Our central planners in Raleigh are at it again. This time, a subsidiary of German investment banking giant Deutsche Bank will receive a substantial tax break for opening a technology development center in Wake Co. (I thought big investment banks were evil?)
Gov. Bev Perdue today announced that Deutsche Bank AG will open a technology development center in Wake County. Operating as DB Global Technology Inc., a newly formed subsidiary, the company plans to invest $6.7 million and create 319 jobs during the next five years.
The new jobs at DB Global Technology will pay an overall average wage of $88,213, not including benefits, which is significantly higher than the Wake County average of $43,160.
If the company creates the jobs, makes the investment and pays the wages called for under the agreement and sustains them for 11 years, the JDIG could yield as much as $9.4 million in maximum benefits for DB Global Technology.
So in a state with 11% unemployment and a new sales tax now a cent higher, taxpayers will be forced to subsidize six-figure jobs (when you factor in benefits). Just wait until they get to pay that NC income tax “surcharge”!
Some of you may argue that the JDIG awards will only go to DB if they live up to the promised number of new jobs and wages; therefore its not really a “subsidy” – its just a decrease in the taxes collected from revenue that wouldn’t otherwise have existed. In the end, its still a net positive, the argument will go.
Nonsense. State leaders got played like a fiddle, once again. A global investment banking giant really needs a tax break? Please. What it really amounts to is a $9.4 million press release for the Governor’s office: “Look at how our Governor is creating jobs!” The lower level of taxes collected as a result of this tax break will have to be shouldered by a greater burden by everyone else. What happened to state leaders wanting to “modernize” NC’s tax code by broadening the base? Tax breaks like these serve to narrow the tax base. As long as government spending continues to rise, the heightened demand for tax revenue will need to be met by a smaller group of businesses (i.e. those not receiving the politically-motivated tax breaks).
Furthermore, no new jobs are being created. The jobs being “created” by this bribery….er I mean incentive, come only at the expense of jobs and investment that would have occured absent the governemnt’s meddling. The “new” Global Technology positions will just be filled by researchers who are bid away from their current jobs. Furthermore, the steel, concrete, labor and countless other resources that will now be devoted to DB Global Technology will not be available for other investments. Other investments that would have been created by entrepreneurs in response to anticipated consumer needs, not in response to government bribes.
Lastly, at the local level, what sense does it make for local governments to chip in to this bribery scheme? I thought that growing areas like Cary in Wake Co. can’t afford more people? We are told that more people cost the government more money – so why does the government then spend more money to bring in more people?
Corporate welfare scams like this amount to bribery. And not only do they make no economic sense, they are also well outside the proper role of government. After all, what business is it of the government’s where an investment bank decides to open a new technology center? In a free society – none.