Sanofi Puts Tax Squeeze on Pennsylvania Towns

Sanofi-Aventis‘ vaccine division, Sanofi Pasteur, wants to move its HQ from Swiftwater, Pa., to Upper Saucon. But to complete the move, it’s holding up the town for tax breaks. Sanofi wants to pay Upper Saucon $200,000 in return for not paying taxes for the next 10 years. The move is merely a relocation of existing staff and thus would not create any new jobs.

Some locals are furious at the potential deal because such tax deals “can eliminate payment of all state, local and school district taxes for 10 years,” as the Allentown Morning Call reports. The result is that companies that get such deals bring in employees with kids, but don’t pay taxes that can be used to educate those kids in the local schools. The result can look a lot like Jersey City, N.J., which is dotted with luxury high-rise buildings but has some of the worst schools in the nation.

On local message boards, people are already divided over Sanofi’s plan:

… Ah yes, bring in another company and give them tax breaks so that the Upper Saucon Residents get the burden of paying Sanofi’s fair share of taxes.

… The burden of the school district tax is FORGIVEN to these companies, therefore, the community must pay the HIGHER taxes now imposed.

According to the Pocono Record, Sanofi does indeed need to move:

The Swiftwater pharmaceutical facility houses 600 people in temporary office space — trailers. “Some of the people have been there for years. They need places to put these people,” [a Sanofi rep] said.

Sanofi is playing a superb political game in pitting local towns against each other for the best tax break. Sanofi vp Frank Epifano said the Upper Saucon site is one of a few sites the company is considering.

Local pols are responding by doing exactly what Sanofi wants, which is to fight amongst themselves for the reduced taxes that Sanofi wants to pay:

Allentown Mayor Ed Pawlowski disappeared into a room with several commissioners after Sanofi’s presentation and twice was heard arguing with administration officials over the proposed move, telling them the new office should be in Allentown.

The icing on the cake is Epifano’s chutzpah in citing the quality of the Upper Saucon school district in its desire to move:

Company Vice President Frank Epifano told the commissioners that the Stabler Center is attractive because of its location near Interstate 78, its proximity to Lehigh Valley International Airport and the ”excellent” schools, colleges and universities in the area.

Image by Flickr user Paul Keleher, CC