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ADM shouldn't get a tax break on Stutsman County project

Why do taxpayers get trapped subsidizing wealth accrual by corporations?

JSSP Letter to Editor

By Katrina Christiansen | Jamestown

When I moved to Jamestown from Auburn, Alabama, in 2011, I was bewildered by the atrophy of the local economy, schools and community assets. Clarity came when a fellow transplant explained to me: Jamestown is the only place they’ve lived that plans its own mistakes. Year after year, one can point to decisions that leave the taxpayers of Jamestown and Stutsman County wondering: “Why can’t we have anything nice?” Well, poor decision-making. A recent example being the Stutsman County Commission approving tax abatement for the ADM soybean crush facility.

ADM lobbied aggressively to externalize costs of the new facility to the taxpayers and will walk away with a tax avoidance of $5.6 million over the 15-year agreement on top of the $2.5 million incentives approved by the JSDC (paid by taxes collected from Stutsman (property) and Jamestown (sales).

A company with $64.5 billion in assets and annual revenues over $24 billion with an effective tax rate of 5% can only pay one-third of the assessed taxes.

The ADM crush facility will process 150,000 bushels of soybeans daily into meal and oil. The 2020 crush margin, the difference between the cost of beans and the value of the products, was $3 per bushel giving estimated annual revenues over $150 million. The assessed tax of $600,000 could have only been 0.38% of revenue. However, nothing is free. Local taxpayers will have to compensate for lost revenue including the county’s loss of $150K per year or $2.25 million over the period than if the asset had not been sold.

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Why do taxpayers get trapped subsidizing wealth accrual by corporations?

Because the assumption is that corporations will not come if communities demand too much. Fearful decision-makers lower corporate costs and reduce their risk. But that fear is illusionary. In 2019, the Brookings Institute shared research that “at least 75% of taxpayer incentives do not affect a business’s decision to locate and create jobs-they’re all cost and no benefit.” Furthermore, this research shows that only 10-30% of jobs created go to state residents.

Was ADM really not going to build a crush facility with cogeneration, rail line access and millions of bushels of grain storage that they acquired for $8.3 million because they might have to pay more than one-third of the assessed tax?

This tax abatement scheme is a perfect example of corporate welfare and poor decision-making. The facility will use county infrastructure to support it and extract all the value and resources it can from the supply chain and local economy to increase earnings.

These decisions lead additively to an imbalanced tax regime that perpetuates inequity and community atrophy.

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