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So $208M for 50 jobs. Wouldn't they be better off just giving those 50 lucky folks $4M each? Or giving 800 people $250K ? At least those 800 people would li

So $208M for 50 jobs. Wouldn't they be better off just giving those 50 lucky folks $4M each? Or giving 800 people $250K ? At least those 800 people would likely spend the money locally and stimulate the state economy.

gtCameron 9y ago
They aren’t handing Apple $208m. They are giving them tax breaks. If Apple didn’t build a data center in Iowa they would also collect $0 in taxes from them. The cost/benefit calculation is no where as simple as this article or comments make it out to be. It could still be a bad deal, but there is not really an honest attempt to figure that out here.
- dahdum 9y ago
  Exactly - states competing on incentives obviously doesn't increase gross tax collection on a national level, but the article makes much bolder claims that it doesn't help anywhere. Specifically this claim: "There is virtually no association between economic development incentives and any measure of economic performance." The article states that the 1.3 billion dollar data center will get $39 million tax break up front on hardware, and another $190 million abatement over 20 years from the city. They will invest at a minimum $20 million into Waukee, a city of 20k people, and expect 50 permanent employees + ancillary services. Waukee will see a construction boom, higher employment, and more tax revenue. The state will see a reduction in the data center decline + additional tax revenue. Unless they were sure Apple had no other option but Iowa for this project, the state and community were better off making a deal than not.
  - vacri 9y ago
    > Waukee will see a construction boom, higher employment, and more tax revenue. The city will also now have a major corporation throwing its weight around to get its way; one with no loyalty to the residents or their concerns.
- kartan 9y ago
  > If Apple didn’t build a data center in Iowa they would also collect $0 in taxes from them. Iowa can't do that. But the USA can. If another state (instead of Iowa because of the tax break) has gotten the revenue of that taxes and the federal government gets it from that state. The USA can give that money to the Iowa residents.
laser 9y ago
That "$208M" is how much more would have been earned in taxes had Apple built the data center there with no tax breaks. However, it seems like the reality is that without those deductions, there would be no Apple there, and therefore not only no "$208M", but no jobs, no $20 million donation, and no whatever taxes they are paying (if any?). On the other hand, the article claims that according to research not offering incentives has no negative economic impact, so maybe they should've just not offered and Apple would have come anyway. Hard to discern what actually is in the states' and counties' best interest without reviewing the research, as this article isn't very convincing.
- quadrangle 9y ago
  If no states did these tax breaks, Apple would still need a data center. This is nothing more than corporations playing states against each other for the result of corporate profit and public loss.
  - eridius 9y ago
    Sure, but why would all states refuse tax breaks? It's a pretty obvious means to convince a company to choose that state. This is "nothing more" than the free market at work.
    - quadrangle 9y ago
      > This is "nothing more" than the free market at work. Exactly! And by their very nature, free-markets are susceptible to races-to-the-bottom. https://en.wikipedia.org/wiki/Race_to_the_bottom https://en.wikipedia.org/wiki/Race_to_the_bottom So, yes, here they are at work doing one of the examples of free-market behavior that work against the public interest. Here's another variant of my comment above: If all the workers refused to work in abusive conditions for low pay, the companies would still need to hire workers. And you could reply "Why would workers refuse that? Accepting abuse and low pay is a pretty obvious means to convince a company to hire you over others — the free market at work." Are you one of those people who blindly thinks that the algorithm of "free market" necessarily (tautologically) results in the best situation for everyone? The entire concept of a corporation exists within a government framework, not a completely free market. They are a complex organization of people making decisions as a unit. So too can states do the same or even work together and decide collectively not to make decisions that worsen the state-vs-corporation power structure…

gtCameron 9y ago

They aren’t handing Apple $208m. They are giving them tax breaks. If Apple didn’t build a data center in Iowa they would also collect $0 in taxes from them. The cost/benefit calculation is no where as simple as this article or comments make it out to be. It could still be a bad deal, but there is not really an honest attempt to figure that out here.

dahdum 9y ago
Exactly - states competing on incentives obviously doesn't increase gross tax collection on a national level, but the article makes much bolder claims that it doesn't help anywhere. Specifically this claim: "There is virtually no association between economic development incentives and any measure of economic performance." The article states that the 1.3 billion dollar data center will get $39 million tax break up front on hardware, and another $190 million abatement over 20 years from the city. They will invest at a minimum $20 million into Waukee, a city of 20k people, and expect 50 permanent employees + ancillary services. Waukee will see a construction boom, higher employment, and more tax revenue. The state will see a reduction in the data center decline + additional tax revenue. Unless they were sure Apple had no other option but Iowa for this project, the state and community were better off making a deal than not.
- vacri 9y ago
  > Waukee will see a construction boom, higher employment, and more tax revenue. The city will also now have a major corporation throwing its weight around to get its way; one with no loyalty to the residents or their concerns.
kartan 9y ago
> If Apple didn’t build a data center in Iowa they would also collect $0 in taxes from them. Iowa can't do that. But the USA can. If another state (instead of Iowa because of the tax break) has gotten the revenue of that taxes and the federal government gets it from that state. The USA can give that money to the Iowa residents.

laser 9y ago

That "$208M" is how much more would have been earned in taxes had Apple built the data center there with no tax breaks. However, it seems like the reality is that without those deductions, there would be no Apple there, and therefore not only no "$208M", but no jobs, no $20 million donation, and no whatever taxes they are paying (if any?). On the other hand, the article claims that according to research not offering incentives has no negative economic impact, so maybe they should've just not offered and Apple would have come anyway. Hard to discern what actually is in the states' and counties' best interest without reviewing the research, as this article isn't very convincing.

quadrangle 9y ago
If no states did these tax breaks, Apple would still need a data center. This is nothing more than corporations playing states against each other for the result of corporate profit and public loss.
- eridius 9y ago
  Sure, but why would all states refuse tax breaks? It's a pretty obvious means to convince a company to choose that state. This is "nothing more" than the free market at work.
  - quadrangle 9y ago
    > This is "nothing more" than the free market at work. Exactly! And by their very nature, free-markets are susceptible to races-to-the-bottom. https://en.wikipedia.org/wiki/Race_to_the_bottom https://en.wikipedia.org/wiki/Race_to_the_bottom So, yes, here they are at work doing one of the examples of free-market behavior that work against the public interest. Here's another variant of my comment above: If all the workers refused to work in abusive conditions for low pay, the companies would still need to hire workers. And you could reply "Why would workers refuse that? Accepting abuse and low pay is a pretty obvious means to convince a company to hire you over others — the free market at work." Are you one of those people who blindly thinks that the algorithm of "free market" necessarily (tautologically) results in the best situation for everyone? The entire concept of a corporation exists within a government framework, not a completely free market. They are a complex organization of people making decisions as a unit. So too can states do the same or even work together and decide collectively not to make decisions that worsen the state-vs-corporation power structure…