In June, Donald Trump traveled to Mount Pleasant, Wisconsin, for the groundbreaking ceremony of the Taiwanese electronics company Foxconn’s new manufacturing plant—a 20 million-square-foot complex that state officials say will create 13,000 jobs for southeastern Wisconsin over the next 15 years.



By the time Trump visited the site, however, those claims were already in doubt. Wisconsin Governor Scott Walker, a Republican, had offered Foxconn CEO Terry Gou nearly $3 billion in tax credits and exemptions to move his company to the state. But Wisconsin won’t get any of that money back until 2042, only breaking even then—according to a report released by the state’s Legislative Fiscal Bureau last August—if Foxconn gives all 13,000 jobs to Wisconsin residents. Thus far, the company has only committed to 3,000. And it has reneged on these kinds of promises before. In 2013, the company said it would hire 500 workers and spend $30 million on a plant in Harrisburg, Pennsylvania, and then never built it.

Lavish, lousy incentive deals aren’t unusual. These packages rarely influence corporate executives; CEOs tend, instead, to look for good infrastructure and skilled labor when selecting a new location. According to research by Timothy Bartik at the W.E. Upjohn Institute for Employment Research, tax incentives only change their minds between 2 and 25 percent of the time. When companies come to town, unemployment tends to stay where it was. Economic growth doesn’t ramp up. Big corporations nab about 90 percent of government incentive dollars, leaving small businesses almost nothing. And often, all that’s left is a big hole in the state budget.

This math is familiar—and yet, incentive packages have tripled since 1990. Thanks to blockbuster deals like Foxconn and the beauty pageant underway for Amazon’s second headquarters, which drew a whopping $7 billion bid from New Jersey and an offer from Fresno, California, to give Amazon joint control over where the city spends its tax dollars, incentive packages could double over the next five or ten years, reaching $100 billion annually, according to Bartik. Politicians, under pressure to show voters that they’re creating jobs, are increasingly reaching for the flashy choice: cutting checks to corporations that are all too happy to take them. And so far they haven’t faced a reckoning.

America’s first tax incentive package was in 1791, when New Jersey convinced Alexander Hamilton to move his manufacturing company to the state. These schemes wouldn’t become widely popular, however, until after World War II, when Southern states—hoping to transition their economies away from agriculture by luring manufacturers from the North—began offering companies tax breaks.