Is Xerox, which posted profits of $1.3 billion last year, getting a call center courtesy of taxpayers?
Xerox – after several weeks of mildly threatening to locate the call center elsewhere – decided to proceed with plans to renovate a portion of Building 200 in Webster. The call center would employ 500 people over two years and cost $4.3 million.
The company had already been awarded $271,000 in county sales tax breaks. But the state press release made clear what sealed the deal: a $1 million grant and $5 million in job creation tax credits.
If you do the math, $1 million plus $5 million minus $4.3 million means Xerox comes out ahead.
Lieutenant Governor Bob Duffy and County Executive Maggie Brooks seemed genuinely started when I pointed out the call center would essentially be free and questioned the accuracy of the state’s press release.
But both defended giving the project incentives.
“It’s not about giving anyone a free call center. It’s all about leveling the playing field for companies that want to stay here because they have a larger investment,” said Brooks.
“I can assure you that other governors in other states would be right there offering to build this,” said Duffy.
A Xerox spokesman disputed the idea the company would be getting a free call center. He tax credits are not cash and they are paid out after many years and only if Xerox creates and retains jobs. But the spokesman could not say exactly how much money the tax credits would be worth.
Austin Shafran, a spokesman for the Empire State Development Corporation, also said this is not a free call center. He said tax credits are paid out over 10 years and Xerox must adhere to its job creation and investment agreement.
“Only after verifiable proof has been demonstrated will the company get the tax credits,” Shafran said. “The tax credits are paid off over a long term period, get paid off over 10 years.”
Shafran says it’s not fair to compare tax credits with Xerox’s $4.3 million investment. I disagree because Xerox may not have moved forward with the call center without the incentives. Tax credits are worth money, whether Xerox realizes that savings up front or down the road. The fact is the company could eventually recoup its $4.3 investment.
As for the jobs being created, Xerox couldn’t say how much they would pay. Innovation Trail points out call centers don’t pay a whole lot. Also, Xerox is being rewarded for creating 500 jobs after eliminating 500 local jobs in 2011. (Two-hundred-fifty were outsourced to another company, much to the consternation of those workers.)
Whether the state foots the bill for some or all of this project, it’s clear taxpayers are paying a lot so a multi-billion dollar corporation can rehab an existing building to create low-paying jobs.