Landing Samsung Electronics Co.’s massive new chip plant didn’t come cheap for Taylor, Texas. The question now is whether the investment will pay off.
State and local officials offered a raft of incentives to lure the plant to the town, which is in Austin’s northeastern suburban fringe. It all could amount to hundreds of millions of dollars for what’s expected to be one of the largest foreign investments in the U.S.
The approach underscores a debate that’s raged for years about heavily subsidized economic development projects. Research suggests they don’t always deliver, despite the eye-popping numbers in pitch decks and the politicians racing around to take credit for delivering jobs.
“The benefit of capital-intensive manufacturing is generally the tax revenues,” said Nathan Jensen, a professor at the University of Texas at Austin, who studies subsidy programs. “But these tax revenues are exactly what the state and local governments are giving back to companies.”