Why Is Detroit Mulling a Tax Break for General Motors?
As the U.S. and Canadian governments sell off remaining shares of General Motors (NYSE:GM) stock, the automaker may benefit from a tax break offered by the bankrupt city of Detroit. According to a report by The Detroit News, the Detroit City Council has already approved a measure that would grant a $600,000 tax break to General Motors. After receiving final approval, it would offset costs GM planned to invest in its last assembly plant within Detroit city limits.
The measure is seen as a way of encouraging General Motors to build two logistics facilities in the Detroit-Hamtramck Assembly Plant, The Detroit News reports. The price tag would be approximately $121 million and create 210 jobs at the plant, as well as another 165 construction jobs to make the additions to the facilities. The site is the last GM plant actually within city limits, giving General Motors leverage in its position with bankrupt Detroit.
The measure has sparked protests in Detroit as the city’s emergency manager, Kevyn Orr, prepares to review the city council measure. According to Michigan Radio, protesters appeared Monday at GM headquarters in Detroit to protest the tax abatement. Organizers suggested that the automaker has already received enough assistance — including a $50 billion federal bailout in 2008 — and should pay its full tax obligation to the beleaguered city.