Corporate Tax Credits Secure Edwards Lifesciences Expansion in Utah
10.08.2009 by Elizabeth Ziegler
(KCPW News) Governor Gary Herbert and his economic development team are offering medical device developer Edwards Lifesciences Corporation an incentive package worth $11.5 million to convince the company to expand its operations in Utah. But should the state be promising such large tax credits when critical social services and public education are facing significant budget cuts? Here’s what Herbert says:
“Absolutely. Again, when you invest a dollar and get back $5 or $6, that’s a good place to put your money,” Herbert says. “It is in the growing of the economy that more revenue comes into government, without having to raise taxes. So, if I can spend a dollar and get five back, that’s a good investment for the taxpayer.”
Herbert says the incentive package being offered to the company will have no budgetary impact in the long run, because it will create additional jobs and revenue for the state.
Paul Redmond, Corporate Vice President for Edwards Lifesciences, says the company had no definitive plans to move out of Utah before this package was offered. But it was one reason the company decided to stay.
“So the incentive packages and the partnership we received from the state of Utah were very important in achieving that,” Redmond says. “But the more driving factors were the successes we had here already, the availability of talented employees, the establishment of a management team that could make this expansion a reality.”
The company currently has 228 employees in Midvale. Under the deal, it will receive up to $11.5 million in tax credits from the state over the next 15 years, on the condition that it adds 1,000 new employees. It will also receive up to $3 million from Draper to move to a newly developed facility there. City leaders hope it will become part of a larger bio-medical campus.
I hope people understand what is happening with companies like this one. They do not compete with education and social services for funding because they are paid with tax credits that are not available until they provide the jobs they present. By that time, the business and employees are paying far more in taxes than the cost of the incentives.
One caveat though is determining whether the coumpany would have located in Utah or expanded here if the incentive was not provided. If a company is teetering between Utah and another location, then the investment is justified. However, I doubt if a company is going to tell you that and other states are absolutely offering incentives. In a perfect world, there wouldn’t be incentives, but it’s not a perfect world and we need to trust our Governor to make the best decision in our behalf.