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by psychlops 858 days ago
How much does Toyota pay in taxes in Kentucky or are we subsidizing the factory?
5 comments

I don't think there is such thing as manufacturing investment without subsidization any more.

And it most often results in the Winner's Curse: the entity providing the greatest subsidies win's the "investment", but they give up so much in the process that the economic benefits are wiped out.

See: Tesla in Buffalo, VW in Ontario, FoxConn in Wisconsin.

I'm not sure if I agree, tbh. You've certainly brought up some good cases of failures, but what about:

Tesla in Sparks NV, BMW in Greer SC, or Mercedes in Alabama and SC? It seems like those have more than paid for themselves by now. In at least one of those cases, they've had huge regional impacts.

>Tesla in Sparks NV

Ironically, you go to the website and there's a fake image of the factory, based on previous promises.

I can't speak to the others, but I'm sure there's some positive outliers!

Why assume they are outliers? It seems like there are more successes than failures, just that the failures get attention.
>Why assume they are outliers?

Because when the government hands tax money over to profitable companies to "create jobs", you are inherently distorting the market.

>It seems like there are more successes than failures

Maybe, but I'm skeptical.

Foxconn in Wisconsin is the one people love to mention.

AFAIK - they got $3B in FUTURE benefits - of which none came to fruition.

Foxconn delivered nothing and also got almost nothing (~1% of that $3B).

Yeah - it was a dumb political stunt - and it unfortunately worked for the time. But it wasn't the massive financial disaster people think it was.

Overall, yes. But I suspect there are winners if we could follow the money trail.
It's true globally too. China heavily subsidizes their industrial base as do many other countries.

When everyone else is subsidizing you have to subsidize too or you lose.

You can have tax policy that makes up for unfair subsidies or simply block those countries from your market.
The first is a subsidy by another name. The second has a lot of knock-on effects unless you own the whole supply chain, and nobody does anymore.
"KEDFA approved the $43.5 million tax incentives shortly after the Toyota expansion announcement was made Monday. The dollar figure combines the incentives from the Lexus expansion in 2015 with the latest investment for a total of $190 million in incentives, said Jack Mazurak, communications director at KEDFA.

https://www.kentucky.com/news/business/article143755074.html

I don't know how much they currently pay in taxes, but when Toyota built the plant in the 80's, Kentucky gave $125M in incentives. https://en.wikipedia.org/wiki/Martha_Layne_Collins#Toyota_As...
Let’s be honest. Southern state probably lured them in with a nice package.

Toyota has been moving ops to states with lower cost of living for awhile now. Toyota corp in USA shifted ops from CA to TX a decade back. Many workers hate or regret the move. C-level executives are excited because they pay less in state taxes. Probably even got a nice deal on the land.

Toyota broke ground in San Antonio more than two decades ago, in 2003, not one. Georgetown KY has been around since 1986 and Princeton IN since 1996. Toyota has been investing in “low cost of living” states for a very long time.
How much is the currently empty field where the factory will be built currently contributing to tax revenue?