Study: Nissan’s Mississippi Subsidies Top $1.3 billion

May 17, 2013

Good Jobs First has just published a report (commissioned by the UAW) showing that the subsidies provided to Nissan by state and local governments in Mississippi amount to more than $1.3 billion–far more than has been previously reported.

The report can be found on our website: A Good Deal for Mississippi?

Here’s an excerpt:

Over the past decade Nissan has created thousands of manufacturing jobs in Mississippi. While the Japanese automaker has spent considerable amounts of its own money, it has also received huge amounts of financial assistance from taxpayers at the local and state levels.

In this report we document the many varieties of economic development subsidies the company has been offered, among them corporate income tax credits, rebates of withholding taxes, site preparation and infrastructure grants, training grants, and property tax abatements. In all, the value of the state and local subsidies offered to the company in Mississippi is some $1.3 billion, considerably more than has been reported.

The Advantage Jobs payments offered to Nissan in Mississippi are part of a controversial category of subsidies in which an employer gets a rebate of a portion of the state withholding taxes deducted from the paychecks of workers. In an April 2012 Good Jobs First report entitled Paying Taxes to the Boss , we found that the 25-year, $160 million Advantage Jobs deal granted to Nissan was the largest withholding tax subsidy ever awarded.

Aside from the total amounts, the Nissan subsidies raise other issues. Mississippi legislators approved subsidies based on an overly optimistic cost-benefit analysis commissioned by the state’s development officials. Our report does not provide a full-blown alternative analysis, but it is clear to us that legislators were not given the complete picture on how much would end up going to Nissan.

Although they approved a package valued at $295 million, the real cost of the tax subsidies included in the deal made it worth hundreds of millions more. According to publicly available sources, the number of jobs created at the Nissan plant in Madison County has hovered around 4,500. With Nissan eligible for an estimated at $1.3 billion in assistance over the term of the subsidy programs, Mississippi taxpayers may end up paying around $290,000 per job.

Unfortunately, many of those jobs are not regular Nissan payroll positions. The figures from the state auditor show that around 20 percent are temps. In 2012, temporary employees started work at only about $12 an hour. Taxpayers have paid premium amounts for jobs that in many cases are far from premium. This, along with the fiscal difficulties we document in the community where the plant is located, suggests that the Nissan investments in Mississippi have provided a lot less net economic benefit than the company and public officials have claimed.