What could underlying reasons be for elected officials be offering tax breaks for businesses?

“Tax incentives to new or existing business seldom pay for themselves, forcing deeper cuts in basic services or tax shifting to individuals and homeowners. Moreover, they attract footloose industries that are likely to pick up and move when they get a better offer” (Rubin, 56).

“Why do public officials offer businesses tax breaks rather than allowing the market to determine the location of firms? One possibility is that elected officials believe these incentives are effective, even without evidence… elected officials also seem to respond to threats to leave the state or city if particular businesses do not get the tax break they demand” (Rubin, 57-58).

 

Question:

When looking at the use of offering businesses tax breaks in order to keep them within the state, what other politics do you think are involved in the thought process of elected officials- especially because there is no evidence stating this strategy is effective. Do you think the power/name of the business has a large part in this? What could underlying reasons be for elected officials be offering tax breaks for businesses?

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