Tag Archives: Marketwatch.com

Keurig Green Mountain and the limits of tax incentives

Photo from killthekcup.org.

Photo from killthekcup.org.

Last week, Keurig Green Mountain announced 330 layoffs, including 200 in Vermont. The move came after sales and profit shortfalls hammered the company’s stock price. (Last November, KGM traded at more than $150/share. Now it’s barely over $50.) One analyst told MarketWatch.com that KGM shows “‘telling’ signs of a company struggling to turn around its business.”

The layoffs were widely reported in the Vermont media. What wasn’t mentioned is that since 2007, KGM has received approval for a whopping $7 million in job creation tax incentives through the state’s Vermont Economic Growth Initiative (VEGI). What does KGM’s contraction (and uncertain prospects) mean for its generous tax incentives?

I sought answers from Fred Kenney, Executive Director of the Vermont Economic Progress Council and head honcho of VEGI. He offered a fair bit of reassurance on the VEGI mechanism and state oversight of KGM grants, but I remain dubious on the fundamental concept of tax incentives as a means to economic growth.

In short, while VEGI is a well-designed program of its kind, the KGM experience rings some very real alarm bells about it.

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