Tennessee Officials Gave Volkswagen Huge Subsidies, Report Says

The state of Tennessee has thus far given Volkswagen $818.8 million in corporate subsidies, going back several years.

Nissan, meanwhile, got $536.7 million.

DowDuPont received $486.7 million in subsidies.

These are among the latest updates from Good Jobs First, a Washington, D.C.-based policy resource center that monitors corporate subsidies nationwide.

The group runs a national database of state, local and federal economic development incentive awards.

For Tennessee, the organization also called out Electrolux, Wacker Chemie, HCA Holdings, Hankook Tire, Dell Technologies, TRT Holdings, and Eastman Chemical for taking state subsidies ranging from $120 million to $232 million.

Tennessee was one of several states getting the fine-tooth comb treatment.

“In this round, we added records from 61 state and local programs from Arizona, Colorado, Connecticut, Georgia, Iowa, Illinois, Kentucky, Michigan, Missouri, Mississippi, New Hampshire, New York, Ohio, Oklahoma, Pennsylvania, Tennessee and Utah,” Good Jobs First said in a press release.

The Good Jobs First update included seven new megadeals.

“Some are for well-known deals such as the $900 million award for Toyota- Mazda in Alabama, but others cover less well-known deals such as the $618 million from Michigan to Bedrock Detroit for an urban redevelopment project in the city ($256.3 million of that will come from income withholding taxes of new workers at the development; we nickname this type of subsidy ‘paying taxes to the boss’).”

As for the Chattanooga Volkswagen plant, Tennessee officials have bestowed generous benefits upon it dating back years.

As Tennessee Watchdog reported five years ago, state officials offered the company $2 million in taxpayer money to use for marketing and public relations. Volkswagen officials took $266,000 of that money and painted a sign on its roof that simply said “Volkswagen Chattanooga.”

The idea was to market Volkswagen to two groups of people — airplane passengers looking out their windows as they fly over Chattanooga and people who go online to look at Google Earth.

State officials gave $577 million to Volkswagen for an assembly plant in Chattanooga in 2008. Good Jobs First said it was “the largest subsidy package ever offered to a foreign automaker in the United States.”

Tennessee offers several kinds of tax credits and multiple training subsidies, according to the organization’s website.

• The Headquarters Tax Credit allows sales and use tax credits in addition to relocation expense refunds.

• Businesses receive credits for up to 50 percent of their franchise and excise taxes through the Jobs Tax Credit. Companies that qualify for FastTrack Job Training Assistance are refunded the cost of this customized training program.

• On a local level, the main subsidy program is Payment of Lieu of Taxes, or PILOT, a form of property tax abatement.

“The issue of PILOTs has been especially problematic in Memphis,” according to Good Jobs First.

“In 2013, the city abated about 14 percent of its property tax base and lost about $42 million in revenue that year.”

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Chris Butler is an investigative journalist at The Tennessee Star. Follow Chris on Facebook. Email tips to [email protected].