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Winston-Salem City Council makes expensive overture to unknown company. Again.
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Winston-Salem City Council makes expensive overture to unknown company. Again.


A company that makes vitamins and nutritional supplements is being recruited to come to Whitaker Park. The white rectangular building in the left foreground is the one the company would purchase. Reynolds Boulevard is to the right.

A company that makes vitamins and nutritional supplements may move to Winston-Salem

The devil, it’s been noted time and again, lurks in the details. Especially as it pertains to the baking of public money into private bottom lines.

Per a meeting of the minds on the Winston-Salem City Council, the skeletal outline of yet another incentives deal seems easy enough to follow.

The City that Never Learns most likely will offer a company that makes vitamins and nutritional supplements some $265,000 over five years on top of $1.5 million from the state of North Carolina if the company moves its manufacturing operation and world headquarters to Whitaker Park.

The chase, it seems, is on again as the economy accelerates its recovery from pandemic. The game is the same even if one key detail is once again conveniently being withheld from the taxpayers who ultimately finance these deals: the name of the company.

Would you buy a car without knowing the make and model? How about a home that’s never been inspected?

Well-worn playbook

The news was right there on the front page, the traditional landing spot for such financial balloons.

“We are the front runner,” Laura Lee, senior vice president for economic development for Greater Winston-Salem Inc., told the check-signers, also known as members of the City Council’s Finance Committee.

It’s a familiar story all the way down to the part about keeping citizenry mostly in the dark.

City, state and likely Forsyth County (at a lower number) offer a package of incentives. Economic-development types then sell it by promising a set number of “good” jobs and investments.

In this case, it’d be as many as 260 jobs that pay an average of $46,377, a $ 3 million investment to upgrade space at Whitaker Park and $18.7 million for new machinery. The guess is that some portion of that expenditure reduces future tax bills.

All in all, it’s a pretty neat trick played time and again by smart companies.

Find a potential suitor or two, gin up a bidding war—real or imagined—then lean back to weigh the offers. Word is that the unnamed company is also considering sites in New York, South Carolina and Virginia.

Of course it is.

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The headliner for this sort of deal, of course, is, was and always will be the Dell debacle.

The cut-and-paste condensed version reads this way: In the early aughts (00’s), Dell Inc. wrangled promises for as much as $38 million in local incentives and up to $267 million from the state.

It opened to great fanfare in 2005, and announced four years later that it’d be closing. Turns out that consumers preferred laptops to desktops and making things overseas is less expensive. Who, other than everyone, knew?

Local governments clawed back $26.5 million of its dough, but state money largely vanished.

The only lesson for the City that Never Learns, it would seem, was to lower the amounts but not the approach. Swallow the trunk instead of the entire elephant.

Filling coffers

Picking winners from losers seems as business better left to the free (ish) marketplace rather than governments.

Through the years, a handful of purists have pushed the idea but have failed to gain traction. Bob Orr, an old-school conservative and former chief justice of the N.C. Supreme Court, wrote in 1996 the dissenting opinion when the state high court paved the way for incentives by ruling that putting public money into private business serves a public purpose.

Even if we’re not told who that private business might be until the check is endorsed.

“It’s frustrating that we keep playing the same game,” Orr said in 2009 after the Dell implosion. “Shouldn’t we be trying to assist small businesses in an across-the-board way instead of dumping money into companies that literally have no loyalty to North Carolina?”

Good question. Here’s another: Why are elected officials at all levels determined to give public money into private companies?

The answer is, “Everybody does it.”

And one more: In the name of job creation, the corporate tax rate was lowered in 2017 to 21 percent. Come to find out, though, a healthy number of American companies pay nothing in federal income taxes.

As many as 60 household names identified by the Institute on Taxation and Economic Policy benefit bigly. More than two dozen, including FedEd, Duke Energy and Nike, paid no federal income tax for the last three years on combined income of $77 billion—plus tax rebates, some of which no doubt came in the form of incentives.

There’s no telling what the tax bills are for smaller private companies; there are no disclosure requirements. But it’s safe to say that smart companies are using the same laws and tactics as the big fellas.

It’s not the companies’ fault. If a Brinks truck spewed cash on U.S. 52, you’d stop, too. And I’ve yet to hear of anyone returning $1,400 in stimulus.

The $265,000—a relative spit in the ocean—that Council is considering for an unnamed company is only the latest example of corporations lining up for the dole.



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