A Question About ThyssenKrupp

From Redneckin:

When talking about the tax breaks for the ThyssenKrupp steel mill to locate in Mobile, we hear that the plant is a $2.9 billion dollar plant and that it’s going to hire 2,700 people (remember that the number of employees doesn’t indicate the number of local’s who will be hired. Sort of like what I’m hearing about the KIA plant), but you don’t hear what the total cost of the incentives which are a 10-year break from utility taxes; a non-education property tax break for 20 years; and a state corporate income tax credit on construction costs of the plant for 30 years, effectively freeing the company from income taxes for those three decades.

So I asked Alabama’s Legislative Fiscal Office the cost. The reply

“The numbers are not available at this time. “

Surely that must mean that the numbers are not available to you and me. The legislature would not offer incentives without knowing how much they were giving away, would they? I mean, if they did that, then we would have no idea whether the plant is going to benefit the state or not. Yeah, it might produce jobs, but without knowing the value of what we just gave the plant, we have no way to know whether the value of the jobs will outweigh the incentives. So, again, the legislature must have known the total cost, right?

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5 Comments on “A Question About ThyssenKrupp”

  1. c.a. Marks Says:

    Wouldn’t surprise me at all. Remember we are the state that hired a football coach for an absurd amount of money and stipulated that he would still get paid all the money even if he broke his contract and left the state of Alabama!

  2. Del Says:

    From the story at al.com, fwiw:

    “According to a Press-Register survey of the numbers, the credit would be worth up to $185 million per year on a $3.7 billion plant, effectively wiping out any corporate income tax bills below those numbers. The new plant would have to make over $2.8 billion a year from a $3.7 billion plant — not including federal deductions or profit allocations, which could push that threshold even higher — before it paid any corporate income taxes.

    “Media reports put ThyssenKrupp’s 2006 profit at slightly under $3.4 billion — meaning the new plant would have to produce 82 percent of ThyssenKrupp’s company-wide profit before paying corporate income taxes to Alabama.”

  3. Tim Says:

    The incentive package was made public Friday afternoon: $811 million. The New Orleans paper reported Louisiana offered $2 billion in incentives, including $1 billion in cash.

  4. Dan Says:

    My guess: Thyssenkrupp was coming to Alabama regardless. I’m happy that jobs are coming, but I really think we need to step back and consider the worth of these incentives. If nothing else, we should be worried that the tax breaks to some companies (without tax breaks to other companies within the same industry) would give an artificial profit margin to that company.

    Maybe we could require all tax breaks apply to the entire industry. Or something… I just think there could be a better way.

    And please don’t come here and tell me I’m an idiot because I don’t want a multi-billion dollar plant coming to Alabama. I’m glad, but I think the way we do business is a little odd.

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