As Facebook receives $18 million in tax credits for 31 jobs in Iowa, some people are asking whether their tax money is being wasted.
Iowa politicians agreed to provide Facebook with an $8 million refund of sales tax and $10 million in tax credits, which is where the $18 million comes from. The overall cost raised from capital investment is expected to exceed $300 million. Facebook’s investment would grow to a billion dollars within five or six years.
Iowa Gov Terry Branstad says, “It’s good to be friends with Facebook. It’s high-tech, high-profile. It’s going to put Iowa on the world map, along with our connections with the president of China. This is a big deal. Facebook, like Google and others that have located in Iowa, we expect this will grow…. It’s an exciting beginning.”
You might ask, why Iowa? Like Facebook, Google has data centers spread out over all the United States. The reason brings to mind the old real estate quote which says, “Location. Location. Location.” Iowa is central to the US and data centers tend to replicate information to be closer to users.
With the $18 million the Facebook data center will create 31 jobs, which amounts to $580,000 per job if given in only one year. That sounds like these IT guys will be way, way overpaid, does it not? So where is that $18 million in Iowan tax credits going?
The Facebook data center in Iowa is expected to pay at least $23.12 an hour on average. That works out to be about a $48,000 salary before benefits. But the Iowa tax abatement will be spread over 20 years, which shrinks that $580,000 a job down to a mere $29,000 if applied evenly per year. Data centers also use a lot of power, which means that over time power companies may have to expand, meaning even more jobs.
What do you think about Facebook receiving $18 million for “only” 31 jobs in Iowa?