- The video discusses economic development incentives offered by state and local governments to attract companies and create jobs.
- The example of Startup New York is given, where new businesses receive 10 years of tax breaks.
- All 50 states offer some form of incentives to attract companies.
- The video mentions the bidding war happening for Amazon's second headquarters, with cities and states offering various incentives to win the bid.
- The video highlights the large amounts of tax breaks offered to companies, potentially costing billions of dollars in tax revenue for public services.
- Questionable projects funded by incentives are mentioned, such as a replica of Noah's Ark in Kentucky.
- The impact of incentives on local economies is discussed, with some areas experiencing underwhelming results.
- The hiring requirements for some incentive programs are criticized for being too lax.
- Film and TV incentives are mentioned as an example of programs that may not lead to long-term job growth.

- Film productions are portable and will go wherever they can get the best incentives
- Some states have found that their film programs generate very little tax revenue
- There is not much evidence to support the broader economic benefits of these programs
- Many state development programs do not disclose actual jobs created or workers trained
- Competing tax breaks between Kansas and Missouri have resulted in job losses and lost tax revenue for both states
- Economic development needs to be done in a smarter way with more oversight and accountability

State and local governments offer large financial incentives to attract employers to their part of the country. John Oliver explains what communities get, or often don't get, in return. 

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Literally the only reason that anyone gets up before 11 a.m.

Politicians care about jobs more than anything else, as you can tell from how often they mention them.

Jobs, jobs, jobs, and more jobs, American jobs.

Politicians seem to think that jobs are like Beetlejuice.

If you just say the word a magic number of times, eventually they'll just pop up out of nowhere.

Now, more specifically tonight, I'd like to talk about 1 of the ways that politicians try to create jobs, economic development incentives.

And I know that that doesn't sound interesting.

Switch over the audio, listen to the first line, you'll be back.

I may have to jerk it before we even get there.

All of a sudden, a show about economic development doesn't seem like the worst thing you could be watching, does it?

-$1.5 billion are essentially when state and local governments offer perks to companies to entice them to build or expand in their area.

Here in New York, there is a program called Startup New York, which launched with some pretty astounding tax breaks.

Startup New York creates 0 tax zones for new businesses for 10 years.

0 property tax, 0 corporate tax, 0 business tax, and 0 income tax.

0 property, corporate, business, and income tax.

-♪ Whistle blowing ♪ -And I believe that that sound you just heard was Donald Trump getting an erection.

-♪ Laughter and applause ♪ -Wait for it.

All 50 states offer some kind of incentives, like tax breaks, to attract companies.

And the argument is that they attract employers, which attract jobs, which lead to spending, which creates more jobs, and so on, and so on, and so on.

And many places have bought into this hard, trying to outbid 1 another for businesses.

Indiana even once took out attack ads on other states, like this billboard, which read, -"Ill-annoyed, buy higher taxes?

Come to Indiana, a state that works." And that's pretty aggressive, although it's actually much tamer than their original billboard, just Arkansas, your tax bill?

I'd-a hope you like our tax breaks, because if you color our don'ts, well, Conetta, cut your fucking balls off.

-♪ ♪ -♪ ♪ And if a company is big enough, it can even start a bidding war itself.

That is actually happening right now with Amazon.

They are planning to build a second headquarters somewhere in North America, and they are making governments bid for it.

They even released 8 pages of instructions for candidates, telling them to think big and be creative, which led many cities to do stupid shit like this.

Overnight, the Big Apple looking more like an orange.

New York City Mayor Bill de Blasio lighting up the city in quote, Amazon orange.

The city of Birmingham is using giant Amazon boxes to try to get Amazon's attention.

Stonecrest, Georgia, offering to create a new town of Amazon, Georgia.

They would create a new town and name it Amazon?

You know, to compete on that surprise that Omaha, Nebraska didn't offer to let Jeff Bezos kill any 3 people he likes.

It's the only thing he can't have and he wants it.

And numerous mayors made direct appeals to Amazon with videos ending in versions of the same bad joke.

Hey, Alexa, where should Amazon locate HQ2?

Alexa, where is the most interesting company in the world gonna locate?

So, Alexa, where is the best place for Amazon to locate its second world headquarters?

You know, my 1 and only worry with all of those ads, and I mean this sincerely, is, are they almost too hilarious?

--LAUGHTER --But those stunts are just window dressing.

What Amazon cares much, much more about, as they mentioned in their instructions, 21 times are incentives.

And while few places are revealing what they offered, we do know that New Jersey reportedly offered 7000000000 dollars in tax breaks, which is an insane amount that other places may now have to compete with.

That could mean billions of tax dollars that would not be collected for things like roads, or schools, or hospitals.

And Amazon already has more money than it knows what to do with.

How else can you explain the existence of Goliath?

A show that, and this is true, literally nobody has ever seen.

If you make a show and no 1 watches it, does it exist?

We give companies a lot of money through these incentives.

By 1 estimate, in 2015, they cost state and local governments $45 billion.

And that money can go to some questionable projects.

For instance, a few years ago, Kentucky took a big swing on this.

A full-size replica of Noah's Ark is drawing thousands of visitors to Williamstown, Kentucky.

A chapter from Genesis told on a hundred-million-dollar budget.

4 floors of Noah, his family, and beasts great and small.

The project received 18 million dollars in Kentucky tax incentives.

18 million dollars of tax breaks for a gigantic Ark Museum.

And I'm not saying that that is inherently a bad idea, I do kind of want to see this thing.

Especially as its website genuinely has a section devoted to the question, what about all the manure?

-♪ All the manure ♪ -♪ All the manure The answer, apparently, is slatted floors or multiple level cages, which is really not a good answer because you do not want to be the animal on the lowest level of that ship.

And while the Ark clearly created some jobs, there were some caveats to those positions.

Critics complain of discrimination in hiring.

Only Christians, no gays or lesbians, and single people have to sign a chastity pledge.

Aside from the homophobia, chastity is a pretty weird rule to put in place for a museum that's pretty much a gigantic replica of a floating fuck zoo.

But They weren't brought in 2 by 2 so that everyone would have a swim buddy.

But the justification for taking a gamble on a gigantic arc was that it would be a boom to the whole area.

And to hear 1 local official tell it, the economic impact has been underwhelming.

The arc's success has not had the ripple effect many hoped it would.

Downtown Williamstown, which was expecting increased car and foot traffic, has almost as many empty storefronts as occupied storefronts.

What's it meant for downtown Williamstown?

I don't wanna sound negative in this interview, but...

Yeah, and that kind of makes sense, because once you've spent 3 hours walking around a wooden boat with sexually frustrated tour guides and haunted by the mental image of a miserable zebra neck deep in shit, because apparently decks were assigned alphabetically, you're probably gonna skip lunch in town.

And look, a well-designed, closely monitored program with clear goals might make sense to an area, but too often, the terms are extremely lax.

Some don't require that jobs be created at all, and some require almost laughably few.

Don't think about it, I'm sure it will pass.

That program's hiring requirements were that you create just 1 new job a year.

And the state recently considered scaling that back to 1 new job in the first 5 years.

And sometimes these incentives are given out even when they may not be necessary.

He's not wrong, and I knew that would do the job.

Fargo gave a tax break to FedEx for moving a facility to their city.

Because just listen to what happened when 1 city council member asked that very question of a FedEx representative.

Wilson, if you don't get this exemption, will you still move to Fargo?

Yet, 10 minutes later, the council voted to give FedEx that exemption.

Also, if someone wants to willingly move to Fargo, you don't offer them tax incentives, you simply offer them a full psychological workup that starts with the question, -"Who did you murder?" -$1,000,000.

Well, We'll still let you live here, but we do need to know." -...and then, then there are programs narrowly set up to encourage a particular industry to grow, which can sound great, but may not lead to good permanent jobs.

At some point in the last couple of decades, nearly every state decided that they wanted to be the next Hollywood and now 31 states have incentive programs for film or TV.

The problem with that is if you are 1 of them you have 30 other states competing with you hard and because film productions are portable if you try and scale back your incentives, they'll just go wherever a better deal is.

Just listen to this movie producer who has taken advantage of multiple states' incentives.

I would never make a movie where I didn't get an incentive, and I don't ever intend to.

end of the day, if there's an incentive...

I mean, yes, he looks like every woman's worst ex-boyfriend, but He's not wrong.

It is not his job to worry about whether his incentives are good for states.

It is his job to, I'm assuming, refer to sushi as soosh, because he definitely does that.

But it should be someone's job to worry about the effects of these programs.

And on some occasions, when states have done that, the news they got was not great.

For instance, Louisiana found that for every dollar it spent on its film program, it generated just 22 cents of tax revenue, which sounds bad, but which is still better than Maryland, which made just 10 cents for every dollar spent, which is still better than Connecticut's program, which returned only 7 cents on the dollar.

That's like putting a dollar into a vending machine and getting a single yellow Starburst in return.

At some point, what you're getting out is not worth what you're putting in.

And defenders of economic incentives will say that's just a fraction of the broader economic benefit that they bring.

The problem is, there's not much evidence for that.

And I know that accounting for the total economic impact of anything is tricky, but we are gambling billions of dollars on little more than faith.

And even basic information can be really hard to come by.

1 study found that 3 quarters of major state development programs don't even disclose actual jobs created or workers trained.

So we're basically throwing money down a hole and hoping it brings us prosperity, which is the exact business model of a fucking wishing well.

-♪ ♪ -♪ And to see this at perhaps its most pointless, Just look at Kansas and Missouri.

They've offered competing tax breaks to businesses for years, which has made things particularly interesting in 1 metro area.

2 states, 1 metro area, but both states offer subsidies for job creation.

A Missouri business will move some employees over to Kansas City, Kansas, and claim a tax break, move them back, claim another tax break.

For instance, Kansas City, Missouri lost corporate offices for all these companies to Kansas City, Kansas, which in turn, lost offices for all these companies to Kansas City, Missouri.

And that isn't creating jobs, any more than moving your couch from the bedroom to the living room is creating fucking furniture.

A local foundation has studied 2 state-level incentives programs and estimates that since 2009, around 6,600 jobs have moved from Missouri to Kansas, while around 5,500 jobs have moved from Kansas to Missouri.

Meaning there's been a net gain of around 1,100 jobs on the Kansas side of the line at a combined cost to the 2 states of $331 million in lost tax revenue.

You could create a program where the first 1,100 people to move from...

To Kansas City from Missouri would each get a Ferrari, which they could then drive around a giant pile of 30 million dollars that the state had set on fire, and you'd actually be fiscally responsible because you would have saved the area $20 million.

Look, it is pretty clear that economic development needs to be done in a much smarter way.

And I don't fully blame the companies for this because if governments are going to offer ridiculous incentives, they are going to take them.

So governments need to hold themselves and companies more accountable.

And if companies aren't producing what they promised, we need a system to claw our money back.

But to find that out, we're going to need much more oversight over these programs and what we're getting in return.

Although, I will tell you 1 thing that I know for sure we got in return, the Entourage movie.

That got a 5.8 million dollar tax credit from California, and where else were they going to film Entourage?

So, California, please know that you indirectly had a hand in producing a movie, which, may I remind you, had this for its very first line.

I've gotta say this, congratulations, Kentucky Ark Museum.

Because somehow you've become the second worst taxpayer subsidized fuck boat in this story.


Speaker 0: -♪ ♪ -♪ ♪ Jobs. Literally the only reason that anyone gets up before 11 a.m. Politicians care about jobs more than anything else, as you can tell from how often they mention them.

Speaker 1: These are the things I focus on. Jobs, jobs, jobs.

Speaker 2: Jobs, jobs, jobs.

Speaker 1: Jobs, jobs, and jobs. Period.

Speaker 3: Jobs. Jobs.

Speaker 0: Jobs.

Speaker 3: It's about jobs, jobs, jobs. Good-paying jobs.

Speaker 1: It's about jobs. Jobs, jobs, jobs, and more jobs, American jobs.

Speaker 0: Politicians seem to think that jobs are like Beetlejuice. If you just say the word a magic number of times, eventually they'll just pop up out of nowhere. Now, more specifically tonight, I'd like to talk about 1 of the ways that politicians try to create jobs, economic development incentives. And I know that that doesn't sound interesting. Wait, wait.

What are you doing? You're putting me picture in picture? Is that Entourage the movie? Fine, you know what? Switch over the audio, listen to the first line, you'll be back.

Speaker 4: I may have to jerk it before we even get there.

Speaker 0: Oh! 0, how about that? All of a sudden, a show about economic development doesn't seem like the worst thing you could be watching, does it? So... As I was saying...

-...economic development incentives... -$1.5 billion are essentially when state and local governments offer perks to companies to entice them to build or expand in their area. Here in New York, there is a program called Startup New York, which launched with some pretty astounding tax breaks.

Speaker 1: Startup New York creates 0 tax zones for new businesses for 10 years. 0 property tax, 0 corporate tax, 0 business tax, and 0 income tax.

Speaker 0: Wow. 0 property, corporate, business, and income tax. -♪ Whistle blowing ♪ -And I believe that that sound you just heard was Donald Trump getting an erection. -♪ Laughter and applause ♪ -Wait for it. Don't worry.

Wait for it. Wait for it. It's gone again. See you next year, little buddy. And look, it's not just New York.

All 50 states offer some kind of incentives, like tax breaks, to attract companies. And the argument is that they attract employers, which attract jobs, which lead to spending, which creates more jobs, and so on, and so on, and so on. And many places have bought into this hard, trying to outbid 1 another for businesses. Indiana even once took out attack ads on other states, like this billboard, which read, -"Ill-annoyed, buy higher taxes? Come to Indiana, a state that works." And that's pretty aggressive, although it's actually much tamer than their original billboard, just Arkansas, your tax bill?

I'd-a hope you like our tax breaks, because if you color our don'ts, well, Conetta, cut your fucking balls off. -♪ ♪ -♪ ♪ And if a company is big enough, it can even start a bidding war itself. That is actually happening right now with Amazon. They are planning to build a second headquarters somewhere in North America, and they are making governments bid for it. They even released 8 pages of instructions for candidates, telling them to think big and be creative, which led many cities to do stupid shit like this.

Speaker 2: Overnight, the Big Apple looking more like an orange. New York City Mayor Bill de Blasio lighting up the city in quote, Amazon orange.

Speaker 5: The city of Birmingham is using giant Amazon boxes to try to get Amazon's attention.

Speaker 2: Stonecrest, Georgia, offering to create a new town of Amazon, Georgia.

Speaker 0: They would create a new town and name it Amazon? You know, to compete on that surprise that Omaha, Nebraska didn't offer to let Jeff Bezos kill any 3 people he likes. Because you know he would. Look at it. He wants it so bad.

It's the only thing he can't have and he wants it. -$1.5 million. And numerous mayors made direct appeals to Amazon with videos ending in versions of the same bad joke.

Speaker 3: Hey, Alexa, where should Amazon locate HQ2?

Speaker 5: In Frisco, Texas. Alexa, where is the most interesting company in the world gonna locate? Obviously, Washington, D.C.

Speaker 6: So, Alexa, where is the best place for Amazon to locate its second world headquarters?

Speaker 5: Danbury, Connecticut.

Speaker 6: I told you so.

Speaker 0: You know, my 1 and only worry with all of those ads, and I mean this sincerely, is, are they almost too hilarious? --LAUGHTER --But those stunts are just window dressing. What Amazon cares much, much more about, as they mentioned in their instructions, 21 times are incentives. And while few places are revealing what they offered, we do know that New Jersey reportedly offered 7000000000 dollars in tax breaks, which is an insane amount that other places may now have to compete with. And think about what that means.

That could mean billions of tax dollars that would not be collected for things like roads, or schools, or hospitals. And Amazon already has more money than it knows what to do with. How else can you explain the existence of Goliath? A show that, and this is true, literally nobody has ever seen. Nobody.

No human, no animal, nobody. No bot, No 1. Does it even exist? If you make a show and no 1 watches it, does it exist? Discuss.

And... And that is the thing here. We give companies a lot of money through these incentives. By 1 estimate, in 2015, they cost state and local governments $45 billion. And that money can go to some questionable projects.

For instance, a few years ago, Kentucky took a big swing on this.

Speaker 2: A full-size replica of Noah's Ark is drawing thousands of visitors to Williamstown, Kentucky.

Speaker 3: This is the Ark Encounter. A chapter from Genesis told on a hundred-million-dollar budget.

Speaker 0: -♪ 00000... ♪ -♪ 00000... ♪

Speaker 3: 4 floors of Noah, his family, and beasts great and small. The project received 18 million dollars in Kentucky tax incentives.

Speaker 0: 18 million dollars of tax breaks for a gigantic Ark Museum. And I'm not saying that that is inherently a bad idea, I do kind of want to see this thing. Especially as its website genuinely has a section devoted to the question, what about all the manure? -♪ All the manure ♪ -♪ All the manure The answer, apparently, is slatted floors or multiple level cages, which is really not a good answer because you do not want to be the animal on the lowest level of that ship. And while the Ark clearly created some jobs, there were some caveats to those positions.

Speaker 3: Critics complain of discrimination in hiring. Only Christians, no gays or lesbians, and single people have to sign a chastity pledge.

Speaker 0: Oh, come on! Aside from the homophobia, chastity is a pretty weird rule to put in place for a museum that's pretty much a gigantic replica of a floating fuck zoo. But They weren't brought in 2 by 2 so that everyone would have a swim buddy. They were on that boat to fuck. To fuck.

But the justification for taking a gamble on a gigantic arc was that it would be a boom to the whole area. And to hear 1 local official tell it, the economic impact has been underwhelming.

Speaker 1: The arc's success has not had the ripple effect many hoped it would. Downtown Williamstown, which was expecting increased car and foot traffic, has almost as many empty storefronts as occupied storefronts. What's it meant for downtown Williamstown? Nothing. I don't wanna sound negative in this interview, but...

There's nothing here.

Speaker 0: Yeah, and that kind of makes sense, because once you've spent 3 hours walking around a wooden boat with sexually frustrated tour guides and haunted by the mental image of a miserable zebra neck deep in shit, because apparently decks were assigned alphabetically, you're probably gonna skip lunch in town. And look, a well-designed, closely monitored program with clear goals might make sense to an area, but too often, the terms are extremely lax. Some don't require that jobs be created at all, and some require almost laughably few. Remember Startup New York? 0 taxes for a decade.

Oh, shit. I'm sorry, I'm sorry, I'm sorry. Don't think about it, I'm sure it will pass. That program is hiring requirements. That program's hiring requirements were that you create just 1 new job a year.

And the state recently considered scaling that back to 1 new job in the first 5 years. And sometimes these incentives are given out even when they may not be necessary. Take a look at Fargo, North Dakota. You know what? He's not wrong.

He's not wrong, and I knew that would do the job. Fargo gave a tax break to FedEx for moving a facility to their city. But why did they really need to? Because just listen to what happened when 1 city council member asked that very question of a FedEx representative.

Speaker 1: Mr. Wilson, if you don't get this exemption, will you still move to Fargo?

Speaker 0: Yes, sir, we will. Okay. Yet, 10 minutes later, the council voted to give FedEx that exemption. Why? Also, if someone wants to willingly move to Fargo, you don't offer them tax incentives, you simply offer them a full psychological workup that starts with the question, -"Who did you murder?" -$1,000,000.

Well, We'll still let you live here, but we do need to know." -...and then, then there are programs narrowly set up to encourage a particular industry to grow, which can sound great, but may not lead to good permanent jobs. Take film and TV incentives. At some point in the last couple of decades, nearly every state decided that they wanted to be the next Hollywood and now 31 states have incentive programs for film or TV. The problem with that is if you are 1 of them you have 30 other states competing with you hard and because film productions are portable if you try and scale back your incentives, they'll just go wherever a better deal is. Just listen to this movie producer who has taken advantage of multiple states' incentives.

Speaker 7: I would never make a movie where I didn't get an incentive, and I don't ever intend to.

Speaker 0: At the

Speaker 7: end of the day, if there's an incentive... It's good for me.

Speaker 0: And look... -...he's not wrong. I mean, yes, he looks like every woman's worst ex-boyfriend, but He's not wrong. It is not his job to worry about whether his incentives are good for states. It is his job to, I'm assuming, refer to sushi as soosh, because he definitely does that.

But it should be someone's job to worry about the effects of these programs. And on some occasions, when states have done that, the news they got was not great. For instance, Louisiana found that for every dollar it spent on its film program, it generated just 22 cents of tax revenue, which sounds bad, but which is still better than Maryland, which made just 10 cents for every dollar spent, which is still better than Connecticut's program, which returned only 7 cents on the dollar. That's like putting a dollar into a vending machine and getting a single yellow Starburst in return. At some point, what you're getting out is not worth what you're putting in.

And defenders of economic incentives will say that's just a fraction of the broader economic benefit that they bring. The problem is, there's not much evidence for that. And I know that accounting for the total economic impact of anything is tricky, but we are gambling billions of dollars on little more than faith. And even basic information can be really hard to come by. 1 study found that 3 quarters of major state development programs don't even disclose actual jobs created or workers trained.

So we're basically throwing money down a hole and hoping it brings us prosperity, which is the exact business model of a fucking wishing well. -♪ ♪ -♪ And to see this at perhaps its most pointless, Just look at Kansas and Missouri. They've offered competing tax breaks to businesses for years, which has made things particularly interesting in 1 metro area.

Speaker 6: So I'm in Kansas City, Missouri. That's it behind me. There is Kansas City, Kansas. 2 states, 1 metro area, but both states offer subsidies for job creation. Create a job, you get a tax break.

So what do businesses do? A Missouri business will move some employees over to Kansas City, Kansas, and claim a tax break, move them back, claim another tax break.

Speaker 0: It's true. For instance, Kansas City, Missouri lost corporate offices for all these companies to Kansas City, Kansas, which in turn, lost offices for all these companies to Kansas City, Missouri. And that isn't creating jobs, any more than moving your couch from the bedroom to the living room is creating fucking furniture. And this war has come at a real cost. A local foundation has studied 2 state-level incentives programs and estimates that since 2009, around 6,600 jobs have moved from Missouri to Kansas, while around 5,500 jobs have moved from Kansas to Missouri.

Meaning there's been a net gain of around 1,100 jobs on the Kansas side of the line at a combined cost to the 2 states of $331 million in lost tax revenue. And think about that for a second. You could create a program where the first 1,100 people to move from... To Kansas City from Missouri would each get a Ferrari, which they could then drive around a giant pile of 30 million dollars that the state had set on fire, and you'd actually be fiscally responsible because you would have saved the area $20 million. Look, it is pretty clear that economic development needs to be done in a much smarter way.

And I don't fully blame the companies for this because if governments are going to offer ridiculous incentives, they are going to take them. So governments need to hold themselves and companies more accountable. And if companies aren't producing what they promised, we need a system to claw our money back. But to find that out, we're going to need much more oversight over these programs and what we're getting in return. Although, I will tell you 1 thing that I know for sure we got in return, the Entourage movie.

That got a 5.8 million dollar tax credit from California, and where else were they going to film Entourage? Idaho? So, California, please know that you indirectly had a hand in producing a movie, which, may I remind you, had this for its very first line.

Speaker 4: I may have to jerk it before we even get there.

Speaker 0: You know what? I've gotta say this, congratulations, Kentucky Ark Museum. Because somehow you've become the second worst taxpayer subsidized fuck boat in this story. -♪ -♪ That's the story.

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Economic Development: Last Week Tonight with John Oliver (HBO)