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Illustration: Sarah Grillo/Axios

More than two years after Amazon announced its search for a second headquarters and cities around the U.S. bent over backwards to offer the megacompany as much free cash and incentives as they could, new research confirms what economists have been saying for years: Such programs are a waste of money.

Driving the news: A paper from researchers at Princeton and Columbia Business School found "no evidence" that business tax incentives given to individual companies increased broader economic growth at the state and local level.

Why it matters: It's not just Amazon's highly publicized HQ2 that has attracted massive tax subsidies from city and state governments.

  • Research shows states continue to offer up increasingly large sums of money to big-name companies in an effort that proves more effective at generating headlines than economic growth.

Details: In 2014, the study found that about $7 billion — or about a third of total state incentive spending that year — "went to .0072% of new firms and 1.41% of all jobs created by those firms."

  • An earlier study found that despite their ineffectiveness, incentives offered to individual companies tripled between 1990 and 2015.
  • The Princeton/CBS study estimates that state and local governments spend at least $30 billion a year on business tax incentives — well above the 2014 total.
  • About a quarter of all business tax incentives are given to a very small collection of firms opening offices in new locations — less than .01% of firms opening in new locations in 2014.

The intrigue: New York offered Amazon $800 million more in incentives than was previously known and was even prepared to pay part of some employees’ salaries, WSJ reported (subscription) Sunday.

  • Amazon has since announced plans to lease 335,000 square feet on Manhattan’s West Side without any special tax credits, and executives have said the HQ2 decision was based more on where employees would want to live than incentives.
  • Newark had dangled $7 billion and officials in Maryland had offered $5 billion, both far exceeding packages offered by Virginia and New York.

Between the lines: Co-authors Cailin Slattery and Owen Zidar wrote in the study that they found a slightly negative effect on housing markets for municipalities that attract new companies with incentives, "seeing, on average, a 4% decrease in house prices."

  • "This apparent decline in house prices provides some weakly suggestive evidence that the welfare effects of these subsidies might be negative on average."

Go deeper:

Go deeper

Updated 26 mins ago - Economy & Business

S&P 500 on track for worst-ever start to year

Data: FactSet; Chart: Axios Visuals

Stocks suffered their steepest drop of the year early Monday, putting the S&P 500 on course for its worst-ever start to a year.

Driving the news: The benchmark S&P 500 dropped for its fifth straight day, with losses nearing 3% in early trading, momentarily putting it on track to fall into a "correction." Some of the steepest losses were recovered in early afternoon trading.

Tina Reed, author of Vitals
1 hour ago - Health

Health care workers hit new breaking point

Illustration: Shoshana Gordon/Axios

The ranks of health care workers are dwindling and stretching what it means to be reaching their "breaking points," particularly at small nonprofit hospitals.

The big picture: Even as Omicron cases have begun to wane in some places, many hospitals are still fielding a crush of patients amid record employee callouts.

Sarah Palin tests positive for COVID, delaying defamation trial

Sarah Palin. Photo: Matthew Staver/Bloomberg via Getty Images

Former Alaska Gov. Sarah Palin (R) tested positive for COVID-19 on Monday, delaying the start of her defamation trial against the New York Times.

Why it matters: The trial will be closely watched, as it's a rare instance of a major media company defending its editorial practices before an American jury.