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Multilateral Disarmament: A State Compact to End Corporate Welfare

Byron Schlomach, Stephen Slivinski, and James M. Hohman

This study provides a plan for how states can end the harmful competition that the practice of corporate welfare encourages. It describes why corporate welfare is damaging to local and state economies and a zero-sum game from a national perspective. It also ranks the states based on how many handouts they make to favored businesses.

In addition, it offers an entirely new strategy to end policies that economists agree are wasteful. By entering into a state compact, as they are authorized to do under the U.S. Constitution, states could agree not to offer preferential tax treatment or other subsidies in an attempt to lure businesses into their borders. Instead, states will compete as they were designed to under the U.S. Constitution, based on regulatory burdens, business culture and broad-based tax policy.