Sealed Air Corporation, the company famous for producing bubble wrap, is planning to bring its headquarters to the city by the end of 2017, one of several recent high-profile corporate relocations to North Carolina.
With the July 23 announcement, Sealed Air became the eighth Fortune 500 company in the Charlotte area.
McCrory and the state legislature overhauled the state’s tax policy in 2013, lowering the corporate tax rate from 6.9 percent in 2013 to 5 percent by the start of 2015 in an effort to stimulate the economy and spur job creation in the recession’s aftermath.
“North Carolina’s business-friendly climate continues to attract corporate headquarters to the Charlotte region,” McCrory said in a statement on Sealed Air’s move.
Since March 2013, at least 16 major corporations have moved headquarters to the state, including Advance Auto Parts and MetLife.
The state’s Job Development Investment Grant (JDIG) program could give Sealed Air $36.7 million over a 12-year period. Sealed Air will also receive grants from local governments to facilitate the move.
According to the Charlotte Chamber of Commerce, Sealed Air will employ 1,262 people by the end of 2017 with an average salary of more than $119,000, bringing in an estimated $18.1 million in state and local taxes annually. The average annual wage in Mecklenburg County is $59,046.
“When a Fortune 500 company picks Charlotte, it does wonders for the Charlotte business reputation,” said Natalie Dick, vice president of public relations at the Charlotte Chamber of Commerce. “It could be that the CEO of Sealed Air could be a cheerleader for future relocations to the Charlotte area.”
Charlotte was an attractive location for Sealed Air because of its international airport, its business-friendly environment with old and new companies and the quality of life the area provides, she said.
Despite the large number of jobs being brought in by Sealed Air, not everyone agrees with the use of state incentives to attract companies.
“The state of North Carolina’s economy is not going to be won by a couple of big projects,” said John Hood, president and chairman of the John Locke Foundation. “One of the purposes of taxation is to generate revenue for the cost of services. If one company gets a tax break, then someone has to pay for their services.”
The state’s incentives fund has been used to the point of depletion, and some are pushing the North Carolina legislature to call a special session to replenish the program, said Patrick Conway, chairman of the economics department at UNC.
“When you use funds for business recruitment, you are taking them away from other activities,” he said.
Rather than just recruiting corporations through the use of monetary grants and incentives, there are other options, Hood said.
“One traditional incentive is through the training of local citizens,” he said. “If the company fails, the employees were trained. At least you have something that will stick around and not move to South Carolina or South Korea.”
The United States has the highest corporate tax rate in the world, Hood said. When North Carolina faces competition from not only South Carolina but also South Korea for attracting companies, it is not unreasonable for the state legislature to flag North Carolina’s tax rate as an issue, he said.
Hood said if the state reaches certain revenue goals, the corporate tax rate could drop as low as 3 percent by 2017.
Critics of the lowered corporate tax rate said lawmakers’ reform package will decrease state revenue.
“Any benefit from a tax cut will be offset dollar for dollar and result in no net economic gain in the short-term,” wrote Alexandra Sirota, project director for the Budget and Tax Center, in an April 2013 report.
And even with a lower tax rate making North Carolina more competitive for relocation, incentives are still necessary to bring companies like Sealed Air to cities like Charlotte, Dick said.
“Incentives don’t necessarily mean that a company will come, but we need to be competitive,” she said. “And to be in the running without (incentives) will be very difficult.”