Since no one is helping you, I will provide you the basic outline for the paper. First, ethics are, as I am sure you are aware, rarely black and white issues, but deal with shades or gray. Also, "situational ethics" often dictate that what might be ethical in one circumstance or for one person may not be "ethical" for another.
As to the questions asked: (1) George has a valid argument in that it certainly appears at face value that he is being punished for being a good corporate citizen all these years. But is he really? While he is not receiving all the offers being provided to the foreign company, there are usually in place numerous incentives for local companies to stay and grow their businesses. If Stafford wants to add a 2Million expansion and add 100 jobs, the local and state governments will usually offer a tax abatement from any taxes for the new expansion as an incentive to complete the project. Stafford is frustrated because the incentives are being offered to his biggest rival, but the governor is responsible for all of the citizens of her state, not just Stafford. The potential negative effects to one corporate citizen are arguably, at least from the governor's perspective, outweighed by the benefit to 400 other citizens and the State as a whole. The governor is simply trying to assist her state in competing globally for new businesses to locate in her state. Not sure there is anything unethical about that, especially if her incentives are consistent with offers from surrounding states and her figures as to the net benefit to the State are indeed accurate. Stafford is not being punished at all, but is the unfortunate negative beneficiary of actions that are intended to benefit the entire state. Stafford needs to focus on benefits that are available for local companies to stay and grow. Maybe the area that Stafford's factory is located could be declared a TIF zone so more infrastructure improvements can be made.
The question of whether it is ethical or not for States and governments to offer incentives really depends upon your policy concerning market forces and the economy as a whole. For the most part, our policy makers have declared that the "market economy" will eventually correct any errors if left to run its course. Therefore, under this theory, states and governmental entities "bidding" for businesses works to ensure small government and support for industries that grow the local, and ultimately, the national economy. If one were to look from a perspective other than the market view, perhaps there could be an argument that this "bidding" is unethical.
Lastly, is there any federal laws or restrictions. No, and if you're a proponent of the market force theory, there also should NEVER be any such laws. For example, I would contend that the amount we now pay in federal taxes should go to our states while the smaller amount we now send to the States would go the Feds. With only a fraction of those federal dollars, the federal government would be reduced to those activities that clearly fall under the federal umbrella, i.e., military, roads, FDA, and MAYBE, social security. This would then force states to compete to maintain people residing in their states and thus states would "compete" to keep their budgets and individual tax rates to a minimum. Under this market theory, States would compete not only for businesses to locate there, but also to maintain its own residents from looking to other states, with a much lower tax rate, to live.
Hope that helps you.
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