Tax incentives: Not always the answer for Alabama’s economic struggles

  Last month, the state rejoiced with news that Alabama would be the home of a new Toyota-Mazda plant. The plant is expected to bring over 4,000 jobs and billions of dollars in net revenue to the state. With the execution of this deal, known as Project New World, state and local governments will give the two companies around $900 million in tax incentives.

  A tool used by state and local governments, tax incentives attempt to lure large businesses with the hope that the revenue brought in from that corporation will offset the incentive costs. Often, incentives leverage the taxes paid by small businesses and use them to bring a large, untouchable competitor into the state. Although small, loyal businesses pay the high tax rate year after year, tax incentives comprised of that money can hurt or destroy their business. While there are no small businesses competing with Toyota and Mazda, an increased reliance on tax incentives to bring in major consumable goods retailers can hurt local, small businesses that spend years paying into the system.