Mercedes also flees to lower-tax state, shuns CA

by John Seiler | January 8, 2015 9:29 am

Toyota’s HQ last year fled [1]high-tax California for low-tax Texas. In 2005, Nissan split [2]the Golden State for the Volunteer State, Tennessee, for the same reason.

Now Mercedes is moving its HQ from high-tax New Jersey — basically, California with bad weather and a Republican governor — for Georgia.

The Wall Street Journal reported[3]:

Wooed by lower costs, proximity to a Mercedes-Benz factory and government incentives, the German luxury car maker in July will begin moving about 1,000 U.S. personnel to a temporary facility and later move to Sandy Springs, Ga.

The operation, which includes staff working on the Sprinter van business and the Smart mini car lineup, will permanently move into a new building erected on a 10-acre site in the same city.

Of course, subsidies means everybody else in the state must take up the slack given to a favored company. But the Garden State also dangled subsidies before Mercedes’ eyes. Yet they weren’t enough to compensate for Georgia’s other advantages:

Daimler executives turned down a significant incentive package from New Jersey to keep its U.S. headquarters in Montvale, where it had been running operations since 1972….

John Boyd, principal of the Boyd Company Inc., a Princeton, N.J.-based site selection consultant, said that New Jersey has the country’s most appealing incentives policy in his assessment, but it was outweighed by the cost-savings and convenience of moving to the U.S. South. He said that the move would reduce Mercedes-Benz’s costs, including real estate, energy and property taxes, by about 20%.

California, of course, was in contention for the Mercedes HQ move about as much as North Korea. Energy costs here are high and going much higher because of Gov. Jerry Brown’s push for 50 percent renewable energy by 2020.

Property taxes here generally are low at 1 percent of assessed value, because of Proposition 13[4]. But numerous state and local restrictions [5]on construction have boosted land values to prohibitive levels.

Mercedes still sells a lot of cars out here. We still have the Silicon Valley digital elite, the $100K Pension[6] Club of retired government workers and others who are in the money and can afford an S-Class Sedan[7] or SL65 AMG Roadster[8].

But otherwise the company, like so many others, shuns our state, depriving us of thousands of middle-class jobs.

Source URL: https://calwatchdog.com/2015/01/08/mercedes-also-flees-to-lower-tax-state-shuns-ca/

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