Should public money be used to lure companies like Porsche?

One of the big pieces of local news last week was Porsche’s announcement that it would relocate its North American headquarters from Sandy Springs down to the old Ford plant near the airport. The move can be measured by more than the 22 miles from North Fulton to South Fulton: The old HQ was a rental, while the new one will be a $100 million facility that includes a test track and an employment boost of as many as 200 new jobs.

And if you’ve followed these sorts of deals before, your first inclination may have been to wonder how much this expansion will cost local and state taxpayers by way of an incentive package.

The answer, according to the AJC’s Rachel Tobin: About $14 million.

The incentive package includes $1.75 million in job tax credits from Georgia, $400,000 in infrastructure improvements from the Department of Transportation, and discretionary money from the Regional Economic Business Assistance Program, or REBA, said Alison Tyrer, a spokeswoman for the Georgia Department of Economic Development. The REBA grant, with a city of Atlanta match, is expected to be about $1 million.

The package also includes city of Atlanta incentives. The Ford site is in an urban enterprise zone, and related tax abatements could net Porsche an estimated $11 million over the next 10 years, said Amanda Shailendra of the Atlanta Development Authority.

That $14 million works out to more than $36,000 per job if employment reaches 400 (the 200 already employed in metro Atlanta stood to be lost if Porsche moved out of state). The chief executive of Porsche Cars North America told the AJC that other states made “very, very aggressive and attractive offers” to lure the company away from Georgia.

Should government use public money to attract businesses and jobs?

  • No, we should focus on a fair tax code for all companies. (32 Votes)
  • It depends on the type of investment. (27 Votes)
  • Yes, anything to help ease unemployment. (16 Votes)
  • Sure -- if we don't, other states will. (15 Votes)

Total Voters: 90

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Georgia isn’t shy about using tax breaks and other incentives as part of its economic development efforts. Undoubtedly, some numbers will be thrown out in meetings during the next two weeks as Gov. Nathan Deal courts investments from companies in Britain, Germany and Austria. On the other hand, the city and state appear ready to stand by and watch if the Atlanta Thrashers hockey team is sold to investors who want to move the team to Winnipeg.

Should the state or local governments use tax incentives to lure or keep businesses and jobs? Answer in the comments thread and in the poll to the left.

– By Kyle Wingfield

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28 comments Add your comment

bob

May 16th, 2011
5:59 am

Well Kyle, if a dem admin does it, it is good for the community. If a repub admin does it, it is a give away the rich.

Dave R.

May 16th, 2011
6:30 am

Short answer, Kyle, is no.

Long answer is that every time companies and government negotiate these deals, at the end of the deal the company doesn’t show any loyalty to the state or municipality they’re in, and look for additional incentives or move to where they will get them. Bottom-line, the government still doesn’t get any tax revenues (except maybe those of workers who live and spend money in the community), and and the company still leaves the area having soaked yet another set of local rubes.

Ayn Rant

May 16th, 2011
6:32 am

Government-subsidized private enterprise is about the only thing moving in the moribund US economy. American private investment capital is tied up in hedge funds and speculative financial instruments, which offer a much better return than serious investment in American industry and commerce.

American mega-corporations, which are subsidized by tax deductions, have killed off the free market by merging with, buying out, and running off their competition. Foreign companies lured by tax incentives serve to invigorate the American market with real competition that cannot be crushed by monopolistic business practices.

Karl Marx

May 16th, 2011
6:32 am

It’s a give away and it’s call Corporate Welfare. Until we change the tax system this kind of crap will continue and we will make bad deals like paying a 36K incentive for jobs that pay less.

Low taxes didn't keep Porsche in Sandy Springs

May 16th, 2011
6:36 am

Sandy Springs prides itself on super low business taxes. In a vote earlier this year, they lowered business taxes even more for big companies like Porsche. Citizens were assured that the reduction of taxes would entice corporations to relocate to Sandy Springs. Bye bye Porsche.

Bart Abel

May 16th, 2011
6:42 am

I tend to agree with Dave R. on this one. There are numerous examples of local and state governments giving away such tax incentives only to get burned.

The best incentives for attracting business to Georgia are fundamental: an educated workforce and an advanced infrastructure.

Splavistic

May 16th, 2011
7:51 am

Kyle RightWingfield,

Why would any “True Republican” want to give away tax money to corporate welfare? Shouldn’t taxes ONLY go to defense (… and country club construction)? Seriously, you don’t want it going to education and infrastructure because that’s just plain socialist. We don’t need to give it to corporations (because we can just give them kick backs for votes under the table, anyway…)

DebbieDoRight

May 16th, 2011
7:58 am

Short answer: No.

Dan

May 16th, 2011
8:05 am

It’s actually a stupid question. You are not giving anything “away” when you grant a tax reduction. What you are in fact doing is collecting more than you would have otherwise. When you attract a business by offering to collect less in taxes you still collect more than if the company did not relocate to your area. In addition you put people to work and get them off the dole. So you are in fact ahead of the game.

And with regard to the concept of corporate welfare. Welfare is “giving” something to someone who has done nothing to earn it. When you bestow a tax reduction on a company, what you are in fact doing is allowing that company to keep more of what they earned. Which allows them to be more profitable which leads to increased investment, increased hiring, and increased salaries. It also leads to higher stock prices and dividends, which benefits anyone who is invested in them via ther 401K or pention plan.

Unfortunately the people responsible for coining the term are intellectually dishonest. And whats worse, is that although they themselves are intelligent enough to understand that the term is misnomer, they are hoping to influence people who are not smart enough to understand it themselves.

Tone Loc

May 16th, 2011
8:08 am

Don’t offer incentives. Let the jobs leave Georgia for a state or country offering incentives. We do not need any jobs in Georgia anyway.

Finn McCool

May 16th, 2011
8:17 am

You know Wal-Mart’s buiness model on how to destroy small downtown’s? Get a five year tax break for building a store within a community and, at the the end of the 5 years, abandon that location and rebuild just outside the small town’s jurisdiction. The downtown area is destroyed but Wal-Mart doesn’t miss a beat with it’s fancy new store all ready to go once the tax break is up.

Want to learn more, see the movie “Wal-Mart – The High Cost of Low Prices”

Finn McCool

May 16th, 2011
8:40 am

If a company can’t make a profit without hand-outs, do you really want to invest in that company or work for it?

Order my Porsche now

May 16th, 2011
8:47 am

In the case of the Ford Plant. What else was going to be built there? I think this was an excellent idea. AND it keeps a company in Sandy Springs – here in Atlanta. What was the best urban use of that Car Manufacturing Plant, that has been sitting empty for years? Mind you – we still have another one – The GM plant – still sitting empty – and nothing actually moving forward with that property in Doraville. I think the TAX incentives that states can offer are good, as long as the State doesnt go over board. Spread out over 10 years — this was a good deal. Think about all the small businesses around the plant – Sub shops, Burgers, Couriers, even gas stations that will come back to life. HECK – think about the business created just to come and watch the Porsche’s on the TEST TRACK. — this deal is good for Georgia

Lil' Barry Bailout

May 16th, 2011
9:29 am

“Citizens were assured that the reduction of taxes would entice corporations to relocate to Sandy Springs. Bye bye Porsche.”
——

Just another example of morons thinking that one counter-example invalidates the policy.

retired early

May 16th, 2011
9:33 am

If these tax incentives give an unfair advantage for new businesses over existing ones, it is allowing government to pick favorites…which means government is not treating everyone “equal”.
If I owned an auto manufacturing plant in Ga, I would sue the state for the same tax breaks and if I did not get them…would file an “unequal treatment” lawsuit with the Feds.
Alabama gave extreme tax breaks to attract a German manufacturing Co to their state costing them $200,000 PER JOB. If the Co decides to shut down ahead of the 40 year window to break even…the state actually loses money.
Ala can have those jobs….

HDB

May 16th, 2011
9:38 am

Lil’ Barry Bailout
May 16th, 2011
9:29 am

Lest you forget: with any theorem, all that is needed IS one counter-example to prove it false!!

Intown

May 16th, 2011
9:38 am

Yes, unless you make it illegal across the nation. this game is not a new one. Race to the bottom baby!

retired early

May 16th, 2011
9:47 am

Intown

Exactly. These companies are just “playing us” against each other. No winners in this game.

Road Scholar

May 16th, 2011
9:50 am

Order my Porshe: The original plan for the site was an international technology center which included hotels, retail and housing. This went through a DRI review. This may not be what is feasible in today’s climate. A portion will still be used to supply parking to the Airport’s new International Terminal. The GDOT contribution was needed also for the Terminal to provide improved access to the Terminal from I 75 and I 285.

My first reaction is “No”. But only half of the finacial impact was reported. What is the alledged state and local taxes based on the commerce that this move will provide? How does it offset the “investment”?

If you remember the Savannah Mercedes debacle, monies were spent readying the site and then Mercedes went to SC. The site still is vacant.Kia was the first automotive deal that Geotrgia made that was successful; GDOT built a new interchange and roadways to get “unmollested ” access to that plant. Now all the suppliers are /have popped up around the area which had a beneficial second impact to their local economy.

As a note, when Ford was still active at this location, a study was done to build a suppliers road/bridge across I 75 to link the plant to a “suppliers village” on the east side of the Interstate. The point is that these deals are commonly persued to compete with other states and counties.

Finally, Porshe had offices in the NE quad of the SR400 and Hammond Drive new interchange. Access to their driveways may have been limited by the interchanges’ operations.

Lil' Barry Bailout

May 16th, 2011
9:57 am

HDB: lest you forget, no one said that the policy guaranteed that every job currently in Sandy Springs would remain there forevermore.

Lil' Barry Bailout

May 16th, 2011
10:01 am

Companies SHOULD play one state against another. That way, high tax states get the punishment they so richly deserve, and low tax states get the jobs.

Gerald West

May 16th, 2011
10:02 am

The Porsche announcement is a cause for rejoicing. The prestigious project will attract wealthy tourists, will promote $100 million of new construction, will rejuvenate a forlorn industrial district, and will retain or create a few hundred permanent, well-paying jobs.

Georgia taxpayers will, in effect, pay $14 million to obtain a showcase for a German-made product that only rich people can afford. It will boost Porsche sales and create more manufacturing jobs in Germany. By the way, we run a big trade deficit with Germany, even though German workers get better pay and benefits than their American counterparts.

Reflect a moment on this: an advertising showcase for a foreign-made product will replace a manufacturing plant that once employed thousands of American workers! Could there be a clearer indication of the failure of the American private sector to produce the goods Americans want and the jobs we need to support our families?

Lil' Barry Bailout

May 16th, 2011
10:16 am

Germans don’t despise corporations that earn a profit. Democrats do.

Lil' Barry Bailout

May 16th, 2011
10:21 am

Germans are smarter and don’t mind working for a living.

Lil' Barry Bailout

May 16th, 2011
10:23 am

German kids learn math and science. American kids learn how to put condoms on cucumbers and that it’s OK for Julio to have two daddies.

Richard

May 16th, 2011
10:29 am

I have a great idea! Let’s up college tuition 13%, and instead, use the money to bribe Porche to stay in the state.

If we keep this kind of thing up, Porche wont have anyone worth hiring, but they’ve got a pretty new plant.

(Wouldn’t I make a great Republican?)

Lil' Barry Bailout

May 16th, 2011
10:55 am

(Wouldn’t I make a great Republican?)
——-

No.

Do you need help with anything else?

ATLgal

May 16th, 2011
11:50 am

I’ll take the tax base increase and the jobs, thank you very much. willkommen, Porche!