Is landing ThyssenKrupp plant really a win for Alabama?
That's the question the folks over at Citizens for Tax Justice pondered recently on their Talking Taxes blog. Louisiana also tried to lure the German company's $3.7 billion steel plant, which instead will be built north of Mobile in the community of Mount Vernon.
The plant will employ 2,700 people and generate at least 38,000 indirect jobs in the region over the next 20 years, according to the company.
But as Talking Taxes points out, the cost to Alabama will be considerable: $461.1 million in direct financial aid, including land acquisition, site preparation, worker training and road improvements; and $350.3 million in "abatements of sales, property and utility taxes by state and local governments."
In addition, the steel giant won't have to pay any state income tax for the next 30 years unless its tax liability exceeds $185 million in any year -- pretty unlikely considering that the tax for the entire state brought in a total of only $484 million in fiscal year 2006.
Keep in mind that all this taxpayer-funded assistance is going to a company whose second-quarter earnings announced earlier this month were $769 million -- even after being hit with a $646 million fine by the European Union for its involvement in an illegal elevator cartel.
Talking Taxes concludes:
The plant will employ 2,700 people and generate at least 38,000 indirect jobs in the region over the next 20 years, according to the company.
But as Talking Taxes points out, the cost to Alabama will be considerable: $461.1 million in direct financial aid, including land acquisition, site preparation, worker training and road improvements; and $350.3 million in "abatements of sales, property and utility taxes by state and local governments."
In addition, the steel giant won't have to pay any state income tax for the next 30 years unless its tax liability exceeds $185 million in any year -- pretty unlikely considering that the tax for the entire state brought in a total of only $484 million in fiscal year 2006.
Keep in mind that all this taxpayer-funded assistance is going to a company whose second-quarter earnings announced earlier this month were $769 million -- even after being hit with a $646 million fine by the European Union for its involvement in an illegal elevator cartel.
Talking Taxes concludes:
So if Louisianans are looking for consolation in the wake of "losing" this smokestack-chasing contest, try this on: maybe this is a race they couldn't have afforded to win. And maybe Alabama will find they can't afford it either.
2 Comments:
I am a business person in Mobile and we locally and statewide are in total favor of this steel mill coming here. We in the city and county are doing 125 million in tax credits for an employer that will bring over 7,000 permanent jobs to our area. The way we look at it...without them we have no jobs and no tax revenue but with them we have 7,000 jobs and no tax revenue. We know that the money in wages and goods will produce far more revenue for the county and city than a tax on the mill. Even the state is giving them primarily tax credits. Additioanlly, a 100 million dollar offloading facility will be paid back in docking fees; that facility will provide another 50 port jobs. Is it too much?...either compete for the plant or step aside for those who are willing to pay the price. We have done the math and WE WIN!
I would agree with jagsouthern.
It was absolutely worth offering every penny to this company. You are going to see job growth that's unprecented in region of the country.
Also other plus are:
Alabama is home to the auto manufacturing industry in the South. There is a great need for a steel plant in that region to produce carbonized steel used in the manufacturing of cars and trucks.
Also the South is growing by leaps and bounds. Demand for steel in this country and particularly in the South is at an all time high. We import more steel that ever.
ALSO LET'S NOT FORGET CHINA.
CONGRATULATIONS ALABAMA...CONGRATULATIONS MOBILE.
IN 10 YEARS NO ONE WILL RECOGNIZE YOU!
THE HELL WITH THE NAYSAYERS. THEY SAID NAY WHEN MERCEDES CHOSE ALABAMA AND THEY ARE LICKING THEIR WOUNDS.
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