Analysis shows communities like Ypsilanti Township pay high price for business tax incentives
Manufacturing —Â and particularly the automotive industry —Â is the top target for business tax incentives from state and local governments, The New York Times reports Sunday in a lengthy analysis that cites prominent examples from Ypsilanti Township and other Michigan cities.
Yet the heavy spending on incentives carries little clear evidence of resulting jobs growth, and in many cases —Â such as in Ypsilanti Township, home of the massive, shuttered Willow Run plant —Â companies that took incentives for factories ended up closing them.
The Ann Arbor-based Center for Automotive Research says $13.9 billion in incentives have been pledged to the auto industry nationwide since 1985. Automakers have also closed more than 267 plants in the U.S. since 1979, about half of which remain empty, according to CAR.
At least 50 properties in the 2009 list of liquidations of old GM assets were in towns and states that had awarded the automaker incentives, the Times found.
Ypsilanti Township, which awarded more than $200 million to GM for its two Willow Run plants, is suing over GM's departure. Doug Winters, the township's attorney, told the Times, "We're their own private ATM. When they need money, they come begging, but when they don't want oversight, they say 'get out of the way.'"
Today, a trust is marketing the Willow Run facility as valuable —Â even as it pleads for lower property taxes from the township because it says the plant isn't worth much.
Ypsilanti Township has already made numerous staffing cuts, but Supervisor Brenda Stumbo said she'd be willing to grant GM more incentives if the company brought back jobs.
Read the entire New York Times story here.
Comments
Basic Bob
Mon, Dec 3, 2012 : 4:30 p.m.
I can believe that tax incentives lose money for the township and schools. Unfortunately, empty plants are a money loser, too. How much would they have lost if GM had pulled out a decade earlier? Or if the plant were never built? Whoever moves into that plant will have a major investment to make. GM's investments were specific to the product they were building, and anything they could easily reuse has been removed from the site. If Ypsi Township wants this ever to be anything more than a brownfield, they need to work with the new owner or tenant- but carefully. Is there a better way to attract redevelopment with a sufficiently educated but underpaid workforce like they could find in Texas, NC, or Tennessee? Desperation leads to motivation for everyone involved.
Cash
Mon, Dec 3, 2012 : 1:42 p.m.
Corporate Welfare is alive and well in Mich. http://www.nytimes.com/interactive/2012/12/01/us/government-incentives.html#MI
Jeffersonian Liberal
Mon, Dec 3, 2012 : 1:37 p.m.
Spoken like a brain dead life long politician Mrs. Stumbo. Despite the avalanche of evidence that bribing companies never works out, she's ready to double down with your money. Keep electing her suckers.
Barzoom
Mon, Dec 3, 2012 : 11:47 a.m.
There was a time when communities felt that a company in their town was a valued member of the community. Likewise, companies felt a good deal of loyalty to the communities where they located. In addition to jobs for the local population, they contributed taxes and promoted volunteerism for local causes from their employees. Now it has come down to the bottom line. Companies ask "where can I do business for the least cost?". Loyalty to a community, state or country is a long ago thing of past
YpsiGirl4Ever
Mon, Dec 3, 2012 : 9:32 a.m.
Umm......G.M. is not coming back! So, I'm confused about the "if they come back" comment.
Tru2Blu76
Mon, Dec 3, 2012 : 9:16 a.m.
Found this in the New York Times: "Under Gov. Rick Perry, Texas offers more incentives to attract businesses than any other state, around $19 billion a year, an examination by The New York Times has found. Texas justifies its largess by pointing out that it is home to half of all the private sector jobs created over the last decade nationwide." - which begs the fact that those jobs could just as well be distributed under a more uniform approach to attracting businesses based on things like quality of education, suitable climate and productivity of work force (not on how much the bribe will be). Worth noting: Texas and Michigan were nearly equal in population back in the 1950s (when the military draft was still in effect): Michigan sent double the number of its native sons into military service compared to Texas. Not saying the draft was good idea: but at that time it was considered to be the right thing to do. (The Texas attitude would be reprised decades later when G. W. Bush described his absence from duty as "helping in a political campaign.")
Tru2Blu76
Mon, Dec 3, 2012 : 8:25 a.m.
In addition to what johnnya2 says about the disadvantages of tax reduction deals, there's also the fact that state governments which give "incentives" to business are put in a "race to the bottom" situation: competing on the basis of how much tax base they think they can afford to lose in return for a "promise" which only says corporations will cherry pick and only stay in a location so long as conditions suit themselves. "Bribe them to come and they will come" seems like a very poor model for job creation. Even more insidious is the "deal" offered by some states: "Come hire our employees whom we've conditioned to accept low wages in an anti-union culture." Seems that history shows the American economy worked much better when there was something for everybody who chose to participate. The fear of job losses to other towns or states is the apparent driving force behind this whole trend. Is fear to be the currency of "economic promise " in America? Maybe if the 50 states were really united in purpose (to provide a fair deal for their citizens), they'd join to ban this practice which blends bribery with extortion. "States United For An Honest Deal" might be a good name for this movement.
GP
Mon, Dec 3, 2012 : 7:46 a.m.
"even as it pleads for lower property taxes from the township because it says the plant isn't worth much" The plant has been retooled among other things. It seems to me it is worth a great deal.
johnnya2
Mon, Dec 3, 2012 : 12:12 a.m.
No community should ever be allowed to give ANY business an incentive. SInce the business community wants to be treated as people, that would fall under equal protection. Why should Pfizer get an incentive from Ann Arbor. This is also why many laws in the country should be national in scope. The concept of states and communities competing with their own country is silly and counter productive.