The $7 million incentive package Carrier Corp. will receive as part of a deal the company reached with President-elect Trump and Vice President-elect Pence represents a departure from the way tax credits are typically used in Indiana, says The Indianapolis Star.
And it's the kind of agreement Trump slammed during the campaign.
The furnace manufacturer will get $5 million in tax credits over 10 years in exchange for keeping 1,069 jobs at its Indianapolis plant, with an average wage of $30.91 an hour. The company also will get $1 million in training grants and up to $1 million in additional tax credits based on Carrier's planned $16 million factory investment.
The board of the state's economic development agency must approve the deal. As governor, Pence is chairman of the board and appoints the agency's members.
But the deal differs from most other economic development agreements in Indiana, where incentives usually are aimed at luring jobs, not merely retaining them, says the Star. In fact, about 400 workers at Carrier still will lose their jobs under the deal, as will 700 employees at a related company in Indiana, the paper says.
"It’s a potentially dangerous policy where you reward a company that threatens to leave. It’s a dangerous precedent. Why wouldn’t every other company make the exact same pitch?" says Steve Weitzner of Silverlode Consulting, a site-selection firm. "In this case, you’re rewarding a company that is actually cutting a lot of jobs in the state.”
Maintaining a good relationship with the incoming Trump administration likely is a more important factor than the incentives, experts say, especially since Carrier's parent company, United Technologies, gets billions of dollars a year in federal contracts.