BMW’s manufacturing facility in Greer, S.C., is marking its 20th year of production, and the plant typically is cited as the pilot program that led to a renaissance of auto manufacturing in the South (though Nissan’s factory in Smyrna, Tenn., opened 30 years ago).
This Associated Press story notes that, while the plant has been a huge economic engine (ahem) for the Palmetto State, it also came at a cost of hundreds of millions of dollars in economic incentives … and led a rush for other states to do the same.
The pursuit of BMW and other companies also increased the race to offer tax money, tax breaks and property as incentives to private companies. BMW got the equivalent in today’s dollars of about $325 million in incentives. But the plant likely would have been successful even if it hadn’t gotten a dime of taxpayer money, said Ashley Landess, president of the South Carolina Policy Council.
Politicians were soon trying to find the next big thing and likely gave incentives to companies that squandered the money. A Pew Center report this year found that 26 states, including South Carolina, didn’t have an adequate system for evaluating how well tax incentives were working to bring economic development.
“You had one big success and everyone chases the next one,” said Landess, whose group thinks incentives amount to corporate welfare that hurts capitalism and competition. It would rather see lawmakers lower taxes to improve the state’s business climate.
John Locke Foundation and Carolina Journal have studied and reported on the folly of targeted incentive packages for more than a decade. With a new adminstration about to take charge in Raleigh, we’ll see if (or how often) the itch to give away tax dollars to favored businesses gets scratched.
As Vince Gill and Big Al Anderson say, everybody’s looking for the next big thing.