Carrier deal math

Some months ago a friend asked what a Trump presidency would even look like. I responded:

“ It’ll probably look a lot like his businesses. Love him or hate him, he knows how to run things. My guess is more jobs, certainly fewer illegals, and large number of unfiltered loud mouthed gaffs. Those who can really get things done aren’t always the most personable. But you have to distinguish between personality and stats.”

With the recent Carrier deal I’m guessing this was on the right track. I was in the Cruz/Rubio camp, but willing to give Trump a look since he was going to win the nomination it seemed.

So the Carrier deal kept around a thousand jobs in Indiana. I’ve heard varying numbers from 700 to 1,200; so my guess is a final number hasn’t even been arrived at. Let’s call it a thousand.

At a tax-break cost of $7,000,000. Now, is that a good deal? Let’s look at the numbers.

$7,000,000 divided by 1,000 jobs = $7,000 per job kept.

The state of Indiana will lose $7,000 per year per job in tax revenue (from Carrier) to keep those jobs.

The average salary in the US right now is $41,080 per year. That’s $41,080,000 PER YEAR of income to US citizens that won’t be lost. The workers will not only pay income taxes on that (about $10,000,000 federal), but they’ll buy cars, food, tvs, cell phones, pay rent/mortgages, etc, too. That supports other local businesses, generates sales taxes, etc.

The state will make up the $7,000 lost in Carrier taxes handily. Remember that with those jobs gone $10M in income tax (albeit federal) was going to go away anyways. In addition to the lost income tax revenue that would have occurred, those workers would have then placed a burden on state and federal programs; unemployment compensation, food stamps, housing, etc.

The decision was made between:

A. Lose 1,000 jobs ($41M in income in your state). Have another 1,000 people unemployed in your state burdening resources.

B. Lose $7M in corporate taxes.

This seems entirely worth it. This seems like a good deal.

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