Based on open-record requests, it turns out that state and local taxpayers will cough up as much $210 million in tax incentives and subsidies to lure Baxter International, a major medical products company, to build a plant in Georgia. That’s more than twice the initial public estimate of $80 million.
It also adds up to a tidy $140,000 for each of the 1,500 jobs that the plant is expected to provide. When you figure that at least some of those well-paying jobs will be filled not by Georgians but by people lured here from outside the state, the per-job price tag rises higher still.
Nonetheless, economic-development officials insist that it’s a good deal, especially since the Baxter plant could bring other health-science firms to the region.
But let’s think about it for a moment. The state of Georgia and local governments are struggling financially, slashing budgets, laying off teachers and police officers and cutting government services. Nonetheless, they’ve agreed to come up with $210 million in incentives and subsidies for Baxter.
And Baxter International, the Fortune 500 company that will be receiving those incentives? In the first three months of 2012, Baxter recorded a profit of $588 million on behalf of its shareholders.
You can’t blame Baxter for making the sweetest deal it can find. And state economic development officials don’t believe they have a real option either. As they point out, if Georgia didn’t make the deal, another state would have eager to do so. They’re forced to play a game in which the deck is stacked badly against them.
Baxter International, in other words, is acting rationally. State and local officials are also acting rationally. But they’re all acting rationally within a deeply irrational system in which private corporations have all the advantages.
And of course, it’s not just Baxter. We still don’t know what the final deal will look like, but it seems likely that hundreds of millions of dollars in tax revenue, as well as other incentives and subsidies, will be used to build a brand new stadium for the Atlanta Falcons, replacing an existing stadium that still has years of productive life ahead. Nice as it is, the Georgia Dome just isn’t as big and shiny as the toys that other franchise owners enjoy.
Study after study demonstrates that stadium deals are bad investments for state and local governments, while they significantly increase the value of the sports franchises for whom the facilities are built. But city after city chooses to make the deal nonetheless.
There’s something inherently wrong about cutting special deals and exempting individual companies from tax laws that affect everyone else. That’s not how laws are supposed to work.
There’s also something potentially corrupting in a system in which politicians are given the authority to hand out hundreds of millions of dollars in tax breaks and special deals. While there’s no hint of impropriety in the Baxter deal, the secrecy in which such deals are made and the amount of money that’s at stake make it inevitable that the system will be abused.
And of course, while these deals grow in size and number, business and industry still insist that they want nothing more from government than to be left alone. And that’s clearly not the case.
– Jay Bookman