There really has been a war going on–one of those wars that doesn’t get written about much. It’s the war between the states…oh, the other one–to give away the economic store to businesses without much thinking about the consequences.

I’ve written a lot about this over the years (here is one from 2006). I was reminded of the issue via a piece today in The Wall Street Journal entitled “Companies Cash In on Tax-Credit Arms Race“:

U.S. states are digging deeper into their pockets, offering businesses lucrative tax credits for everything from brewing beer to renovating buildings, in an effort to spur economic growth and create jobs.

Companies are finding the new state tax credits especially alluring because many of their biggest federal tax breaks expired at the end of last year. What’s more, an increasing number of the state credits are refundable or transferable, meaning they can guarantee a company cash regardless of the size of its state tax bill.

Some 46 states now offer such tax credits through more than 200 different programs, compared with only a handful of states a decade ago, and exchanges are popping up to help businesses trade them.

Unfortunately, the piece is pretty weak in criticism, leaving a sort of bizarre, if predictable, alternative:

Still, some critics worry the states may be spending too much on tax credits. Transferable credits decrease tax revenues, while refundable credits can take money directly out of state coffers. And, because the credits can be sold, they may wind up in the hands of businesses that don’t need government help.

Missouri, for example, handed out a record $629 million in tax credits in 2012, about 10 times as much as allocated for public-safety spending last year. An audit of its three largest tax credits in March found the programs were inefficient, sometimes channeling only about half the funds to desired projects.

“There’s a raging debate in the business community as to whether we shouldn’t give any tax credits and just lower the [corporate tax] rate,” said Missouri’s state auditor Tom Schweich. Mr. Schweich says more of the state’s credits should be refundable to make them more attractive and effective.

Counter-posing tax credits and lowering the corporate tax rate sort of misses the point: most of these businesses are paying taxes that are too low to support a viable economy. Draining state coffers, either via tax credits or lower taxes, means, for example, money can’t be found to pave roads and fix infrastructure–things businesses need to be competitive.