Nothing is free. When cities and states give companies tax incentives to open plants or warehouses, they are putting more of the tax burden on the existing businesses and population. Officials argue that bringing more workers and business activity to the area will stimulate demand and pay for itself. If that’s true, then why don’t they give everyone tax breaks and incentives? In the extreme, it’s a silly position, but cities and states do it to woo businesses from other jurisdictions.
But what happens when a company doesn’t hold up its end of the bargain? General Motors is finding out the hard way.
The company received $60 million in state tax credits to keep the doors open at its Lordstown, Ohio assembly plant, but then shut down the location in March of 2019. Ohio Attorney General Dave Yost demanded the Detroit automaker repay their money.
GM has agreed to repay $28 million as well as invest $12 million in the Mahoning Valley by the end of 2022.
Maybe the state could use some of the $28 million it receives to bolster the local Lordstown economy, or provide some benefits to the 3,700 people who were supposed to remain employed at the plant.