4 ms·

States/Cities offer tax breaks to attract/keep the business in the first place. The Pacific NW city wanted to become a tech city and offered incentives (=tax cu

by rusanu 10y ago

States/Cities offer tax breaks to attract/keep the business in the first place. The Pacific NW city wanted to become a tech city and offered incentives (=tax cuts) many years ago for companies like MS to settle here. Successful companies bootstrapped satellite dependent businesses (the myriad small IT shops in area, like SourceDynamics Inc) and attracted in the area subsidiaries from big SV (FB, Google etc). The affluent workforce they foster spends their disposable income in the area and this benefits all other businesses in the area. And both MS and Boeing can decide to move to other locations, taking with them huge swat of tax paying employees and a myriad of satellite smaller businesses that depend on the 'mother ship'. Here is a simple thought exercise: salaries -> area desirability -> high property taxes -> high budget. I don't think this is a case of corrupt WA politicians being in the pocket of Big Business Co and writing off tax breaks for kickbacks. I think is a calculated deal in which tough negotiators for both sides reach an agreement benefiting both the state and the business. At 83.4 billion $ budget ([0]) WA state does not seem to get the short end of the stick... [0] https://en.wikipedia.org/wiki/List_of_U.S._state_budgets https://en.wikipedia.org/wiki/List_of_U.S._state_budgets

rusanu 10y ago
TFA is not strictly about the fact that there is a tax break, but about a great increase of the break in recent years and some possible shenanigans vis-a-vis some Nevada operations. My reply was driven by the comments here that why breaks exists in the first place, not strictly to the situation presented in the article (of which I understand little to tel you the truth). This video shows that from times immemorial local authorities tried to attract business: https://www.youtube.com/watch?v=hExE6iLxfEw https://www.youtube.com/watch?v=hExE6iLxfEw
nightski 10y ago
A state's budget will likely remain the same regardless of who pays the bill. If Microsoft did not enjoy the tax breaks, everyone else would including its employees.
- ptaipale 10y ago
  If Microsoft did not enjoy the tax breaks, it might have settled somewhere else in the first place, and the overall economic activity and tax revenue would be smaller. Everyone else would have to pay more, or be happy with smaller public spending.
  - nightski 10y ago
    Maybe, maybe not. We are talking about 30 years ago. It is now one of the largest corporations in the world. Even if you buy into the corrupt world of tax incentives, they generally come with some sort of expiration date.
  - Retric 10y ago
    Lower taxes, but also lower needs for spending due to lower population. There is an argument that attracting company's that compensate well has a net positive impact. But, it takes a lot of of people to make up for these costs. If you assume an extra ~3,000$ per person per year over the areas average that's 230,000 workers which seems unlikely. Remember everyone involved wants to make this seem like a great thing. But, even negative sum games can make someone rich.
blisterpeanuts 10y ago
WA's annual budget is $37 billion (plus some deficit spending). The number you cited is a 2 year budget.
vvanders 10y ago
> benefits all other businesses in the area Generally, but not always the case. I lived in Redmond for ~5 years and saw a ton of small businesses close up shop since they couldn't afford to keep pace with market prices for leases/etc. Heck we got our lease on our apartment terminated "early"(~2 month lead time) and the 1br/1ba was turned into a 300k condo. No way we could swing that price at the time(and it was crazy in retrospect). So we also moved out of the area.
ameza 10y ago
Oh please! This is Reaganomics, trickle-down nonsense. Why? Because it is a race to the bottom. If WA does not give in, then another state/country will. What happens when the tax rate is 0? Are we to pay these companies for the benefit of a job? Oh wait. We already do!

by rusanu 10y ago

rusanu 10y ago

TFA is not strictly about the fact that there is a tax break, but about a great increase of the break in recent years and some possible shenanigans vis-a-vis some Nevada operations. My reply was driven by the comments here that why breaks exists in the first place, not strictly to the situation presented in the article (of which I understand little to tel you the truth). This video shows that from times immemorial local authorities tried to attract business: https://www.youtube.com/watch?v=hExE6iLxfEw https://www.youtube.com/watch?v=hExE6iLxfEw

nightski 10y ago

A state's budget will likely remain the same regardless of who pays the bill. If Microsoft did not enjoy the tax breaks, everyone else would including its employees.

ptaipale 10y ago
If Microsoft did not enjoy the tax breaks, it might have settled somewhere else in the first place, and the overall economic activity and tax revenue would be smaller. Everyone else would have to pay more, or be happy with smaller public spending.
- nightski 10y ago
  Maybe, maybe not. We are talking about 30 years ago. It is now one of the largest corporations in the world. Even if you buy into the corrupt world of tax incentives, they generally come with some sort of expiration date.
- Retric 10y ago
  Lower taxes, but also lower needs for spending due to lower population. There is an argument that attracting company's that compensate well has a net positive impact. But, it takes a lot of of people to make up for these costs. If you assume an extra ~3,000$ per person per year over the areas average that's 230,000 workers which seems unlikely. Remember everyone involved wants to make this seem like a great thing. But, even negative sum games can make someone rich.

blisterpeanuts 10y ago

WA's annual budget is $37 billion (plus some deficit spending). The number you cited is a 2 year budget.

vvanders 10y ago

> benefits all other businesses in the area Generally, but not always the case. I lived in Redmond for ~5 years and saw a ton of small businesses close up shop since they couldn't afford to keep pace with market prices for leases/etc. Heck we got our lease on our apartment terminated "early"(~2 month lead time) and the 1br/1ba was turned into a 300k condo. No way we could swing that price at the time(and it was crazy in retrospect). So we also moved out of the area.

ameza 10y ago

Oh please! This is Reaganomics, trickle-down nonsense. Why? Because it is a race to the bottom. If WA does not give in, then another state/country will. What happens when the tax rate is 0? Are we to pay these companies for the benefit of a job? Oh wait. We already do!