Apparently, the Queen City just doesn’t have enough resources to allow it to compete with neighboring areas for new jobs. This week, three large companies announced their intentions to move to nearby cities in South Carolina. Giti Tire, a Singapore based manufacturer that sells tires through Wal-Mart, will build a 1.8 million square-foot manufacturing and distribution facility, its first in the United States, in Richland, S.C. The new facility is expected to create 1,700 new jobs, as well as invest $560 million, in Chester County, a mere 40 miles south of Charlotte on I-77. According to a June 16 article in the Charlotte Observer, North Carolina officials pursued Giti, but were “hamstrung” by the lack of resources to compete with South Carolina incentives. Coming in second place is becoming a familiar feeling for Mecklenburg County. Last December, it missed on an opportunity to win a Chinese yarn manufacturer, who opted to bring 500 jobs and a new plant to neighboring Lancaster County, S.C.
Charlotte is not just struggling to attract new corporate investors, it can’t seem to hold on to the ones it has. The same day that Giti Tire declared its intentions, two large Charlotte area corporations announced plans to relocate operations to Fort Mill, S.C., less than 20 miles from downtown Charlotte. LPL Financial plans to move more than 1,000 employees from three Southwest Charlotte buildings to a centralized campus in Fort Mill (a ten-minute drive from their current location), and the company projects creating 2,000 more jobs and investing $150 million in the region over the next decade. Lash Group, a healthcare consulting company, also intends to move across the border, bringing 1,200 employees, and hopes to double in size over the next few years, with a total investment of roughly $90 million.
Why are these companies leaving? Some attribute the problem to the lure of incentives from South Carolina. But if cutting taxes for some companies encourages business growth, then eliminating taxes for all companies would do much more to encourage growth. That’s why the real problem is the corporate income tax. As discussed in another blog post this week, states that have no income tax show strong economic growth. NC has lowered the rate, but Charlotte’s lost opportunities underscore how much more needs to be done to make our state’s tax structure competitive.