Waste of the Day: Welfare for Starbucks

Topline: Starbucks is getting a “venti” sized handout from the State of Tennessee to build a new corporate office in Nashville. The company will receive $30 million in economic development grants funded by taxpayers.

The Starbucks deal

Key facts: The deal comes with several benefits for Tennessee. Starbucks says the office will create up to 2,000 jobs and represent a $100 million capital investment. The state told Channel 5 Nashville the grant contract has a legal clause allowing Tennessee to recoup its money if Starbucks fails to deliver on its promises, though the full details are not public. 

Still, it’s fair to wonder why a nearly $140 billion company needs economic incentives at all. Numerous state officials cited Nashville’s business-friendly climate and high quality of life as factors that attracted Starbucks to the city. If that’s the case, it’s possible Starbucks would have chosen Nashville even without support from taxpayers.

Other states and cities have approved grants for Starbucks offices, but they were typically more modest. Atlanta approved a $250,000 grant in 2018 for an office that was expected to create 500 jobs. Nevada, Illinois and more have also given out minor incentives.

Why do they need this deal?

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Critical quote: The Tennessee grant drew backlash from the conservative group Americans for Prosperity, who argued the incentives disrupt the free marketplace that has made Tennessee successful. 

 “We have small businesses starting every single day here, who do not have those kinds of tax incentives, and are doing very, very well. So why does a company that’s making billions of dollars need those kind of tax incentives from us?” Pamela Furr of Americans for Prosperity told Channel 5.

Summary: Starbucks may bring jobs and critical investments to Nashville, but the company sells more than enough Frappuccinos to pay its own way.

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This article was originally published by RealClearInvestigations and made available via RealClearWire.