National Chains Don’t Need Tax Incentives to Come to Town

National Chains Don’t Need Tax Incentives to Come to Town

Charlotte, North Carolina, may have just become a case study for local economies everywhere. Earlier this year, Walmart announced that it had begun hiring associates for a new facility in Charlotte. As it turns out, the retail giant chose Charlotte without receiving any of the taxpayer-funded financial incentives that have become so synonymous with big business.

According to The Charlotte Observer, Walmart requested financial support two years ago for a project that promised to create 1,000 new jobs and invest $24 million into the city. Mecklenburg County officials, though, voted not to approve any financial incentives, reportedly because of concerns that the retailer didn’t pay its employees enough. Many of the positions created by Walmart’s proposed project would have left local workers earning less than 80 percent of the median area income, qualifying them for subsidized housing.

Despite reporting incentive packages in other cities, Walmart chose to open its facility in Charlotte anyway. The job creation has begun, but Walmart’s decision to build in Charlotte has left many residents wondering if tax incentive programs – like the one Walmart had sought – are worth it.

Taxpayer-funded incentive programs are often developed to spur job creation and economic activity. The idea seems plausible, but in practice, things tend to go awry. National chains and big-box retailers usually stand to benefit from the tax incentives, but local workers who need to earn a living wage don’t always see the payouts they were expecting. Particularly if a company was going to come to the city anyway, as in Walmart’s case, financial incentives seem to send the wrong message to the business community and local workers.

The controversy surrounding such incentive programs is nothing new. Back in 2008, The New York Times reported that New York City’s incentive program allowed national chains to displace independent businesses. The Times pointed in particular to Toys R Us, which was receiving $2.4 million from the city to occupy some of Manhattan’s most sought-after real estate in Times Square.

In Charlotte, the criteria for earning financial incentives were reportedly loosened after the country’s recent recession. As a result, big businesses brought low-paying jobs to town – and they were even being paid to do so. If big businesses will come without being paid, perhaps there’s a better way to use the money.

As Preservation Month begins, one idea that comes to mind is for the money to go toward preserving historic and culturally valuable independent businesses. Unlike national chains, these independent businesses have made themselves a part of the community for generations. They consistently hire local workers, and oftentimes, their wages and benefits are more in line with the community’s needs. Not to mention, they return a higher portion of their profits to the local economy than national chains.

Independent businesses make a much better return on investment for taxpayer funds than national chains. As the example of Walmart in Charlotte shows, national chains will build where they want, but it’s up to local communities and officials to support the independent businesses that truly strengthen their local economies.

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