Corporate welfare versus good business sense

The Iowa Progress Project, a conservative group which lobbies for consumer's rights, started running a radio advertisement last week about "corporate welfare." The impetus for the ad was an announcement that Microsoft is creating 50 new jobs in Iowa by locating a new data center there.

The state is requiring Microsoft to invest at least $200 million in the project, and will receive about $50 million in tax incentives in return. The incentive package includes a six-year exemption from taxes on computers, electricity and equipment used in the data center. A similar deal was struck with Google in 2007 to lure the company to Iowa.

Microsoft is planning on building about 24 of these data centers around the country, and of course, competition is fierce to bring the business to a state. Consumer advocates say the $50 million offered to Microsoft is too high, at $1 million per job created. But is it really that simple of an issue?

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