It’s time for North Carolina to say no to corporate hostage taking

Last week, the Triangle Business Journal ran a story, Email records show NC ‘made a hard run’ for Jeff Bezos-led Blue Origin spaceship manufacturing operation.    The piece looks at emails from officials within the Department of Commerce and traces their quest to lure Blue Origin to North Carolina.

Blue Origin is a private spaceflight company.  It’s pretty much the coolest possible thing we could have in North Carolina.  This could be my ticket to actually go to the moon or something.  I’m loving this idea!

But the cool factor aside, the story outlined in the TBJ piece is worrying.  It goes something like this.

  • October 2016 – Department of Commerce puts together and incentive package of $650,000 in customized training, $7.7 million in tax exemptions, and $6.4m in JDIG.  Total package of $14.75 million
  • November 21, 2016 – Economic Development Partnership of NC (EDPNC) emails Commerce to say,“Consultant expressed disappointment with NC proposal – requesting JDIG at statutory max and One NC or state will be eliminated
  • November 22, 2016 – A revised proposal emerges with a new total package of $17 million, including $8.8m in JDIG.
  • December 12, 2016 – EDPNC marks the project “Closed Lost” due to the company’s inability to find a suitable location.
  • February 2017 – emails emerge discussing future meetings between Blue Origin and the Governor, an indication that the project still may not be completely dead.

At the Locke Foundation, and on this blog, we’ve talked extensively about the problems that incentives cause.  This is the clearest example yet.  Look at that email from November 21.  The company is effectively issuing an ultimatum, attempting to hold the state hostage and demand more money.  And yet, why wouldn’t they?  It’s likely to work.  Every state is playing this incentive game.  They’ll get millions and millions of taxpayer dollars somewhere.  So of course they exert pressure.

And North Carolina caved.  The next day, there’s a couple million more on the table.  But it still doesn’t work.  How many millions would it have taken?

There’s no end to this.  States will give more and more, and companies will expect ever larger packages.  It’s time for North Carolina to stop.  Let other states do what they will, we should say no to corporate hostage taking.  Even if it means we lose really cool companies like Blue Origin.

Instead, lower taxes, get rid of corporate income tax entirely, reduce regulations, and create an environment that works for all businesses.  Make our state attractive to businesses that actually want to invest for the long term, not those who are just looking for a handout.

 

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