As reported in the WSJ (Sept.22, 2010 p.C8) Navistar International Corp. has just accepted a location incentive package from Illinois. The package equate to over $22,000 per job. The journal reports that about $15,000 for each new job is the national average, but some equate to more than $200,000 per job.
In addition to jobs Navistar is expected to also spend about $205 million including an upgrade of it’s headquarter and a new parts facility.Some research suggests that in the long run a city/county/state is better off investing in honest government, good worker’s comp. practices, education, and other quality of life issues. And as the text notes, some of these incentive deals do not always work out for the company or the state.
Location incentives, potential job creation, and expense to tax payers vs other uses for tax money, can generate a lively class discussion.
Discussion Question:
1. How do location incentives relate to the location criteria discussed in Chapter 8?
2. Can you identify some ‘not so good’ results from location incentives?
3. Is there any consensus regarding how tax payer should be spent vis-a-vis incentives or quality of life issues that benefit all taxpayers?