Calculation and Corporate Tax Incentives

Political Economy in the Carolinas, 2019, vol 2., pp. 61-75

15 Pages Posted: 14 May 2019 Last revised: 9 Aug 2019

See all articles by Rosolino Candela

Rosolino Candela

Mercatus Center at George Mason University

Peter Jacobsen

George Mason University; George Mason University, Department of Economics, Students

Date Written: April 15, 2019

Abstract

Amazon’s HQ2 campaign drew both large support at the possibility of job creation and backlash for perceived cronyism. In this paper we evaluate corporate tax incentive policies in light of the Austrian contribution to the problem of economic calculation. In doing so we highlight the contextual nature of the knowledge problem associated with policy packages and the potential cronyism arising from such a problem. We argue that because political decision-makers lack the knowledge generated via competition in the market process, they are unable to allocate resources in a way that achieves economic growth. In the place of this knowledge, they tend to gain knowledge from the political process which helps them respond to political incentives and rent-seeking behavior by special-interest groups.

Keywords: market process, economic calculation, knowledge problem, corporate tax incentives, rent-seeking

JEL Classification: B53; H26; L5

Suggested Citation

Candela, Rosolino and Jacobsen, Peter, Calculation and Corporate Tax Incentives (April 15, 2019). Political Economy in the Carolinas, 2019, vol 2., pp. 61-75. Available at SSRN: https://ssrn.com/abstract=3372377 or http://dx.doi.org/10.2139/ssrn.3372377

Rosolino Candela (Contact Author)

Mercatus Center at George Mason University ( email )

4400 University Drive
Fairfax, VA 22030
United States

Peter Jacobsen

George Mason University ( email )

4400 University Drive
Fairfax, VA 22030
United States

George Mason University, Department of Economics, Students ( email )

Fairfax, VA
United States

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