(The Center Square) – North Carolina promised more than $1.3 billion in tax incentives to 58 companies in 2021 in exchange for development, according to a report published Thursday.
Raleigh-based think tank John Locke Foundation found the state significantly surpassed the corporate handouts awarded the past two years, according to its report.
North Carolina pledged $146 million in tax credits to 66 companies in 2019 and $519 million to 48 companies in 2020.
The tax incentives are conditional. Businesses must meet the job goals and provide the economic benefits promised to the state. North Carolina uses investment grants to attract large companies and jobs to the state. Its Job Development Investment Grant is supposed to offset the cost of new developments or expansions. The amount of the multiyear grants are based on the projected personal income tax withholdings from the new jobs. The state also offers companies One North Carolina Fund grants, which are given in 25% increments.
The corporations awarded the grants in 2021 have promised to create 15,670 jobs. Among the biggest agreements were Apple and Toyota. Apple promised to create 3,000 jobs for its 39-year, $846 million incentive package. Toyota said it would create 1,750 jobs in return for $79.1 million over 20 years.
The Center for Economic Accountability (CEA) labeled North Carolina’s Apple agreement the “Worst Economic Development Deal of the Year” in 2021. Analysts at CEA said the economic benefits are inflated and Apple would have selected North Carolina for its new campus without the grants. Apple also promised $1.5 billion a year in economic benefits to the state, a $100 million fund to support school and community initiatives and more than $110 million for broadband and infrastructure projects in rural areas.
The John Locke report’s author, researcher Jon Sanders, also slammed the growing incentives.
“It’s not ‘economic development’ to rob Peter to pay Paul,” Sanders wrote. “Having consumers and businesses support giveaway programs for favored crony corporations diminishes job-creation opportunities all across the state as it ‘creates’ jobs in one area.”
North Carolina Gov. Roy Cooper’s office did not respond Thursday to a request for comment on the tax incentives.
A review of the One North Carolina Fund and the Job Development Investment Grant programs in December 2020 by WRAL-TV in December 2020 found both programs have met only half of the job goals announced between 2009 and 2016.
North Carolina ended its grant incentive agreement with Germany-based Deutsche Bank in July 2020 after the financial institution failed to uphold its end of the deal. The bank promised to hire 250 local employees for its Cary facility in exchange for $3.4 million in grants in 2015. The company failed to reach the employment goal and ended up laying off employees.
Originally published by RealClearPolicy. Republished with permission.