As with so many political arguments in Alabama, the one over whether tax abatements are an appropriate tool for recruiting industry has been oversimplified.
North Alabama’s experience with Carpenter Technology is a reminder that the issue is complex.
On one side, the Alabama Education Association has led the forces who oppose most recruitment incentives. It points out that abatements of property and income tax hurt the Education Trust Fund, potentially damaging the state’s ability to educate its children.
On the other side, most state legislators and business groups point to the economic activity — especially jobs — created when the state successfully recruits an industry.
The problem with both arguments is that they rely upon factors that are usually unknowable to the economic developers involved in recruitment.
Waiving taxes has no impact on school budgets if the industry would not have located here without the incentives. All companies claim their decision to locate here is dependent on incentives, so we have little ability to know which ones are telling the truth and which are merely trying to maximize profits at taxpayer expense.
In the midst of these factors that we cannot know is one that we can: When a major company comes to a region, it has the potential to transform it.
Carpenter Technology this week announced a major jump in its quarterly net income.
In an earnings call to investors, it outlined the many ways in which it is positioning itself for future growth, especially in the aerospace and energy markets. Demand for its specialized alloys is growing, and it sees its $500 million Limestone County plant as central to meeting that demand.
It is, of course, possible that Carpenter would have located in Tanner even without the incentives. We’ll never know. What we do know is that north Alabama will benefit from Carpenter’s future success.
The company has committed to hiring 250 employees — who will pay property, income and sales taxes, which benefit schools — and Alabama now is on its radar for expansions. Indeed, the company announced a significant expansion within months of signing the recruitment agreement.
State officials should scrutinize recruitment decisions, especially when a company is likely to locate or expand in Alabama regardless of tax abatements.
For major companies such as Carpenter, however, officials must err on the side of recruitment. The benefits — to the schools, to state and local government and to individual Alabamians — are too great to ignore.
Not registered? Click here
|High School Sports||@DecaturPreps|