Companies Use Corporate Welfare to Pit Tennessee and Mississippi Against One Another

One could argue corporations play the Tennessee and Mississippi state governments against one another to get the best corporate welfare deals possible — at the expense of taxpayers in both states.

Here’s how it works.

Companies wait for Tennessee and Mississippi to pony up their incentives. Company leaders can only accept one of those two deals, of course. Then they set up shop in the state that made the better offer. And sometimes these companies move from Tennessee to Mississippi and vice versa — even if they’re only moving as little as 20 miles away.

This has already happened at least twice in the past two years.

Two years ago, for instance, Memphis officials handed out $1.2 million in corporate welfare to lure a company, International Distributors USA, away from Olive Branch, Miss., right across the Tennessee-Mississippi state line.

At the time, Memphis officials boasted about using public incentives to snag the company away from the Magnolia State, according to The Tennessee Watchdog.

This month, something similar happened, but this time it was Mississippi that offered incentives to lure another company, Krone North America, away from Memphis.

And Olive Branch, the same city that lost International Distributors USA two years prior, now houses Krone North America.

Members of the Mississippi Development Authority offered $7.3 million in property and inventory tax breaks for Krone.

The MDA is Mississippi’s lead economic and community development agency and operates similarly to the Tennessee Department of Economic and Community Development.

The MDA also reportedly gave Krone a $250,000 grant to relocate its equipment, according to The Mississippi Center for Public Policy, a Jackson, Miss.-based free market think tank.

Olive Branch is in DeSoto County, Miss.

MCPP spokesman Brett Kittredge told The Tennessee Star Tuesday that a lot of people live in DeSoto County, but they also commute to work across the state line in Memphis.

“I think the state of Mississippi just wants to be able to claim as many businesses as they can, as many jobs and as many wins as they can, regardless of the cost to taxpayers,” Kittredge said.

“In this case, $180,000 a job when you add up all the incentives, which seems a bit high to me. I don’t know if it’s necessarily a Mississippi versus Tennessee thing. I have not heard any elected officials here say ‘Hey, we stole this from Tennessee’ the same way the governors in Texas have bragged about stealing companies from California.”

Mississippi has a state income tax.

Tennessee does not.

Mississippi officials, Kittredge went on to say, are mindful of that as they try to compete with the Volunteer State.

“There has never been, at least that I know of, a thorough analysis of what returns on investment we’re getting here in Mississippi (through the MDA),” Kittredge said.

“We know what the projects are. We know what they say they’re going to be. There is very little attention when something doesn’t turn out the way we all are told it was going to turn out. We just keep doing all these small deals.”

According to The Daily Memphian, Krone North America makes and distributes hay and forage equipment. That company will move its headquarters to Memphis, with 45 jobs, before the end of this calendar year.

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Chris Butler is an investigative journalist at The Tennessee Star. Follow Chris on Facebook. Email tips to [email protected].
Photo “Memphis City Hall” by Thomas R Machnitzki. CC BY 3.0.