Daimler in Alabama: the financials

A question from Askville:

what tax incentives did Daimler Benz get from AL

A very complicated package…

Alabama committed to paying Daimler a one-time $42 million subsidy toward constructing the plant.  The state allowed Daimler to pay no corporate income tax, as long as the entire tax break goes toward debt service on the Alabama facility.  Alabama also allowed Daimler to use some of the income tax money it withheld from employees (up to 5% of wages and salaries) for debt service.  Finally, the state committed to purchasing 2,500 locally made SUVs over a period of 10 years…  (The last commitment, however, was eventually renegotiated down to nothing.)

Source: Edwin I. Gardner Jr, Robert S. Montjoy, Douglas J. Watson (2001), “MOVING INTO GLOBAL COMPETITION: A Case Study of Alabama’s Recruitment of Mercedes-Benz,” Review of Policy Research 18 (3), 80–93.

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