A $17.5 million tax incentive from the state of Tennessee to lure 1,000 jobs to Nashville–$17,500 per job—came at the expense of taxpayers to lure well-paid corporate executives when they already were drawn to the state’s other features like a favorable tax structure, experts say.
The Tennessee Department of Economic & Community Development announced in May that AllianceBernstein Holding LP would its corporate headquarters and about 1,050 jobs to Nashville from Manhattan.
‘On the backs of taxpayers’
When the announcement was made, Mark Cunningham of The Beacon Center of Tennessee called for the state to not offer incentives: “While the Beacon Center welcomes AllianceBernstein to Nashville with open arms, it should not be on the backs of Nashville and Tennessee taxpayers. The company is leaving high-tax New York City and coming to Nashville because of our extremely favorable tax structure that includes no state income tax and the phase-out of the Hall Income Tax on stocks and bonds. Their decision to already relocate here before any incentives are awarded proves that we can attract businesses with our economic climate, tax structure, and fiscal responsibility, and that we do not need to give them the tax dollars of hard-working Tennesseans on top of that.”
Cunningham also pointed out that Nashville was having trouble balancing its budget, and that was before the city may have offered handouts to a newcomer on the backs of existing businesses.
Bonuses from $4 million to $14 million
AllianceBernstein, which will move in 2020, plans to award bonuses of between $4 million to $14 million to certain executives if they make Nashville their primary residence, Tom Humphrey writes for The Tennessee Journal’s Humphrey on the Hill. Company officials have said the average salary of those jobs will range between $150,000 to $200,000, with bonuses and other compensation pushing that higher.
Humphrey writes that other incentives for the company may include: an undisclosed deal with the Tennessee Valley Authority; possibly other state deals; and possibly up to $3.7 million from Nashville.
But, writes Ron Shultis for The Beacon Center, the $17.5 million tax incentive was not necessary.
When the announcement about the move was made, “As The Tennessean reported, at that time, city and state leaders were still in discussions about a potential incentive package. AllianceBernstein had already decided Nashville was the best place to do business without any incentives saying, ‘Moving our corporate headquarters here allows us to offer advantages to our employees that we simply couldn’t in the New York metro area […] Nashville emerged as the clear winner by every metric we analyzed: housing, education, cultural amenities, weather, cost of living, business friendliness, the ability to source the country’s top talent, diversity and inclusion and more’ said president and CEO Seth Bernstein at the press conference announcement.”
Giving away the farm
Charlotte, North Carolina was the runner-up for AllianceBernstein. Shultis cites The Charlotte Observer, which said that state was ready to offer nearly $30 million in incentives.
Shultis offers this advice for state and local leaders: “turn their focus to what made Nashville more enticing in the first place: things like low taxes, low government regulation, improving schools, culture and good ol’ fashioned southern hospitality. AllianceBernstein serves as an example that it’s not about giving away the farm, but how attractive the farm is.”
