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Not necessarily. Other communities have showered tax breaks on GM and its partners, assuming they would create or at least retain jobs. They were wrong. Volvo-GM closed a jointly owned plant (GM was the minority partner) in Orrville, Ohio, in 1996--just seven years after the county cut property and inventory taxes in half. Some 400 jobs were lost. The two automakers moved operations to Pulaski County, Va., where millions of dollars more in economic incentives awaited.
In 1984 and 1988, Ypsilanti Township, Mich., granted 12-year tax abatements on $250 million worth of new equipment and machinery that GM installed in its Willow Run assembly plant. On its application for the second tax abatement, GM said no new jobs would be created but 4,900 existing jobs "will be retained as a result of the project." A GM executive reaffirmed the company's commitment at a township board meeting.
But in February 1992, GM announced it intended to close Willow Run and move production to Arlington, Texas, where it got a better deal. The township countered with a lawsuit, charging that the tax abatements created a binding obligation. A local judge agreed, accusing GM of "having lulled" the people of Ypsilanti and then trying to skip town. The state court of appeals reversed the decision and concluded that "hyperbole and puffery" in seeking tax breaks "does not necessarily create a promise."
In interviews with TIME, GM executives say they merely do what everyone else does. Moreover, they say, local and state governments often come calling on them. As a GM official explained, when Saturn was conceived, it was a clean sheet, a new type of plant representing a huge investment. Once it became publicly known what GM was planning, he said, "we received proposals from every state in the union except Hawaii and Alaska. We had file cabinets full of material from every state...Every one had to be responded to. It took on a life of its own."
Yet there had to be states that knew GM could not build there just for logistical reasons, he said. Nevertheless, government officials submitted formal proposals so they could tell their constituents they had at least tried. "[A politician] always wants to be perceived as someone who tried to bring home the bacon, even if the bacon doesn't arrive."
And that is where the real blame for corporate welfare rests.
As Ohio state senator Charles Horn, a persistent critic of tax abatements, put it when commenting on concessions granted GM, "We know companies are manipulative, but it's the nature of business to go after every dollar that's legally available. Don't place the blame on the company; place the blame on government. This is government's folly."
--With reporting by Laura Karmatz and Aisha Labi, and research by Joan Levinstein
Next Week: Life with America's Biggest Sugar Daddy