GOED Gave Special Perks to Goldman Sachs, Disadvantaged Overstock
Earlier this week, a new audit of the Governor’s Office of Economic Development (GOED) was announced and discussed, in which the government agency was accused of manipulating data, misleading the public, and giving special treatment to certain businesses over others.
GOED’s own press releases support the latter allegation.
On August 14, GOED published a press release in which they announced a new tax credit incentive awarded to Overstock, a popular online retailer headquartered in Salt Lake County. Upon committing to creating 333 new jobs over the next 10 years, with wages and benefits at 200 percent over the county average wage, Overstock was awarded a 20% tax credit by GOED over 10 years.
Standing alone, this is likely a welcome incentive for Overstock and a reduction of their tax burden which will facilitate job creation and business growth. Stacked against another incentive, however, it becomes clear that Overstock (and many other companies competing for employees) has been placed at a financial disadvantage.
On the very same day that the Overstock tax credit was announced, GOED published another press release explaining that Goldman Sachs had also received one. Theirs, however, differs from Overstock.
In comparison to the estimated 200% above average compensation Overstock was paying its employees under this incentive agreement, Goldman Sachs had only committed to pay 125% over the county average wage. (And, as this week’s audit explains, that calculation is apparently disingenuous as it uses both wages and medical benefits in comparison to the county average wage, which excludes benefits—comparing “apples and oranges,” as the auditor explained.) For this arrangement, Goldman Sachs was awarded a 30% tax credit by GOED over 20 years.
The following chart explains the discrepancy between the incentives awarded to the two companies. (Note that state revenue in Overstock’s column is tied to its 10 year contract; having a 20 year contract would presumably at least double the figure.)
The audit of GOED explains that the agency has made “a number of inconsistent decisions regarding which companies to incent, incentive duration, and incentive amount.” As indicated, and using GOED’s own press releases, it is clear that this allegation is factual and therefore merits attention and accountability.
We encourage state lawmakers to review the audit in depth and support bills during the next legislative session that will aim to provide increased transparency and accountability of GOED’s activities, and reduce the “flexibility” the agency has been given to treat companies unfairly and put competing companies at a financial disadvantage, thereby manipulating the free market envisioned by the Utah Constitution as an imperative.