Let’s recap the political news surrounding American Greetings first.
American Greeting, citing a minor increase in the City of Brooklyn’s personal income tax (which I don’t believe is one the company itself pays except as a payroll withholding for its employees), threatened to move to Illinois, which just enacted a significant hike in its corporate tax rate (which it would pay if it was located there.)
Enter Governor John Kasich, who promptly promises the company millions in state aid. In fact, the combined state and local aid package to the company is so large that it will construct a brand new corporate HQ for the company at no cost to the company. Over the next, 15 years, starting last year, American Greetings is getting roughly $93.5 million in aid.
Even worse, we know that in the Diebold deal that the company could keep every penny in its “free HQ” deal so long as it doesn’t fire more than 20% of its workforce. We don’t know if the American Greetings deal, which was first, got the same term because, frankly, we didn’t think to look for such a ridiculous term before.
American Greetings, fresh off of getting a massive infusion of State and local subsidies, gives its CEO a nearly 19% raise (May, 17, 2011).
Today, the company laid off 30 people as part of its “overall strategic focus of the company.” (Source: ONN)
How much you want to bet that American Greetings can still keep every penny of the roughly $94 million in aid it got despite the fact that it didn’t save all the jobs at the company? How much do you want to bet this isn’t the only downsizing announcement we’ll hear from American Greetings before it’s all said and done.
I guess we’re going to have to start keeping a tally of how many jobs Kasich really has “saved” with these deals. The other real question is did companies get terms like Diebold got because the Administration knew they planned on downsizing even after getting these generous tax incentive packages?
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