Corporate Welfare Weekly - September 25, 2009 – Issue 17
Sep 25th, 2009
Recent Announcements…
$7,400,000 in potential tax benefits to EMC Corp. through the Job Development Investment Grant (JDIG). The state voted unanimously to award the information technology company the grant to establish a new research facility in Durham County. County officials and the City of Durham will be voting on granting additional local incentives in the coming weeks.
~ Press Release, Media Newswire, September 25, 2009
$250,000 to Townsends, Inc. from the One North Carolina Fund. The company, an international producer and marketer of poultry products operating as Crestwood Farms, will be expanding their production line in their Mocksville facility.
~ Press Release, Statesville Record & Landmark, September 25, 2009
$472,178 in local incentives to Central States Manufacturing, Inc. from the City of Mount Airy. In addition, $135,000 in state incentives was granted from the One North Carolina Fund. Mount Airy officials also provided land, property-tax rebates and other amenities to the company. Surry County is also considering giving the Arkansas-based metal building components maker additional incentives.
~ Tom Joyce, Mount Airy News, September 22, 2009
Quotes of the week…
“Good state tax systems levy low, flat rates on the broadest bases possible, and they treat all taxpayers the same.”
~ Kail Padgitt, a Tax Foundation economist, regarding the foundation’s 2010 business climate
rankings
“Until Tuesday, secrecy had surrounded the industrial prospect, which some in the community had criticized due to public funding being tied to the incentives. Local officials had said that Perdue’s office would have to disclose the company’s identity, due to the presence of state incentives and their fear that a premature announcement would block such assistance in the future.”
~ Tom Joyce, Mount Airy News, September 22, 2009, regarding the incentives given to Central
States Manufacturing by the state and the City of Mount Airy.
Discouraging Tidbit…
The News & Observer reported in a September 23 article by John Murawski that even as the “economy giveth…the economy taketh away.”
“Central States Manufacturing, based in Arkansas will open a metalworking plant that will create 45 jobs. … The company will receive $135,000 in state grants if it meets the hiring targets. …Last week, however, WEK Industries said it would cut 71 employees and by Dec. 14 shutter [sic] its plant in Reidsville, about 90 miles northwest of Raleigh.”
~ John Murawski, News & Observer, September 23, 2009
North Carolina Ranks 39th for business climate...
The Triangle Business Journal reported in a September 22 article written by Chris Baysden that the Tax Foundation ranked North Carolina #39 in the country for business climate:
“The nonprofit organization released its 2010 rankings on Tuesday, with North Carolina keeping the same rank it had a year ago. The state placed No. 41 in 2008 and No. 42 in 2007...”
“…The rankings include a composite of five index measurements – corporate tax, individual income tax, sales tax, unemployment tax and property tax. The states are scored on these taxes, and the scores are weighted based on the relative importance or impact of the tax to a business...”
“…The final rankings are meant to measure a state’s business tax competitiveness and the state’s ability to encourage investment...”
“…North Carolina’s score was hurt because of the variety of property taxes imposed by local governments statewide. The Tax Foundation also docked North Carolina for being one of the only three states to tax gifts and one of 10 states to tax intangible personal property such as stocks, bonds and trademarks.”
~ Chris Baysden, Triangle Business Journal, September 22, 2009
Around the Country…
“From California to New York, taxpayers remain on the hook for billions of dollars in subsidies for stadium projects, even in the midst of the worst fiscal downturn in state and local budgets in decades. … New York City just completed two gleaming new Major League Baseball stadiums for their beloved Yankees and Mets. … taxpayers shelled out a whopping $1.8 billion. … Supporters claim the projects will generate significant economic development from stadium construction and future events to be held in the new facilities. But economists and taxpayer advocates raise serious questions about those claims, especially in a tough economy.”
~ Moylan, Andrew. “Stadium Subsidies Continue Despite Economic Downturn.” Budget & Tax News Sep. 2009, Vol. 7 No. 8
The City of Winston-Salem has its own beloved baseball stadium project that is being subsidized by taxpayers.
Around the World…
U.S. vs. Europe
The problems caused by corporate incentives or subsidies are not limited to a locality, a state or even a country; troubles also erupt on a global scale. In 2004, the United States filed a complaint with the World Trade Organization (WTO) claiming that Boeing, an American jet maker, experienced material harm due to European subsidies given to Airbus, Boeing’s competitor.
The Associated Press reported in an article written by Tom Raum and Donna Borak that the WTO ruled in a September 4 ruling that the billions of dollars in subsidies granted to Airbus by European countries were illegal.
“In a major victory for Boeing Co., the World Trade Organization sided with the American aviation giant Friday in finding that European countries have provided billions in illegal subsidies to chief competitor Airbus. The preliminary ruling by the Geneva-based WTO, although expected to be challenged by the European Union, could begin to shake up the $3.2 trillion global market for new jetliners, in which Airbus has overtaken Boeing.
The next shoe to drop will be a decision that may well go the other way: The international trade body will rule next year in an Airbus challenge to what it sees as unfair U.S. government support for Boeing...”
“…The American case protested “launch aid,” easy-term loans that were extended primarily by France, Britain, Spain and Germany to help Airbus develop new jetliners as it overtook Boeing as the world’s top producer of commercial airplanes.”
Last week’s ruling was crucial for Boeing and Airbus because they are currently competing for a $35 billion contract for an aerial refueling tanker for the U.S. Air Force.
~ Tom Raum & Donna Borak, Charlotte Observer, September 5, 2009