7 corporate handout failures, as explained by Lucille Bluth  


By Bre Payton | Watchdog.org

Politicians like to throw money at big corporations through what are called “targeted incentives.”

Politicians like to make it rain for large companies in their states. Lucille Bluth explains 7 times when those deals failed so bad.

The goal of these incentives are to keep jobs within the state, but so often they just fail.

Here’s 7 of our favorites from an earlier Watchdog.org story and a new study from George Mason University’s Mercatus Center.

1. State lawmakers like to give incentives to Walmart in the name of new jobs, but those come with a steep price tag.

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Walmart has received 260 special state benefits totaling over $1.2 billion as of 2013.

The kicker: “For every 100 new Walmart jobs, an average of 50 existing jobs disappear as other retailers are crowded out.”

2. But, often times, states end up overpaying for new jobs.

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Like that time Louisiana gave Cheniere Energy benefits worth $1.7 billion. In return, “the company was supposed to hire 148 new people and keep 77 existing jobs.”

The kicker: These jobs cost $7.5 million apiece.

3. Or like when North Carolina gave Apple state tax breaks worth $370 million for setting up in their state.

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The kicker: Only 50 new jobs were created, and North Carolina ended up paying $7.4 million per job.

4. Unfortunately, North Carolina makes our list twice. The state “paid FedEx $77,000 for each job it created in a new hub.”

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5. And South Carolina is no exception, as this state gave a BMW auto plant $68,0000 per year for each job it created.

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6. Companies end up sometimes getting other freebies too, like electricity.

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Alcoa, an aluminum company, got free electricity from the state of New York for over 30 years. In exchange, the company would promise not to fire more than 165 workers, and make a $600 million investment.

The cost of the deal was an estimated $5.6 billion. Yeah, billion with a ‘B’.

The kicker: “Subsequently, New York raised taxes multiple times on its citizens.”

7. Sometimes, companies will get their own state to throw money at them so they won’t leave.

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Like that time the Marriott hotel chain suggested it would leave Maryland for Virginia, and two Virignia counties offered the company $12 and $17 million in subsidies.

The kicker: Maryland policy makers gave Marriott $49–$74 million in subsidies to stay.

Be sure to read the full report for more fails.

Contact Bre Payton at bpayton@watchdog.org or follow her on Twitter @Bre payton.