Doing The Math On The Acciona Corporate Welfare

Yesterday in my post Iowa Taxpayers Supporting Corporate Welfare For Foreign Companies I mentioned how some Spanish company (Acciona) is going to get up to $5,150,000 in corporate welfare thanks to the State of Iowa taxpayers in order to create up to 110 jobs that pay an average of $15.14 an hour. In other words, Iowa taxpayers will be spending almost $47,000 for each of the 110 jobs that pay an average of $31,500 a year if Acciona get all the taxpayer-financed corporate welfare they seek.

I asked you readers to do the math on the State of Iowa recouping their initial investment and got this from a longtime reader:

Iowa's average state and local tax burden is approximately 10.4% of income. Of course, I would guess this would be somewhat less for incomes hovering around $31,000, but let us use the 10% as a ball park.

Allegedly, the company will pay approximately $3,465,000 in annual wages. 10% of that is $346,500 in state and local income taxes, or $3,150 per year, per employee. Therefore it will take 15 years for the state to recoup its subsidy of $47,000 per employee.

That is...If the company a) stays in business b) pays what it says it is going to pay and c) doesn't get enticed to another state or country to assemble the wind turbines by the next sweetheart "incentive" deal they are offered.

Again, the 15 years [is] only [if] these employees do get socked locally for the whole 10%. If they have kids or other deductions/exemptions/credits it could take 30 years.

Another thing we don't know is what sort of sweetheart deal Acciona is getting on the property taxes for taking over an old factory and adding 95,000 square feet. I'd guess that it's unlikely Acciona will be paying the full property tax bill that other area business owners do, but that hasn't been revealed.

And I like Roth & Company's Tax Update Blog's separate take on things:

Grow the Iowa economy by subsidizing Spain?

That's about right.

Circular firing squad, commence firing!