Home Depot is the largest home improvement corporation in the world. On the Fortune 500 list of the largest companies, Home Depot ranks 34th, with revenues in 2004 of $73.1 billion. They are the third largest retailer in the world, and twice the size of their nearest competitor, Lowe’s. Home Depot has 273,000 people on their payroll. Does that sound like the profile of a company that needs welfare from a small town in Ohio? It’s hard to believe that taxpayers in Salem, Ohio are being asked to ante up for Home Depot, but the Salem City Council this week approved a Tax Increment Financing (TIF) agreement with Home Depot that allows a large percentage of the property taxes to be set aside for infrastructure improvements to the immediate area. According to the Lisbon Morning Journal, 75% of the property tax money generated by the increase in property value resulting from the construction of the Home Depot building will be set aside for 10 years for use on roads and drainage specific to the property. Instead of asking Home Depot to pay their own way, taxpayers in the city will receive only 25% of the property taxes back to the city treasury. City officials argued that the taxes going into the TIF could be used to improve a local road, freeing up funds now allocated to that project for others. But the South Range schools district argued that they would be hurt financially by a loss of property tax revenue resulting from the TIF. The City’s Auditor told the district they will continue to receive the same amount of tax money as they did before the improvements were made to the property, as well as its share of the 25% of the increased taxes after improvements. The newspaper did not publish how much money this tax subsidy for Homje Depot came to, probably to avoid upsetting its readers. But the fact is, local taxpayers are helping Home Depot fix up its property.
Home Depot could easily have paid its own way into Salem, and improved the land, roads, and other infrastructure at its own expense. City officials have ended up subsidizing Home Depot’s entry into town — at the direct expense of other merchants who received no such tax breaks, but who will lose jobs and revenues as the pie gets split up into smaller and smaller shares. Large national corporations like Home Depot don’t need to be on welfare, and city officials who give them welfare are subsidizing the ongoing dominance of big companies over smaller corporations. Communities could avoid this embarassment by passing an ordinance that bans the use of TIF funding for retail projects, and reserving them only for industrial developments that produce higher-paying jobs. For earlier stories on this subject, search Newsflash by “corporate welfare.”
