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Better idea would be to stop favoring large corporations with both our regulatory schemes and tax treatment rather than to provide new benefits to large numbers of businesses that will fail. Putting both on equal footing can be accomplished without creating new government largesse.
In principal, we agree . . . Unfortunately it is only on the "government largesse" portion of your statement.
The state of California decided to tax its cash cow (the entertainment industry centered in Hollywood) until it forced them to move most of their production efforts out of state, some even out of country. Most of your Hollywood television shows are now filmed in Canada or New York state or Illinois. Some in Florida and even some in Texas.
States need to learn from California because it is now broke and living off of federal subsidies because most large businesses have left the state or are planning to do so very soon. It won't be long before California will be asking the federal government for a huge multi-billion dollar bailout.
The states that are giving tax break incentives to large businesses are now beginning to realize the profitable windfall of their wise choices. Our federal government needs to learn from that. But they won't because you just can't fix stupid – However, you can vote them out of office.
In principal then we don't agree since that's only a minor philosophical point existing alongside opposition to pre-existing governmental largesse in the form of corporate welfare and regulatory capture problems that are considerable barriers for small businesses.
In essence what you are saying is that you prefer a system where corporations receive considerable power and preference from the government? That seems to be what is suggested in your second statement below anyway.
States that give tax break incentives are dealing with short-term benefits from a single company, or a few. The better solution is not to give "tax break incentives" to a single company or a few but to cut the corporate tax rates for everybody rather than continue to pretend to be able to game the market to one's favor.
What happens under your scheme is that companies relocate and then relocate again when the tax break runs out (famously the Kelo-New London eminent domain case where a corporate HQ and massive office complex now sits deserted when a tax break ended and was not extended for a single company). I agree certainly that the federal government and state governments could cut (or abolish) corporate income taxes, but the major reason for this is that they are consistently used by corporate entities to bludgeon their competition (other corporations, small businesses) and not because it has some considerable economic advantage.
The actual effect of corporate income taxes (as well as most forms of regulation) is to create favored industrial policies where the state (at all levels) covers for the most favorable campaign donations in exchange for a less free market environment where they can maintain market share against rivals. What the question above proposes doing is extending this process downward to small businesses. Which is idiotic. The process should be reversed and ended, not extended.