Why Toyota turned down $100 million from N. Carolina to move to Texas
Toyota Motor Sales North (TMS) recently turned down a $100 million incentive package from the state of North Carolina to move its US headquarters to the state. While this is an amazing amount of money for most corporations (and all people), compared to the taxes that Toyota pays, it is not an amazing amount of money. In fact, it is quite small.
Toyota Moving To California
Toyota Motor Sales North America includes Toyota's, Lexus' and Scion's US operations. It is relocating its US headquarters. Toyota is fleeing the ridiculous tax situation in California and will be building a huge new campus in the Dallas Texas suburb of Plano. Doing so will save the company billions over the coming decades. Employees of TMS will also enjoy a higher standard of living due to the much lower cost of living in Texas which has no personal income tax.
North Carolina Had a Bigger Incentive Package Than Texas
According to The Street, Texas and local governments did offer an incentive package to TMS to move to the Lone Star State. However, it was less than half that offered by North Carolina. This may seem crazy, but consider that North Carolina has a 6% Corporate Tax on profits and it suddenly makes all the sense in the world.
Toyota Most Profitable Automaker
Toyota is the most profitable automaker in the world, as well as the largest in most ways imaginable. Bloomberg recently pointed out that globally, Toyota’s profit is 30% higher than Volkswagen's. Another sobering summary of Toyota’s financial might from that article is that its earnings are larger than the combined earnings of GM, Ford, Honda, and Nissan.
GM Has Cost The Taxpayers Money, Not Paid Taxes
Toyota doesn’t have any sweetheart deal here in the US like GM does that allows it skip paying federal taxes on profits. Rather than contribute to the US' federal tax base, GM has cost the US taxpayers over 10 billion in the past ten years. Toyota pays its federal taxes. It is hard to fault a company like Toyota for moving to a state like Texas that is happy to host corporations without requiring that they pay an additional income tax to the state. That Texas also has that view for its residents in their personal finances is just icing on the cake.
We at Torque News understand there is more than one valid viewpoint on Toyota’s move from California to Texas. For a very different perspective, we encourage readers to check out Aaron Robinson’s opinion piece on the subject that was published in the August issue of Car and Driver.