Pittsburgh was able to keep US Steel from moving its headquarters with tax breaks and other incentives, and Nashville may soon follow suit in its bid for Bridgestone.
The Tennessean reported on Monday that the Nashville “Metro Council will have its first crack at Mayor Karl Dean’s proposed tax incentive package” on Tuesday, which includes both tax breaks and cash awards designed to encourage Bridgestone to move its HQ (which is in nearby Donelson), as well as its Illinois and Indians divisions, to downtown Nashville.
To boost the city’s chances, “the mayor has proposed giving a 100 percent abatement of real property tax payments for 20 years,” as well as “a $500 grant per each new Bridgestone employee…over a seven year period.”
“Instead of losing Bridgestone to some other place, we’re keeping the company here and adding 600 new high-paying jobs to our economy,” Mayor Dean said in a recent speech. (RELATED: Film Subsidies Under Scrutiny in North Carolina)
According to the Tennessean, the job grant would cost a little more than $2 million in total, but the cost of the tax abatement “isn’t clear because it would depend on the appraised value of the land and tax rate in future years.”
A legal analysis by Metro Council attorney Jon Cooper projects that “Bridgestone’s total property tax discount would be around $54.2 million,” if the property is appraised at $150 million.
“Skeptics use terms like ‘corporate welfare’ to describe the tax breaks,” the Tennessean says, but each of the mayor’s previous incentive proposals have passed by wide margins, including one valued at $66 million. (RELATED: Misguided Incentives May Contribute to Rising Health Care Costs)
According to Watchdog, Pittsburgh used similar incentives to convince US Steel to keep its new headquarters in the city (the decision was made official last week) even though the company “isn’t claiming to generate any new jobs.”
In addition to federal and local tax breaks, which Pittsburgh Mayor Bill Peduto’s chief of staff indicated, “would probably total at least $6 million,” Watchdog says that, “Pennsylvania will invest $15 million…underwriting infrastructure like water and sewage.”
Opponents of that plan also label it “corporate welfare”, but the promise of creating—or in this case, not destroying—jobs often creates enough political pressure to push such deals through. (RELATED: States May Have to Disclose Business Subsidy Costs)
Robert Strauss, an economics and public policy professor at Carnegie Mellon University, told Watchdog that the most important consideration is “whether such programs simply encourage relocation rather than growing business.”
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