Tax breaks for Big Tech aren't worth it, says study

States are draining their coffers to offer tech giants such as Amazon and FoxConn taxpayer subsidies to come and create jobs.
By Rick Docksai | Jul 03, 2018

State governments are offering Amazon, FoxConn, and other tech giants increasingly large tax breaks to set up shop within their borders, says a new analysis by watchdog group Good Jobs First. The lawmakers bank on the companies creating enough new jobs to more than offset the tax breaks, according to the analysis, but its calculations find that the states and their taxpayers frequently end up losing money on the deal.



The Watchdog observed "megadeals" all across the country, which it defines as totaling $50 million or more in tax benefits. Examples include the $8.5 billion tax-break package that Montgomery County, Maryland, enacted to draw big tech companies. The largest deal so far took place in Wisconsin, where state lawmakers recently awarded $4.8 billion in tax subsidies to FoxConn, Taiwanese manufacturer of the iPhone, Playstation, and other electronic goods, to build a massive new plant in-state.



While a megadeal's cost can run into the billions, the benefits to taxpayers are questionable, according to the report. It finds that on average, these deals do not lead to significant new numbers of jobs, and those few jobs that they create come with exorbitant price tags: The average price of a job created by a megadeal now stands at $658,000.


"At that price taxpayers never break even," said Greg LeRoy, executive director of Goods Jobs First.


Those high costs also force states to cut back on public funding for education and social services, the report adds. It found that Nevada's tax-abatement programs, under which Tesla accrued $68.7 million in taxpayer-paid subsidies last year, resulted in the state's local governments losing a combined $105 million. One school district, Storey County Schools, lost $36.7 million.

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