Ohio and Cincinnati have agreed to give General Electric a record subsidy deal which will be mostly composed of its workers’ personal income taxes. About 1400 jobs will be relocated, from undisclosed locations, as GE locates its Global Operations Center to downtown Cincinnati. GE projects another 300 new jobs to accept this $98 million subsidy package; that’s about $326,600 per job.
It’s not just the exorbitant cost per job, but also the source of the subsidy dollars: an estimated $51.6 million will Ohio’s Job Creation Tax Credit (JCTC) program, a subsidy derived from employees’ state personal income taxes. Essentially the state of Ohio will use the employees’ state withholding taxes to credit GE. (For more information see Paying Taxes to the Boss.) This represents the largest JCTC deal Ohio has agreed to since 2003, according to the Ohio Development Services Agency.
Not only will the state sacrifice tens of millions of dollars in tax revenue, but so will Cincinnati. Offered in conjunction with the state JCTC is the City of Cincinnati municipal JCTC estimated at $23.9 million via GE’s local earnings tax. In short, other states and localities are losing tax revenue, while Ohio and Cincinnati forgive it.
Although the GE jobs will have a projected average salary of $79,000, it is unclear how many of the 1,500 existing jobs are coming from other cities in Ohio versus out of state. To the extent the jobs are already in Ohio, the JCTC will cause a revenue loss for the Buckeye State.
At the very least, Good Jobs First recommends truth in taxation: when a worker’s taxes are deducted from her paycheck and do not actually go to the state treasury, the pay stub should clearly state that GE is getting the money. Instead of fixing roads or supporting education, healthcare, or public safety, the money will flow into GE’s books. Those same books stash profits in offshore tax havens like Bermuda and the Bahamas, according to recent findings by Citizens for Tax Justice.