Agreement To Phase Out Corporate Incentives Compact Act
Impact
The bill establishes that any two or more states that enact this agreement will have a shared commitment to refrain from employing subsidies as a means of attracting specific industries or companies. The implementation of this act could lead to more stable economic environments by standardizing approaches to corporate incentivization and equalizing the terrain for businesses in different states, potentially reducing the allure of relocating solely based on financial incentives.
Summary
House Bill H7642, also called the Agreement to Phase Out Corporate Incentives Compact Act, aims to establish a compact among states to regulate the granting of subsidies. This legislation seeks to prohibit member states from offering selective subsidies to entice businesses to relocate or open new facilities, thereby creating a uniform policy across participating states. The intent is to prevent the aggressive competition that sometimes arises between states for businesses, which can lead to uneven economic advantages based on state-specific incentives.
Contention
Notably, this legislation could be seen as controversial, particularly by those states and local governments that rely heavily on tax incentives to draw businesses and stimulate local economies. Critics may argue that the inability to offer tailored incentives could stifle economic growth and lead to job losses in their regions. Additionally, the bill outlines a framework for enforcement by the attorney general of each member state, which could lead to legal complexities if disagreements arise between states about compliance with the compact.