Utah Stories

Who Does Utah Love? Big Business Gets Big Breaks

Utah offers tax incentives to lure big business to the state, but what about local businesses?


DSC_0249Utah government is all about the business of business–keeping red tape to a minimum so that companies can keep making green. It’s also why the Utah Governor’s Office actively lures major out-of-state companies to expand into the state. The Governor’s Office of Economic Development, or GOED, offers tax credits to companies that relocate or expand here, but only after the company starts generating real local jobs. Since 2008, GOED has doled out hundreds of millions of incentives to companies, estimating that over the next two decades these companies will have brought 40,000 new jobs to the state. So far, 14,000 of those jobs have already been created according to GOED spokesman Michael Sullivan.

But the carrots dangled by GOED aren’t for just any old job creator. Critics point out the incentives aren’t offered to small, local mom-and-pop entrepreneurs that may instead be displaced from the market by the presence of these out-of-state behemoth businesses.

Sullivan, however, says that GOED’s incentives are fair to the communities that are asked to welcome new or expanded businesses. For one thing, incentives are not offered to retail operations, and incentives go only to companies that can bring in at least 50 new jobs. Also, a local community must approve the relocation or expansion of a business.

“The state never pushes a company down the throat of a community that doesn’t want it,” Sullivan says. He also points out that GOED doesn’t exclude all local businesses, noting that since 2008, 63 percent of tax credits have gone to businesses that had existing operations in the state.

He also points out that the Governor’s office works hard to help out small operations, not with tax breaks, but with a partnership with the federal government to fund 14 Small Business Development Centers spread across the state–largely in rural counties. These centers offer marketing and financing advice to small companies. The governor’s office also helps these small companies bid on local, state and federal contracts. In fiscal year 2015 alone, these companies, many of them with fewer than 50 employees, were able to nab $390 million in government contract work.

For critics such as Connor Boyack of the libertarian minded Libertas Institute, however, it’s impossible to ignore the advantage tax breaks lend to a big corporation as opposed to small companies.

“Providing tax breaks to recruit out-of-state businesses is a slap in the face to local companies, and imposes on them and their employees a disproportionate tax burden and competitive disadvantage,” Boyack says. “Utah is constitutionally required to have a free market, but it seems the governor’s office hasn’t gotten the memo.”

For Sullivan, however, it comes down to simple math.

“What’s the more logical [approach]?” Sullivan asks. “Give a thousand incentives to companies to add one job each, or give one incentive to a company to add 1,000 jobs?”

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