data center in Wisconsin vs. Illinois, the only difference is that some corporation will be more profitable and pay less tax overall, which they are supposed to be paying to offset externalities (at least in a perfect world).