Wed May 21, 2014
Fuyao State Tax Incentive Valued At Nearly $10 Million
The state of Ohio Tax Credit Authority has approved part of an incentive package for Fuyao, the Chinese auto-glass company coming to the former GM Moraine plant south of Dayton.
The idea behind Ohio’s Job Creation Tax Credit is to give companies a break on taxes—if they create new jobs. Fuyao plans to bring in more than 800 jobs, which would mean $32.5 million in annual payroll. If the company succeeds, the state will give Fuyao a 75 percent tax discount totaling almost $10 million over 15 years.
Economic development officials say incentives like this are a way to compete with other states.
“JobsOhio started working with Fuyao not quite a year ago, and they could have selected any state, they could have selected any site,” said Kristi Tanner with JobsOhio, the state’s semi-private economic development agency.
But tax credits haven’t always worked to retain jobs. A New York Times analysis found Ohio spent about a tenth of the state budget from 2006 to 2011 on tax credits, grants and other incentives for businesses. GM, which pulled out of Moraine in 2008, had been one of the largest recipients of government tax credits in the state. In 1997, the company received a property tax discount as an incentive to stay in Moraine after claiming it had been looking at sites in other states, but the Dayton Daily News discovered GM actually hadn’t been talking to the other cities it named.
The Times reports the state later dangled $56 million in front of GM to try to convince it to stay in the Dayton area; GM didn’t take the offer, and decamped.
The Fuyao tax credit includes the expectation that the company stick around for at least 18 years, and the amount of the tax credit is dependent on how many jobs are actually created.
The Tax Credit Authority also approved a tax credit for General Electric, which is planning a new facility at an as-yet-undecided site in southwest Ohio. GE plans to create 1,400 full-time equivalent jobs at its new shared services facility, and the 85 percent, 15-year tax credit would amount to a $51 million discount on state taxes.
Lewis Wallace is WYSO's economics reporter. Follow him @lewispants.
The Economy & Business
The Economy & Business