Krafting a Bad Subsidy Package in Columbia

Good news everybody, Boone County is looking to give a tax break to Kraft Heinz so it can modernize! Specifically, it will award Kraft Heinz a 75 percent property tax abatement, which will save the company $4 million in property taxes. But wait, there’s more. Once Kraft Heinz finishes work on the plant, it will end up employing 150 fewer employees.

You read that right. There will be fewer people at this plant when all is said and done. Companies are free to employ as many people as they deem necessary. However, giving out a subsidy to a company so that it can employ fewer residents just doesn’t make sense. Even if the tax abatement led to higher employment at the plant, Boone County would be hard pressed to justify the subsidy since it does not lead to the kind of economic growth that would justify it being awarded.

If Boone County really wants to become a place where it makes sense to locate a business or expand a current one, it should rethink how it taxes property (more on this in another post). There are potential tax improvements that could help not only Kraft Heinz, but all the other businesses in Boone County as well.

Boone County is following the example of many other counties and municipalities by granting subsidies to a local business. That doesn’t mean it’s a good idea. These types of subsidies don’t, in the long run, provide a boost to the local economy. They just make it more likely that the county will hand out more subsidies in the future.