MEMPHIS, Tenn. (localmemphis.com) – Local 24 News political analyst and commentator Otis Sanford shares his point of view on taxpayer incentives for companies.
For better or for worse, taxpayer incentives offered up by state government show no signs of going away. The Volkswagen plant in Chattanooga is set to receive them. So is the new Amazon operations hub in Nashville, which is not even open yet. So, why not Fed Ex in Memphis.
The shipping giant would be exempt from paying more than $21-million in state and local taxes over the next seven years, if a bill moving through the legislature becomes law. The House passed the bill Monday by an overwhelming 94-to-2 vote. And the prospects for passage in the Senate seem equally certain.
The case for such a lucrative exemption is the fact that FedEx is planning a major upgrade to its Memphis facility to the tune of about $1.3 billion.
The tax deal seems only fair since Governor Bill Lee’s proposed 2020 budget calls for infrastructure grants totaling $50 million to Volkswagen and $65 million to Amazon. But the larger point is that while these high dollar incentives are unpopular, they continue to be the price that governments feel they have to pay.
In the case of Fed Ex, local government stands to lose about $5 million in sales tax revenue. But the tradeoffs are more jobs and a boost to the economy through the expansion. Such is the economic life we must live. And that’s my point of view.