Ohio wants its money back from General Motors. Back in 2009, the state granted some hefty tax breaks to the auto company. In return, General Motors promised it would keep the Lordstown manufacturing plant open through 2029 plus retain 3,700 jobs through 2040. GM signed on the dotted line of a contract. The company got a whopping $60 million in tax credits from the state.
Flash forward to 2018. The company announced it would close the facility. Ohio Attorney General Dave Yost is not happy. In fact, he wants a refund.
Pay Back Every Last Penny
According to Ohio Attorney General Dave Yost, “General Motors should have to pay back every last penny of the $60 million the company took in state tax credits after breaking its promise to the state and the Mahoning Valley.”
States, counties, and cities often offer tax breaks to companies to either locate or remain in the area. But when companies don’t live up to their end of the bargain, taxpayers pay the price. “Accountability is the key to good business and we’re holding GM accountable for not living up to its end of the contract,” Yost said. “We demand the money that is rightfully owed to Ohio – no more, no less.”
$6.732 Billion Profit
According to Yost, GM is the 12th largest company in the country. It made a $6.732 billion profit on over $137 billion in gross revenues in 2019. At the time of the Lordstown plant closing, GM said its decision to close the assembly facility would save the company $6 billion.
Yost said repayment of the tax credit wouldn’t be much out the company’s pocket. It would amount to just 1% of what GM claimed it saved by closing the plant.
It’s estimated that shutting the plant cost Ohio 8,000 jobs and $8 billion in economic activity. It also hit the local school district hard. Taxes from Lordstown accounted for 10% of its budget.
Promises Meant To Be Kept
Yost said repayment is only fair. “Promises were meant to be kept, it’s what we were taught as children and it’s something adults and companies should honor.”
The attorney general said that this case is important because it will set an example. If GM doesn’t pay a penalty for breaking this deal, what’s to stop them from breaking other promies? “GM will have carte blanche to walk away from its other Ohio tax-incentivized operations. And so will every other business. The State’s agreements to retain and create jobs will be mere fiction, excused by the slightest inconvenience. Ohio may as well simply give the money away.”