Balancing Tax-Breaks and Job Creation with Profit Motives in a PR World

 Tax Break

In difficult economic times, government officials and businesses work together to induce a trickle-down effect revitalizing troubled economies. However, this creates an unequal distribution of wealth when incentives cause businesses to redistribute their real property investments.

Long Island is an expensive place to do business. In such situations, governments often offer tax breaks to reduce business costs. Requiring companies to remain on Long Island and create jobs. But,  tax breaks aren’t always enough to stop companies from leaving. Many have left Long Island despite tempting incentives.

Goya Foods Moves To Jersey

Goya Foods held a ceremony in celebration of the opening new headquarters. This comes in spite of $9.5 million in bond financing from the Nassau County Industrial Development Agency in 1998, and $200,000 in grants and loans from New York State. The state offered these hoping to keep a major Bethpage distribution center. But instead, the employment of fifty-seven workers are in jeopardy.

NBTY Drops Hundreds of Jobs After Promising Progress

In 2012, the Babylon Industrial Development Agency offered to reduce the property tax bill of NBTY Inc.’s Amityville manufacturing operations by 60 percent for 15 years. The condition was for the Ronkonkoma-based food and vitamin supplement developer could make 200 new jobs. They succeeded. In May 2015 NBTY announced the closure of Amityville operations, terminating 214 employees. New York State’s Empire State Development offered a $750,000 grant that was also reneged as a result.

Holding Company Public Relations

Critics Respond to Questionable Company Relocations

However, critics question the value of tax-break incentives in light of companies who move within a state’s borders. The Goya opening ceremony had questionable subtexts, with the one-mile-move benefitting the company, but wasting taxpayer money, while cutting 57 jobs.

Goya Foods began in Manhattan when Don Prudencio Unanue, and his wife immigrated from Spain. They started the business under the premise of helping New York Latinos eat their native food. Goya’s growth was a direct result of maintaining close relations with Hispanic consumers. It supplied a reliable source of Hispanic and Latino customs and tastes in their new American homes. Goya’s advantage was in distributing their food in local bodegas despite continued expansion into supermarket chains.

Can the Government Take a Stand Against Corporate Duplicity?

The American people would like the government to stop companies from moving jobs to better markets. In 2014, the State of Ohio modified 100 tax credit agreements with companies who consistently failed to deliver on their promises. This is an effort to take a tougher stance on the majority of underperforming companies. Some companies’ funding were canceled because of project plans that never succeeded.

This way New York State can take action against companies like those above. It holds true if previously offered grants and loans aren’t already canceled. But government officials can also offer a positive bonus. By extending or increasing tax breaks for creating more jobs than tax break agreements initially stated, helping other companies will work harder.

Taxpayer money should not be spent until the new jobs are available. But there is always the possibility for sudden losses and resulting redundancy eliminations. NBTY may be an example of this. If government officials discover a disproportionate ratio of employees lost to government funding, then they may try to reacquire the funds through court action.

Illinois Governor Rewards Over-Achieving Companies, Retracts Funding from Others

In 2015, Governor Bruce Rauner of Illinois halted a tax break practice that lets dozens of companies garner millions of dollars in tax breaks for creating jobs in one office while terminating jobs at other locations. To do this, he had to make radical changes to a 16-year-old state program, Economic Development for a Growing Economy (EDGE). The program was designed to produce jobs and compete with other states (like New York). But as the 21st century progressed things became complicated. The EDGE program grew into a billion-dollar free-for-all, exploited by a massive series of corporate failures and scarce accountability.

This makes for trials and tribulations in public relations. In doing this, the governor committed his public perception to making the right changes this time around. Such changes are welcomed by citizens where reliable jobs are needed. But if he doesn’t get the plan working, his reputation is at risk, possibly weakening his fight for corporate accountability.

How Can a Company Maintain Its Luster to Receive Benefits from Another State?

If a company is in a court case for exploiting taxpayer dollars, the best option is to cooperate. This way, a company may improve a home state’s faith in their business ethic. A good recommendation from previous State tax breaks helps overwrite troubled pasts. But first on a company’s mind should still be professionalism and quality service. No matter what happens, there is no reason to remain in business if the quality of service suffers. If it hasn’t, then this is all the more reason to work hard to re-earn the people’s – and thus the State government’s – trust.

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