Institute Of Higher Learning To Conduct An Impact Study For The Nissan Project

In October 2000, Mississippi Development Authority contracted the Institute of Higher Learning to conduct an impact study for the Nissan Project. The Authority wanted to make assessment whether the project will generate substantial economic and fiscal benefits that will outweigh its costs. The findings of the study were meant to serve as blue print in estimating financial incentives. And attract the attention and approval of state legislators. This process is prevalent in most traditional economic development recruitment process. However, the employment estimates that emanated from the study were considered by Mississippi Development Authority to be low and insufficient. Not satisfied with the findings, the Authority contracted the Goodman

State legislators approved approximately $295 million worth of financial incentives. These subsidies were to be financed by the state government through general obligation bonds. Instead of the typical 18 months for the approval of bond issued by state legislatures, the Nissan deal was completed within 5 months. Nissan was also granted tax rebates associated with Job Tax Credits and the Advantage Incentive programs. This implied that Nissan will receive corporate income tax rebate $5,000 for each direct job created. And the program is scheduled to run for 15 years upon meeting the minimum requirement to create at least 3000 jobs. Also, tax credits not utilized in a given year can be carried forward for up to 5 years. The state also provided job tax credit worth $1,000 per job for suppliers that create at least 20 jobs and it can be carried forward for up a maximum of 5 years. Under the Advantage Job Incentive Program, Nissan and its ‘tier one’ suppliers were required to pay fixed franchise tax of $25,000 a year. At the normal rate of $2.50 per $1,000 of capital used, invested or employed which approximately $1.43 billion, Nissan’s franchise tax would be $3.6 million a year rather than what is required to pay. Over a 20 year period, the cumulative effect of this amount is $76 million for 20