Tax abatements are a fact of life for communities hoping to attract or maintain businesses. Communities make a trade-off, giving up a portion of tax revenue to help a business expand or purchase new equipment or hire new people. The threat is always present for a business to up and move so officials grant the abatements to keep their communities and residents from further economic decline.
Last week, Owens-Brockway, a glass manufacturer in Lapel, received a $12.2 million tax abatement from the Madison County Council. The company is purchasing that amount in new equipment and will be getting a tax break for the next 10 years. It will pay no taxes on the new equipment during the first year and then a rate that gradually inclines to the full amount by the end of the decade.
Because of the abatement, the county will forgo $851,065 in taxes on the equipment and will collect only $490,332 over the next 10 years. The trade-off will be 216 people remaining on the job, and the abatement will not affect property taxes already paid by the business, just on the new equipment.
The council, being a rational board, had no trouble approving this abatement. Councilman Mike Phipps compared Owens-Brockway’s presence in Lapel to General Motors in Anderson.
Two other council members raised concerns, however. Gary Gustin said he’d like the council to reduce the 10-year term of abatements. And John Bostic, who cast the lone no vote, complained about the company’s minority-hiring practices. The business employs 8 percent minorities.
Bostic has every right to question the wisdom of abatements, but he doesn’t need to play the race card. Owens-Brockway does hire minorities, and to put a quota on their hiring is government overreach in the market. Should Owens-Brockway leave the community, then the 8 percent of minorities on its payroll would lose their jobs, too. A healthy Owens-Brockway has the potential to hire more minorities in the long run.
Gustin makes a far more cogent point by wanting to reconsider the 10-year abatement. In these tough economic times, it’s hard to ask taxing bodies to do without. But it is a trade-off, and keeping businesses operating and employees working should be the goal of local government.
