Ever since Amazon’s highly publicized HQ2 search and other prominent, controversial deals like Foxconn’s $3 billion incentive package from Wisconsin, business incentives have become a heated point of debate across the country.
How has the incentive landscape changed since these deals? And can economic incentives still benefit technology companies looking to expand in other cities? Here’s what you need to know about business incentives today and what you can do to secure them for your company.
City and state governments have provided tax incentives and grants to companies since as early as 1791, and they can be a powerful tool to encourage companies to invest in communities. The way these programs generally work is the government grants cash or tax breaks to businesses in exchange for creating new jobs or other types of investments.
Most projects don’t come close to the size of the Amazon and Foxconn mega deals, and despite their attention and controversy in the media over the past few years, incentive deals are still regularly supported by governments.
While incentives aren’t the primary reason for companies to expand in a new location, business leaders shouldn’t overlook their potential financial impact.
Companies can procure incentives with the expansion, relocation, or retention of fewer than a couple of hundred employees. Governments will support companies in different ways, but these are the three most common incentive categories:
Due to the recent controversial deals like Amazon and Foxconn and the country’s 10-year economic expansion, city and state governments have now become more selective in how they grant incentives and benefits to companies. Many policy makers share the sentiment expressed by Lieutenant Governor of Utah, Spencer Cox, who has called for a comprehensive overhaul of incentive programs in his home state.
While most local, regional, and state governments haven’t pulled away from supporting businesses, they have increased their criteria and reporting requirements.
Many incentive programs are now gearing towards a certain company profile or industry that aligns with the community’s strategic goals. Governments might request more financial information or give priority to companies hiring a certain demographic, such as veterans or students. The overall process is more competitive, and requires companies to be more transparent and assure a strong return on investment for government funds.
While governments still provide incentives, the process is often confusing. Each incentive program has its own criteria, application, approval process, and procedure—some incentive decisions can take as long as 4 months while others take only 4 weeks—which means companies often don’t allow enough time, losing out on significant savings.
Here are six things you can do to help your company secure an incentive package:
While incentives aren’t the primary reason for companies to expand in a new location, business leaders shouldn’t overlook their potential financial impacts.
For companies planning to hire at least 75 new employees, evaluating multiple office locations, and interested in procuring savings through economic incentives, it’s worthwhile to engage an outside consultant to help navigate the complicated process. Incentive experts can help you evaluate different programs and maximize your award based on your company and project scope.
Interested in learning how we’ve saved millions of dollars for our clients through incentive packages? Send me a note at email@example.com.