Yesterday, I linked to a Nashville Business Journal story that looked at the news organization’s unsuccessful attempts to determine how much in tax credits — or even a range of amounts — that AllianceBernstein is expected to get for moving its headquarters to Nashville.
The estimated credits — which ones they would be eligible for and roughly how much they expected to get in credits — were redacted in a memorandum of understanding voted on by Metro Nashville’s industrial development board. Read the full story here and my blog post here lamenting votes by a governing body on redacted documents.
Amid all the extreme secrecy on how much Tennesseans are paying for the new jobs is a tiny bit of light on the cost of economic development tax credits, which is linked to and mentioned in the Nashville Business Journal story.
For the first year in December, the state was required to provide lawmakers (and the public) the annual number of businesses who received economic development tax credits and the annual total value of those credits.
It covers returns filed in the state’s fiscal year of July 1, 2016 through June 30, 2017.
I welcome anyone to check my math. But if you add the carryover credits to the current year credits, the total amount of credits claimed was $1.14 billion, which worked out to an average of $479,198 per business claiming the credit. (2,380 businesses)
The industrial machinery credit amounted to the largest amount claimed. And keep in mind that any business can claim that if they meet the conditions (not just new businesses coming to the state). There are no job-creation requirements associated with this credit.
If you look specifically at the job tax credit, where job creation is required, the total amount of credit claimed for that fiscal year, including carryover credit, was $233,724,362. Which works out to an average of $776,492 per business for the 301 businesses reported as claiming that credit. Obviously we can assume some businesses get more, some get less.
The report says $197,093,929 was “carryover” job tax credits. What that means is if you get the credit, you don’t have to take it in that particular year, you can take it off future tax bills, and that’s what happened here. The businesses qualified in a previous year, but took the credit in this period.
Is it too difficult to guess that some businesses might not have to pay any state taxes some years with credits so large? I honestly don’t know. And guess what, nobody else does either.
Because of the secrecy surrounding these credits, the public and our elected representatives have no idea how large of an incentive we are giving to any particular company who decides to move to the state.