COMMENTARY: The War Against Incentives Rages On

Financial incentives granted to DaimlerChrysler and Dell for major facility expansions are creating quite a stir among opponents of the incentives issue.

The war on incentives kicked into high gear recently, with two high-profile cases — one in Ohio and the other in North Carolina — that involve challenges to the ability of state governments to grant financial incentives in order to attract major business expansions.

Last month, the U.S. 6th Circuit Court of Appeals, based in Cincinnati, let stand an earlier ruling by a three-member panel of its judges that a $280 million incentive package granted to DaimlerChrysler by the state of Ohio was unconstitutional because it unfairly interferes with interstate commerce.

The incentive package in question involves DaimlerChrysler’s decision to build an assembly plant next to its Jeep plant in Toledo. The court ruled — and I’m not making this up — that Ohio’s tax credit was unconstitutional because it offered incentives to a company only if it chose to locate its project in Ohio, but not if that same company chose to locate the project in, say, Massachusetts.

Ohio, which is one of about 40 states that offer various incentives to attract business investment, said that it will appeal the case (Cuno vs. DaimlerChrysler Inc.) to the U.S. Supreme Court.

The other case, which has not yet evolved into a lawsuit, involves Dell Computer’s decision to site a 400,000 square foot manufacturing plant and distribution center in Winston-Salem, N.C.

By: Bill King, Chief Editor

Full Story: http://expansionmanagement.com/smo/newsviewer/default.asp?cmd=articledetail&articleid=16353&st=3