Chipmaker Globalfoundaries managed to score the largest grant ever to build its $4.6 billion Fab 8 project in New York State.
The US taxpayer stumped up more than $1.4 billion in incentives including a $665 million cash grant. The government waived shedloads of taxes which would have meant Globalfoundaries had to pay over $1 billion more to build the chip fab.
According to the TimesUnion newspaper, GlobalFoundries got one of the biggest taxpayer handouts ever offered to a private enterprise in the United States and as a result is a huge risk for local taxpayers.
Kenneth Thomas, a University of Missouri-St. Louis professor, said that cash grants are unusual in the United States and the GlobalFoundries grant is the largest.
It will mean that the people of New York State will pay $25 million a year so that GlobalFoundries can provide 1,465 jobs.
New York State thinks that it is competing with China, Singapore, Brazil and Malaysia and Israel to attract investment.
It is not clear what New York gets for its money. TimesUnion claims it is a long shot that those corporate taxes will be replaced by new revenues flowing into the state treasury from thousands of new jobs and from companies flooding into the area to feed off GlobalFoundries.
Greg LeRoy, executive director of Good Jobs First, a watchdog group that tracks corporate subsidies, says recouping the state’s investment will be hard because high-tech product life cycles are too short.