The Incentives Race to the Bottom Speeds Up

Critics of the corporate subsidies handed out by state and local governments has been often described as a "race to the bottom" as an ever escalating demand pushes for more hand outs. North Carolina has sunk to a new low with the special legislation in the recent budget that provides an estimated $40,000,000 in subsidies to Goodyear Tire & Rubber Company's facility in Fayetteville. What's particularly shocking about this deal is that the company is neither required to create jobs or even keep all of the 2,750 existing jobs. And Goodyear to the best of my knowledge hasn't even threatened to move to another state. It's just an "investment" in keeping them here according to one economic development guru.

There was a time not that long ago when incentives - or subsidies - were targeted only to major manufacturers to lure them to NC with the promise of major investments and new jobs. It didn't take too long before existing large businesses started threatening to move unless they were subsidized, then others simply started asking for handouts for expanding and adding jobs. Now we're handing out the tax breaks even if there is no threat to move, no creation of jobs or guarantee of retaining existing jobs. And the Goodyear deal is for just one company. The least the Legislature could do is help all businesses on an equal basis.

There is no end in sight absent a favorable court ruling in the Dell case or an uprising by the public fed up with under funded needs in the state while multi-billion dollar corporations get major tax loopholes inserted into the law and other sweetheart deals. North Carolina may not have reached the bottom yet but we're getting close.