Why don’t state governments terminate failing programs? Theyspent too much

State governments often enact tax incentives aimed at encouraging business. But why do states decide to introduce these incentives, and why do so many continue even when it’s clear the incentive hasn’t worked? In new research which studies state tax incentives for the motion picture industry, Michael Thom finds that increasing unemployment and the presence of similar incentives at the national level makes it more likely a state will adopt them. When it comes to incentives that have failed to work, many state governments are reticent to end them simply because so much has been spent on them, and ending them would have a large political cost.