Stop throwing our tax dollars to big business

Photo by Marcin Wichary

It seems as if everyone in Fort Worth and Texas is celebrating Facebook coming to town. I wish I could celebrate with them.

It’s wonderful to have a company like Facebook in our community, but I strongly disagree with how we lured it here.

During my senatorial race, I campaigned hard for the abolition of the Texas Enterprise Fund and other state economic development incentive programs. While I’m proud of Texas and its strong and stable economy, I’m also a free-market advocate who believes that government — state or local — shouldn’t subsidize private companies that have the financial assets to relocate on their own.

Take Facebook. At the end of 2014, Facebook reported annual earnings of $12.5 billion and a profit of $2.9 billion. But the city of Fort Worth dangled a 20-year, $146.7 million tax-exemption carrot in front of the company anyway, and Facebook bit. Our new neighbors are getting out of paying most taxes — including real and business property taxes — for 20 years. By the way, it’s these taxes that fund our public schools.

The Texas Legislature this year also passed House Bill 2712, which allows large data centers (over 250,000 square feet) an exemption from state and local sales tax for 20 years. This bill was written specifically for this transaction, after the Legislature in 2013 passed legislation that exempted regular data centers (over 100,000 square feet) from state sales tax for 15 years but still required the centers to pay local sales tax. Thanks to HB 2712, Fort Worth's $146.7 million price tag includes the loss of local sales tax but doesn’t address the millions the state of Texas will lose in revenue.

The terms of the bill require Facebook to invest at least $500 million of capital into the center in five years, offer at least 40 full-time, high-paying jobs, and contract for at least 20 megawatts of transmission capacity for operations at the center. Facebook will absolutely meet each of these requirements; otherwise, it will lose its state tax incentives. But are these requirements enough to warrant the millions that are being taken away from our local and state coffers? The coffers that provide necessary services like roads, public works and public safety?

To put it into perspective, Fort Worth is allowing Facebook to get out of paying $7.4 million a year in taxes. Our city will gain 40 jobs paying at least $70,000 per year, but each job will cost the city $183,375 per year. The return on investment for Fort Worth is far less than should be gained when a city gives such a generous incentive to a company.  

Facebook's incentive package includes an exemption from paying state sales and use tax, local property tax and local sales tax. The company is marketing this data center as the most eco-friendly of the five it operates and is partnering with three energy companies that are investing in a wind farm near Wichita Falls. Facebook looked hard at Texas because of our independent power grid, and rightly so. But here's the kicker: Companies engaged in renewable electricity generation are already largely exempt from property taxes in Texas. While Facebook’s clean energy efforts are noble, even wind farms receive tax incentives and subsidies from our government.

Part of the reason Fort Worth made this deal is to attract more companies and data centers. I guarantee that the companies that follow Facebook will be seeking hefty incentive programs as well.

Don’t get me wrong. I’m a strong supporter of capitalism, business and entrepreneurship — the bread and butter of this great country. But companies should be coming to Texas because of the state’s established merits: its economy, public and higher education opportunities, liberty-minded people, geographic location and natural resources, to name a few. They shouldn’t be coming at the expense of hardworking Texans. Whether we realize it or not, the money Fort Worth and Texas are leaving on the table to Facebook must be made up somewhere, and that somewhere is from the wallets of you and me.

Facebook narrowed its decision to four finalists, three of which were in Texas. The company was already likely to come to our state. Fort Worth and Texas got the short end of this stick.

Konni Burton

State senator, R-Colleyville