Are Economic Development Subsidies a Bad Deal?

Economic incentive packages may be bad public policy because they give benefits to new companies at the expense of existing companies and residents.

A railcar company manufacturing facility in Illinois, which receives millions of dollars in economic incentives, is closing. Nippon Sharyo will close its plant in Rochelle at the end of the month.

“The plant opened in 2012 after Illinois officials offered Nippon Sharyo an incentive package worth more than $4.7 million, including training funds, grants, and corporate tax credits,” the Alton Daily News reports. “Additionally, the Illinois Department of Transportation spent $5.5 million to build a rail spur to the new factory. State Rep. Tom Demmer, R-Dixon, says it’s not the ending anyone wanted… Demmer says there is no mechanism in place for the state to attempt to recover any of the tax credits or grants awarded to the company.”