In dumbfounding news, a company isn’t getting any public money from New Jersey for relocating nearly 400 jobs into the state.
Actavis, a global pharmaceutical company, was in such a hurry to close up shop in Long Island that they passed up what likely might have been $5 to $10 million dollars in incentives.
Experts say this is an aberration. State governments shell out what adds up to over $80 billion in tax incentives each year trying to keep companies from moving their jobs, and tax dollars, into competing jurisdictions. And New Jersey has been especially extravagant, awarding over $4 billion in subsidies since 2010, according to a study from New Jersey Policy Perspective. Companies dangling plans to either expand or relocate can reliably get incentives, experts said.
But Actavis’ exceptional circumstances prove the rule. The now $60 billion company bought Forest Laboratories for $28 billion this past summer. Dealing with a consolidation that big, several million dollars wasn’t worth the longer term commitment Actavis would have to make to qualify for it — signing long term leases and promising long term jobs. There will be more firings yet stemming from the merger, said Charlie Mayr, an Actavis spokesman.
“It seems kind of screwy because, ‘why don’t you just wait three months and get the money?’” Mayr said. “But with timing, and other issues, we elected not to go forward and seek that,” he added, saying that the leases at what had been Forest Laboratories’ Long Island facilities were coming due.
Because Actavis is relocating the workers to existing facilities in New Jersey rather than building new ones minimized their potential incentive windfall — apart from the jobs a company brings, incentives are tied to the money it spends in the state.
Matthew Gardner, the director at the Institute on Taxation and Economic Policy, said it was “bizarre” to hear of a case in which a company hadn’t gotten incentives for relocating workers.
“Lawmakers are so trigger happy with them, they’re just falling all over each other to outdo each other,” he said. “It’s hard to imagine a scenario in which [Actavis’] not getting something from somebody.”
And going back, Actavis has been no slouch at lowering its taxes — the company, which used to be called Watson Pharmaceuticals, received about $4 million in incentives from New Jersey’s Economic Development Authority over the past four years, and has its global headquarters in Ireland, which has one of the lowest corporate tax rates in the developed world. And Jersey gave Forest Laboratories, the company Actavis just bought, nearly $1.9 million (adj. for inflation) for jobs it added in 1999 and 2000.
Spokesman Charlie Mayr said the company was open to getting more incentives from New Jersey going forward.