May 25, 2007

Alabama "Wins" ThyssenKrupp Smokestack Chasing Contest

It's official: Alabama will be the home of the new ThyssenKrupp manufacturing facility. The company announced earlier this month that it will build its newest steel plant in Alabama, ending a tense two-state battle between Alabama and Louisiana for this economic development prize.

So what did it cost Alabama? Let's start with what we know:
  • $461.1 million in direct financial aid, including land acquisition, site preparation, worker training, and road improvements.
  • $350.3 million in "abatements of sales, property and utility taxes by state and local governments."

Which adds up to a cool $811 million in direct spending and tax breaks up front. Now for the part we can't put a price tag on:

In addition, the company won't have to pay any state income tax for the next 30 years unless its tax liability exceeds $185 million in any year.

And since the entire state corporate income tax only brought in $484 million in fiscal year 2006, it's hard to imagine how Thyssen's new plant could possibly rack up $185 million on its own. So that "unless" statement is pretty meaningless: Thyssen is getting a free pass for 30 years on the corporate income tax.

You can't put a price tag on that part of the deal, but that doesn't mean it's free.

So if Louisianans are looking for consolation in the wake of "losing" this smokestack-chasing contest, try this on: maybe this is a race they couldn't have afforded to win. And maybe Alabama will find they can't afford it either.


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