Gary, Indiana—in Deal with U.S. Steel—May Learn the Hard Way How Tax Breaks Can Backfire

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The Gary Works Steel Mill looms (NPR)

By Erik Sherman, Fortune

Subsidies have become a way of life for cities and states that want to woo corporations and expected jobs. And Gary, Ind., along with the state, offered a $47 million incentive package in August 2018 to U.S. Steel, according to U.S. News and World Report.

The hope was that the $750 million the company would invest in modernizing a 112-year-old steel plant would preserve nearly 3,900 steelworker jobs. President Donald Trump’s steel tariffs made the move economically viable.

But as the incentive deal continues to be negotiated, it turns out that jobs may be lost and not kept, as Reuters reports.

U.S. Steel vice president Douglas Matthews told Reuters that “decreasing headcount over time” was more likely.

This makes the city of Gary—initially founded in 1906 by U.S. Steel and named for company co-founder Elbert Henry Gary—is the latest to discover that tax subsidies have left a lengthy trail of unmet promises.

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