Loss of Volvo plant a legislative failure

Published April 26, 2015

Editorial by Rocky Mount Telegram, April 25, 2015.

Political egos and partisan chest-thumping can sometimes offer amusing theater, but not when real jobs and regional economies hang in the balance.

We have watched the hopeless dilly-?dallying this year of the N.C. General Assembly as it has taken on pointless “freedom of religion” causes rather than the real business of economic incentives.

In the meantime, we are told, not one, but two parties of automaker executives have visited the Kingsboro industrial site in Edgecombe County in search of a place to build a $500 million car factory. A factory that would offer thousands of jobs with good pay and benefits and that likely would attract additional supply companies to Eastern North Carolina with more jobs for years to come.

The legislature’s failure to put together an incentives package for such a boon probably isn’t the only factor that led to news that Volvo is no longer considering North Carolina for such a plant. But certainly the General Assembly’s ineptitude played a role. And please don’t mistake the criticism from this corner as some kind of partisan rant.

The legislature may be led by Republicans, but its leaders have gotten a bipartisan earful.

Republican Gov. Pat McCrory isn’t happy. Democratic N.C. Sen. Angela Bryant isn’t happy. And Carolinas Gateway Partnership Chairman Frank Harrison certainly isn’t happy.

It’s one thing to pull together as a state and put every resource we can offer on the table; it’s quite another to simply ignore a prospect of this magnitude.

There is no excuse for the mishandling of something this big. North Carolina lawmakers should be ashamed of themselves.

 http://www.rockymounttelegram.com/opinion/our-views/loss-volvo-plant-legislative-failure-2858409

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April 26, 2015 at 10:05 am
bruce stanley says:

Could someone with NC Spin comment on the "single sales" formula floating in the legislature as an incentive to attract large scale employers, as opposed to special taxpayer funds spent subjectively and wastefully ( i.e. Dell Computer in Winston-Salem)?

April 26, 2015 at 2:11 pm
Rusty Shackleford says:

By allowing businesses to apportion their taxable income to NC based solely on NC Sales over Everywhere Sales, they may average about 2-2.5% of their income being sourced and taxable to NC.

Currently NC uses a four factor apportionment formula that weights property and payroll in NC in calculating its NC taxable income. As a result, a company with a larger physical presence in NC (more property and jobs located in the state) is taxed more than a company with its property and jobs located elsewhere. By apportioning income based on NC sales only, businesses are not effectively "punished" for having more property and payroll located within the state.

More and more states are transitioning to a sales factor only methodology, and NC also needs to focus on market-based sourcing of income alongside a single sales formula to truly effect the lowering of the rate and broadening of the base that the legislature seeks.

Unfortunately a single sales formula will not prove to be a competitive advantage in attracting new investment in the state for long, as sooner or later most states will be transitioning to the single sales formula.

April 26, 2015 at 7:28 pm
Norm Kelly says:

Incentives have not proven advantageous to the point that they should be touted with such extreme enthusiasm. Incentives just tend to grow when states get into a contest of who can offer the most. Which leaves the winning state often the losing state.

Isn't it possible for pols to find another more productive way of enticing businesses to move here rather than throwing tax payer money at them? Wasn't there recently a case where a company chose to locate in NC even though they were offered more bribes from another state? If so, then this is further proof that incentives are NOT the answer. Pols are supposed to worry about managing the state, protecting citizens (like passing a religious freedom law to protect even Christian citizens!), and not play games with taxpayer dollars by trying to be investment bankers. Pols have enough problems doing the job they are SUPPOSED to be doing, and they s!U!c!k! at being wise investors! And that is putting the situation extremely mildly! I try to be kind to pols whenever possible. Simply saying they are bad at investment banking is too polite. Saying it the way I did borders on polite. My true thoughts on their ability to properly 'invest' my money would be edited from this post!

And from now on, can we please call 'incentives' by their proper name? Instead of trying to snow tax payers by referring to this outrageous and useless expenditure in such kind words, please let's start calling this money what it is. It is a BRIBE plain and simple. The area that offers the best bribe wins. This is legalized bribery. Which, when done by anyone besides the state, is ILLEGAL. And it's illegal for a reason. Am I allowed to bribe a judge when I receive a speeding ticket? Could I instead bribe the police officer in an attempt to NOT write the ticket in the first place? Would that it were so! Of course this is illegal. But when the state bribes a company, for some reason it's not just considered legal, but it's encouraged. And too many people want the bribes to grow and grow and grow until every company that wants to move is given enough money to convince them that this is the best place to move to because suddenly 100% of their income becomes tax-free profit! Would that satisfy the incentives proponents? I hardly doubt it. Of course, they'll also claim they don't want it to go THIS far! Far enough, but not too far. But who defines 'too far'? Kinda like when socialist pols tell us the 'rich' should 'give their fair share' when talking taxes. They NEVER define what 'fair share' is, but we haven't reached it yet.