Abstract
This paper illustrates the factors considered by U.S. manufacturing corporations in determining where to locate a new manufacturing facility. The U.S. government, state government, local governing bodies, and foreign governments offer a variety of incentives to persuade companies to locate manufacturing facilities within their borders. The American Jobs Creation Act is an example of an incentive at the federal level that was put in place to trigger investment within the U.S. Many states have their own incentives, such as California's Manufacturer's Investment Credit (MIC), which offers a credit against California income tax based on the purchase and use of property in a manufacturing process in California. Foreign countries are also involved in similar practices. They negotiate specific incentive packages in the form of tax breaks or government grants in order to attract multinational manufacturers and the multitude of jobs that a manufacturing facility can bring. Contrary to the expectations, this paper shows that taxes and government incentives appear to be only one of the factors considered by U.S. manufacturers in deciding where they will locate their manufacturing operations. The choice of location appears to be driven by a variety of business factors, and taxes are only one such factor. Taxes and incentives definitely appear to be contributing factors but they are not the most important factors in the decision making process. [PUBLICATION ABSTRACT]