Captain Morgan rum is now produced in Puerto Rico for the British company Diageo PLC, and tax revenues on the rum are returned to the island as part of a law that comes up for renewal every year. Diageo struck a deal with the Virgin Islands, which also gets rum taxes back from the U.S. Treasury, to move production there; the deal will bring the Virgin Islands an estimated $6 billion in tax revenues over its 30-year duration. Under the agreement, much of that money would be spent on programs benefiting Diageo.
Puerto Rico is not happy and is looking for help in Congress:
Puerto Rican officials call arrangement between the Virgin Islands and Diageo an unfair corporate subsidy that should be outlawed, and Puerto Rico’s delegate to Congress along with several other Hispanic legislators have been pressing to change the law.
More here, here, here, here, here, and here. There was a suggestion in one of the linked articles that Diageo would have left Puerto Rico anyway, and this subsidy just kept them in the U.S. (well, a U.S. territory).
I know I'm repeating myself on this issue, but I'm going to keep at it, because I just don't see how this kind of thing make any sense. Wouldn't all states/countries be better off if they agreed not to compete this way? Presumably the first movers think they can obtain an advantage with this strategy, but ultimately, as subsidy competition intensifies, doesn't everyone end up with about the same number of jobs, and a budget that is in much worse shape?