Are tax incentives costs?
Facebook will follow in the footsteps of Google and Apple and build a $450 million data center in Western North Carolina to store the growing amounts of digital information it collects.
Like those other technology behemoths, the social-networking site was lured to the state by the offer of millions in incentives for a project that will produce few jobs. Facebook's facility is expected to have 42 permanent jobs when it opens in about 18 months.
Facebook announced Thursday that it plans build the data center at a defunct boat manufacturing site in Rutherford County, about 65 miles west of Charlotte. The company could receive $11.4 million in incentives from the county if it meets investment goals.
The $11.4 million in incentives are mostly tax reductions. A common calculation is to divide the value of incentives by the number of jobs created to get the cost per job. In this case the cost per job is $271,428. The time dimension of incentives is not clear from the article (is this a one-shot deal or will it take several years of tax breaks to accumulate $11.4 million [it is the latter, but I don't know how many years without more digging]). But the jobs are supposed to be permanent:
The 42 permanent jobs Facebook expects to create must pay more than $13.45 an hour, the Rutherford County average.Those jobs will be a mix of Facebook employees and contractors, including some local hires, said Tom Furlong, Facebook's director of site operations. The jobs include everything from janitors to technical workers who will maintain the data center's sophisticated equipment.
Getting back to the question at the top of this post, are tax incentives costs? It depends on standing. Typically, the tax payment is simply a transfer. My state income tax payment goes to someone else in the state. But in this case the reduced taxes are enjoyed by Facebook folks out-of-state. If out-of-state folks don't have standing then the incentives are costs.
Since the state is granting the tax breaks I'm inclined to disenfranchise the out-of-state Facebook folks.
Those 42 jobs seem expensive to me.
