Taking your earnings because everybody’s doing it

January 15, 2014 Asheville , News Stories 1355 Views
Taking your earnings because everybody’s doing it

 

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By Leslee Kulba-It was “exciting.” That doesn’t mean it was thrilling or adventurous. It’s just the word politicians feel obliged to use when awarding corporate welfare. The rest of the script goes, “[The company] will create [number of] jobs paying [average annual wage], which is above the local average wage of [number], and invest [dollars] in the community. At the end of the article, you will usually find which government entities partnered in the redistribution of tax dollars. Running down total sums from all the participants is usually a challenge.

In this case, the company was Jacob Holm, a Swiss company with a long-time presence in Candler, or as the incentive agreement calls it, “Chandler.” The company manufactures nonwoven textiles, better known as wipes, and boasts the status of being a world leader in the field. The company already payrolls 82 employees at its Buncombe County facility, which it would presumably leave high and dry without a little help from its friends in government. With the help, it would hire 66 more, paying an average salary of $46,258 plus benefits. The average annual wage in Buncombe County is $35,565.

Less newsworthy is the county’s intention to give Jacob Holm $1,120,545. That’s only about $5 from every man, woman, and child in Buncombe County, and it is payable over a period of five years. That should spread the pain thin enough to allow the county to give a cool million to twenty or so wealthy corporations without public outcry. Perhaps one day it will emulate the federal government in budgeting more for welfare to line the pockets of campaign-contributing tycoons than for all social welfare for the sick and afflicted combined.

Sweetening the deal, presumably innumerate taxpayers are told the money is not a cash transfer. Instead, it is a tax break, and it will only be paid after certain criteria are met. To believers, this means the money is free. To economists, if some citizens can ride free for five years, it means taxes are too high. Surely the newcomers will be utilizing infrastructure, schools, public safety services, and other government offerings.

But in government, that is considered paying mind to the man behind the curtain. What matters is the brightly-colored bar graph showing the county will enjoy a thirty-fold return on its investment. The logic goes something like, “I saw it in a graph. My Barbie doll hates numbers. Therefore it is true.”

According to Assistant County Manager Jon Creighton, who always gets stuck with the hapless presentations, $15,276,520 will be directly generated by the investment. On top of that $5,481,486 will be indirectly created when the company has to expand its janitorial staff, and the office supply store has to hire more people to stock copy paper. After that, another $4,878,917 will be dropped in the community as paid employees take the wife out to eat, causing the restaurant to hire more wait staff, oil companies to build a new gas station, and Ingle’s to stock more groceries.

Of special importance to government is the tax revenue Jacob Holm will be contributing. During the five years of its tax break, it is expected to invest $45,936,000 in the community. Furthermore, it will increase property tax revenues by $240,000 annually, and while the company enjoys its tax break, it is projected to contribute a total of $4,525,697 in sundry taxes.

Creighton estimated the total number of jobs to be created would be somewhere around 123; and another 100 short-term construction jobs would be needed at the onset of the expansion. Not too curiously, since government went gung-ho into the job-creation business with corporate welfare, the economy has been tanking. Between the years 2000 and 2012, manufacturing jobs have decreased 33.2 percent, and construction jobs have decreased 34.6 percent in the Asheville Metropolitan Statistical Area. During the same period, the number of government jobs increased 11.2 percent.

In actuality, the economic equation has too many variables to reach any sweeping conclusion. However, government’s distortion of the market by bestowing financial advantages on certain corporations only harms the economy. The existence of free-riders indicates others are paying more than their share in taxes, buying bureaucrats to regulate them with funds that might have been used to create jobs, further research and development, or price items more competitively.

The practice comes with the message that people can no longer plan big. It is no longer possible to work hard and smart to accomplish one’s dreams, as success will be met with a confiscation by the redistributive arm of government. Those who can earn wealth are now held responsible for subsidizing the dreams of those who only care to whine about relocating if government doesn’t give them a little something extra.

According to a press release from Governor Pat McCrory’s office, dated October 4, “other partners that helped with this project” include the NC Department of Commerce, NC Community Colleges, and the Economic Development Coalition of Asheville-Buncombe County. The One North Carolina Fund only proffered a $100,000 grant contingent upon a local match and fulfillment of job creation and community investment goals.

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