Is it a grant or a tax giveaway? Last week, PdA called the heart of the deal that the County is offering ramen manufacturer Maruchan a rebate. The Express-News, in its belated coverage of the indigestion the plant’s minimum-wage jobs are causing elected officials, made a big deal of pointing out that the County isn’t offering a tax abatement, but a grant.
What’s the deal? The County’s proposed negotiating points include an incentive valued at roughly $5.7 million over 10 years. Assuming the proposed package gets final approval, the actual amount will be calculated annually based on the company’s ad-valorem taxes on personal and real property. Maruchan will pay its taxes each year and in turn receive a gift from the county equal to 60 percent of the amount paid. As most anyone who’s bought an appliance in America knows, that’s a rebate. You could even describe it as a "back-end abatement," as one official did.
Of course, Maruchan gets to keep the money, so the County can fairly call it a grant. The name game is important here because if the County offered Maruchan a tax abatement – an upfront discount on the taxes it’s assessed – all of its new and existing jobs would have to provide at least a living wage, which was $10.75/hour when the 2011-12 Tax Abatement Guidelines were published (that number can be updated without notice) – well above the current minimum wage of $7.25/hour.
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