Tax breaks don't buy much [Editorial]

The recent announcement of the elimination of 191 jobs at the Saks retail distribution center in Aberdeen – which once employed about 600 people and went through an earlier round of cuts last year – is a reminder to some of us that the distribution center's location was chosen in part because of tax breaks offered to the corporate ownership.

Saks closed a distribution center in New York and relocated to Aberdeen and one of the things that made the deal a bit sweeter for the corporation was $8.1 million in tax breaks offered by Harford County and the state.


It was hardly a unique deal, and the result over the long haul isn't unique. Going back many years, Havre de Grace got in the habit of offering tax breaks to lure corporate tenants to the Chesapeake Industrial Park, only to see, often as not, the departure of those tenants once the tax breaks ran out.

Then came Frito-Lay, which opened a snack plant in Aberdeen in the early 1990s, bringing with it several hundred jobs. The price was steep, as it involved a package of city, county and state tax breaks that beat out offers from other locations seeking the economic activity.

Still, elected officials from the governor on down claimed credit for luring a major employer with economic heft to the community. Turns out, Frito-Lay also had political heft and had no qualms about throwing it around.

The Saks situation is substantially different, at least from a corporate perspective. Saks has a new corporate owner and, as is the corporate way, is seeking to consolidate its distribution operations to save money.

From a local perspective, though, the difference is that local taxpayers have subsidized the profitability of two massive corporations, only to be abandoned by those corporations when greener (as in the color of money) pastures are seen elsewhere.

Going back three or four decades, local governments were able to rely on large corporate property owners to pay taxes that would reduce the tax burden on homeowners. Some corporations, however, seem to have had no trouble demanding tax breaks and offering tax breaks became something of an economic development standard practice employed by state and local governments.

It was fair to neither residential taxpayers nor to other businesses that didn't need to be offered tax breaks.

Given the local experience with giving tax breaks to large corporations only to see the resulting economic development evaporate after a few short years, it's time for Harford County, Maryland – and every other government entity in the country, for that matter – to reconsider the wisdom of offering such deals.