“If they know who the first governor was to offer a company tax incentives to locate in a state, they should dig him up and hang him.” — CityWatch, Dec. 7, 2016
As you can see from the above quote, my philosophical position on taxpayers underwriting development costs for private business is clear.
However, such tax incentives are not only a reality but also a well-established one. Governors and legislatures do have to make decisions on granting them, for better or for worse. Nor will the states stop engaging in the giveaways, unless forced to do so.
Personally, I would favor federal legislation to prohibit the states from doling out tax incentives to private business for development costs. We as a nation should be competing with other countries, not playing our states off against each other.
While it’s obviously good for the business to see which state will pony up the most in cash, tax credits, land, infrastructure etc. for development costs in order to get that factory, that corporate headquarters or that sports team, it’s obviously bad for taxpayers to have to underwrite that business through those development tax incentives. And it should stop.
But don’t count on that happening, as the barn door was left open decades ago and the cash cows just keep running out. The game of state tax incentives and state tax giveaways to recruit private business seems here to stay.
And South Carolina has long been a big player in that game.
From major successes (BMW) to major disasters (Mack Trucks) to major deals where we’ll see what happens over time (Boeing and Volvo), the Palmetto state is either an easy mark or a shrewd investor.
Which brings us to the Carolina Panthers practice field deal. Just kidding, Gov. McMaster, I know it’s more than a practice field.
As presented, the plan also includes building the team’s new headquarters facilities, along with hotels and retail development. Maybe they’ll even announce 41 shops and restaurants, like Columbia’s BullStreet project did back in 2014. Of course, we’re still waiting on 39 of those five years later. But I digress.
And good for Sen. Dick Harpootlian, who rightly ridiculed the sky-high job and economic impact numbers for the Panthers project from the S.C. Department of Commerce, which simply looked foolish. The same goes for Harpo slowing the process down, as these deals always need more public vetting.
That said, I think the Panthers project likely will generate adjoining economic development, be good for York County and the state of South Carolina.
But even if you favor the tax incentives to bring part of the Panthers operation to our side of the border, I think the price being paid is too high. Way too high, based on that given for other projects.
The most recent and relevant comparison comes from the Volvo deal.
As reported by The State in 2015 and last week, the Panthers are receiving $115 million in tax incentives, while Volvo received $205 million.
To put that in perspective, Volvo has brought and is bringing thousands of jobs to South Carolina. The Panthers will bring a few hundred.
While the Panthers and their legislative backers argue that thousands of jobs will ultimately be added based on the totality of development that occurs in the area of their project, that figure is both speculative and sensational.
It’s also not what I’m talking about, which is direct employment by the two companies. Again, there are thousands of jobs with Volvo, a few hundred with the Panthers.
So, since the Panthers will directly produce some 10 percent of the jobs that Volvo does, they will naturally get 10 percent of the incentives that Volvo did. Right?
Wrong. In fact, the Panthers are getting 55 percent of the incentives that Volvo did, while directly producing 90 percent fewer jobs.
I don’t know if it was the glitz and glamour of the NFL, being dazzled by billionaire Panthers owner David Tepper or getting a chance to shake hands with Cam Newton, but starry-eyed South Carolina legislators and the governor got hustled on this deal.
Fisher is president of Fisher Communications, a Columbia advertising and public relations firm. He is active in local issues involving the arts, conservation, business and politics. Let us know what you think: Email firstname.lastname@example.org.