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Bloomberg BNA recently asked prominent business incentives consultant Thomas Stringer of BDO Consulting about tax incentive changes he sees following President Trump's election. His responses are below.
Interview by Michael Murphree
Thomas Stringer is a Managing Director in BDO Consulting's New York office where he leads national site selection and business incentives for the firm's Corporate Real Estate Advisory Services practice.
Why is the Carrier deal—and other similar ones—important?
These transactions are important to the business community because they signal a dramatic policy shift by the federal government. The president appears ready to get knee-deep in negotiations with the private sector on major jobs projects across industries and not just in government procurement activities. This has traditionally been the domain of state and local governments.
What questions do these deals raise?
In short, there are many questions, and we don't yet know the answers. The first and foremost question is: how will these deals be monitored? Is this going to be the domain of a federal agency? Will it be up to the states to enforce the incentives packages alone, or will the White House directly keep tabs on these things? When the business cycle changes, what will be the repercussions for a company that has to course-correct due to market forces?
Do we expect this to become a trend?
This was a trend in December. Based on the string of successes the president has had in Twitter-boarding companies, it's safe to assume we're going to continue to see it play out. Once in office, though, the administration is going to have to carry through on real tax and regulatory reform issues in order to cement the momentum it has built. Companies, I think, are giving the administration a chance to get there. If the administration and Congress fail, then this all will simply become noise, and it will be tuned out.
How will this trend affect state and local incentives?
I think we will see greater outreach via Twitter and other social media channels to enlist presidential support on projects. We will also likely see a cascade effect of governors and other state officials using a similar format to engage companies and explain policies to their constituents.
What risks does this present for states and for companies?
Even the best business deals can have periods when negotiations look like sausage making, messy and tough. Exposing that to social media trolling could have a chilling effect on decision-making. At some point, the perceived risk of public and presidential criticism might be too much to bear. That could lead to short-term thinking and reacting, which could hurt the economy in the long run.
What opportunities and benefits does this present for states and for companies?
What is interesting is that the general population and the business community are both engaged and listening through this new medium. It's certainly leading to faster decisions by companies and quicker information flow to the financial markets, which does provide value.
What should states and companies do to prepare for this reality?
Companies need to be ready to respond to inquiries and statements at any moment and on demand. They would be well advised to be as proactive as possible in their communication practices with the general public, investors and the government.
What other industries and companies might be subject to presidential scrutiny?
We believe that any company with projects that have significant jobs tied to them will be on the radar. If it can be in the media, it will be. This administration has made jobs its number one issue. We expect it will continue to pay close attention to projects across the country.
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