NY Times Flashback: Chrysler Got $232m in 1997
NY TIMES (August 12, 1997) -- The Chrysler Corporation has become the latest company to negotiate extensive tax breaks and other government incentives, winning concessions totaling $232 million (MP: $307 million in 2008 dollars), or about $47,000 for each job retained, for building a Jeep assembly plant in Toledo, Ohio.
Never mind that the new factory will have 600 fewer jobs than the one it replaces, that unemployment rates are at record lows and that Chrysler planned to stay within 15 miles of Toledo -- possibly somewhere in Michigan -- even if it had abandoned its downtown site. Cities, like workers themselves, remain eager to hold onto jobs in this era of downsizing. City and state tax revenues paid by Chrysler and its workers would have plummeted had Chrysler moved out.
This is not the first time Chrysler has gotten an incentive package to have a plant stay put. In 1992, Chrysler replaced an 85-year-old plant in Detroit with a $1 billion sophisticated factory where Jeep Grand Cherokees, the high end of the Jeep line, are built. Back then, the company received a package of financial incentives worth more than $250 million ($378 million in today's dollars).
The Minneapolis Federal Reserve Bank argued that while the competition for jobs among states might shuffle jobs from state to state, it created no new jobs nationally. The bank argues that Congress, which has the authority to regulate interstate commerce, should deter such competition by taxing as income the special deals offered to companies like Chrysler.