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View Diary: The Bain Way: Take millions in job creation tax subsidies, then turn around and lay off hundreds (33 comments)

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  •  Tax Subsidies (2+ / 0-)
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    caul, Spoc42

    Here in Indianapolis, the City was wondering if all those companies who promised jobs in exchange for property tax rebates and abatements had actually kept their promises. Much to no one's surprise they found they hadn't.

    From a freind: "Many comaponies get huge checks from the city when they get into these deals. When the city finds out that they haven't kept the promises they want all of that money back + the abatements + the penalties.

    For smaller to mid-size companies, this is akin to a "credit Event" in that the companies can't borrow or pay their way out. They are forced to close or they are acquired. It's a rock and a hard place for govt officials faced with making budgets and keeping companies alive. To the businesses competitors who did pay their taxes and didn't make bullshit promises, the closure or the crippling of the companies who did comes as a tremendous relief as new business is won and new people are hired.

    Bottom line: Don't make any  promises about jobs if one isn't certain they can't keep them to get money today that will be 10x harder to pay back tomorrow. Unfortunately Bain did much of their work in times that were masked by debt stimulated GDP growth so they had no backlash. Plus if the companies go into bankruptcy there isn't much they can do unless it's sales tax or payroll tax.

    Bain wouldn't get away with it today. Cities looked the other way when the bills were getting paid. Not anymore.

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