Max Tax or No Tax: Gubernatorial Races Sound Off on Tax Incentives

If you have followed the gubernatorial campaigns this face, you've likely heard the news: $15 million tax incentive to Symmetry in Michigan, $40 million tax incentive to Adobe in Utah, or you could be in the state of Colorado, the state with second highest corporate tax rate, and contemplating a major overall of corporate tax incentives. Regardless of where candidates sit on the tax incentive spectrum, such incentives are repeatedly a topic of hot debate in the gubernatorial races this fall.

A depressed economy is causing some states to dig even deeper to offer tax incentives that large corporations can't ignore. However, don't be fooled into thinking states are writing big checks as they welcome the new businesses. Most tax incentives have performance requirements associated with them. The $40 million Adobe deal in Utah for example, is payable in reduced tax requirements over 20 years. Adobe is expected to bring 1,000 jobs to the state; each job will be required to offer a salary that is 75% higher than the county average.

One might be led to think that with post-performance incentives, states can't go wrong. Others, think it is prudent to build up smaller and existing businesses already doing business in a state, instead of offering tax breaks to large corporations that need it the least. Those candidates in favor of offering tax incentives to new businesses, argue that in order to remain competitive in a increasingly global economy, such incentives are a necessity.

Sample Test Question: Task 2-B-1
When it comes to building a new logistics facility, tax incentives offered by a local government, are an example of what type of consideration:

A) Labor consideration
B) Transportation availability consideration
C) Governmental and political consideration
D) Environmental consideration