4 ms·

Nobody is giving anyone money, they are just not charging them tax. It's an important distinction I don't understand how people keep glossing over it. If it c

by diddid 9y ago

Nobody is giving anyone money, they are just not charging them tax. It's an important distinction I don't understand how people keep glossing over it. If it creates 10,000 local jobs, those 10,000 jobs are still going to get taxed. So the locale is going to get money, just not from the corporate tax. So it's not a great deal but it's not a horrible deal. I'd prefer nobody made them but once on place does they all have to in order to compete. But if they built overseas they'd get no corporate tax either... so some slice of the pie is better than none.

colek42 9y ago
Thank you. It would be like saying Wal-Mart is giving a customer $5 because DVD is $15 there vs. $20 at Best Buy. Yes, if nobody gave tax breaks companies would have to pay more taxes, but that will never happen, Congress likely does not have the power to force states or municipalities to do so either. edited, spelling.
- geofft 9y ago
  But what is Wal-Mart's cost of buying the DVD? If they get it from their wholesaler at $19.99 and Best Buy is turning the tiniest profit, Wal-Mart selling it for $15 is effectively giving the customer $5. Sure, they can do it if they want to, but that would raise immediate and valid questions about whether the money would be better used in some other way (giving customers $5 without making them buy a DVD), whether this is the sort of anti-competitive behavior that a long-term-productive capitalist society should regulate, and whether there's something shady going on between Wal-Mart and the DVD supplier.
kartan 9y ago
> so some slice of the pie is better than none. That's a run to the bottom. Where's the limit? The USA is already lacking in education, health care, and infrastructure. This is only going to make the problem worse. > If it creates 10,000 local jobs, those 10,000 jobs are still going to get taxed. So the locale is going to get money, just not from the corporate tax. If those jobs have been created in another state without the tax cut they would have gotten the corporate tax and the local jobs taxes (both of them). So you can see it as one state stealing the job taxes from another state at the cost of giving back the corporate tax. One state loses, another wins. The USA as a country just loses because what one loses is bigger than the other wins (being the difference the corporate tax). Only the corporation gets a positive outcome. The country is now in a worse situation.
- rayiner 9y ago
  > That's a run to the bottom. Where's the limit? The USA is already lacking in education, health care, and infrastructure. This is only going to make the problem worse. The U.S. spends more on education per student than any OECD country besides Switzerland. Even leaving out military spending, it spends more overall per capita than Canada and still doesn't manage to provide healthcare. NYC spends 2-8 times as much as European cities to build a mile of subway. Our problem isn't that we're not taxing Apple enough.
kkielhofner 9y ago
Some estimates show that to cover the generous incentives Wisconsin will most likely need to pay Foxconn cash from the treasury for the foreseeable future: http://www.jsonline.com/story/news/politics/2017/07/28/foxconn-could-get-up-200-million-cash-year-state-residents-up-15-years/519687001/ http://www.jsonline.com/story/news/politics/2017/07/28/foxco... The "local jobs" argument is eroded further for Wisconsin when you consider that the proposed sites are all well within commute range for a large population of Illinois residents - something that didn't seem to occur to WI legislators until far too late in this "deal": https://www.reuters.com/article/us-foxconn-wisconsin-illinois-idUSKCN1B42DZ https://www.reuters.com/article/us-foxconn-wisconsin-illinoi... As a Wisconsin resident who's town (near the proposed sites) is overrun with Illinois license plates this was an obvious issue from the beginning (on top of everything else). My (somewhat cynical) belief is that Foxconn has been several steps ahead of our local politicians (who are desperate to put up healthy job numbers). This "realization" of the proximity to Illinois is likely (and unfortunately) the first of many ways Wisconsin is going to get schooled by Foxconn here.
- diddid 9y ago
  Nowhere in that article does it state how they’ll just get checks. Maybe I’m not understanding tax credits because that article says the same thing, they will get up to 200 million a year in tax credits. If you have no tax, you get no credit. Better than a deduction, but not writing a check. Anything past that is all “some estimates” which really are just people making things up. Also, people commute, you can’t stop them all. That’s the nature for all business and it’s part of the game you play with these deals.
  - kkielhofner 9y ago
    The article states: "... because Wisconsin already waives almost all taxes on manufacturing profits in the state, these incentives represent not a lost opportunity at collecting revenue but an obligation to pay cash to Foxconn out of the state treasury for up to 15 years." Put another way: http://fortune.com/2017/07/31/foxconn-wisconsin-plant-tax-breaks/ http://fortune.com/2017/07/31/foxconn-wisconsin-plant-tax-br... "Although the state measures to attract Foxconn are labeled tax incentives, they largely would be paid in cash since the effective Wisconsin state tax rate is 0.4% on manufacturers." Of course people commute (and they should)! However, for a state negotiating an incentive package they should have been aware of this basic fact, especially given the extremely close proximity to another state that (amazingly) isn't contributing to the incentive package.
Steko 9y ago
> Nobody is giving anyone money, Sure. > it's not a horrible deal. Less sure on this, I can see the argument that the sheer scale of the Foxconn credits could allow an end run around the normal plant operations and give them competitive advantages against other (tax paying) businesses. That would be bad and, as a precedent, it could be horrible.

by diddid 9y ago

colek42 9y ago

Thank you. It would be like saying Wal-Mart is giving a customer $5 because DVD is $15 there vs. $20 at Best Buy. Yes, if nobody gave tax breaks companies would have to pay more taxes, but that will never happen, Congress likely does not have the power to force states or municipalities to do so either. edited, spelling.

geofft 9y ago
But what is Wal-Mart's cost of buying the DVD? If they get it from their wholesaler at $19.99 and Best Buy is turning the tiniest profit, Wal-Mart selling it for $15 is effectively giving the customer $5. Sure, they can do it if they want to, but that would raise immediate and valid questions about whether the money would be better used in some other way (giving customers $5 without making them buy a DVD), whether this is the sort of anti-competitive behavior that a long-term-productive capitalist society should regulate, and whether there's something shady going on between Wal-Mart and the DVD supplier.

kartan 9y ago

> so some slice of the pie is better than none. That's a run to the bottom. Where's the limit? The USA is already lacking in education, health care, and infrastructure. This is only going to make the problem worse. > If it creates 10,000 local jobs, those 10,000 jobs are still going to get taxed. So the locale is going to get money, just not from the corporate tax. If those jobs have been created in another state without the tax cut they would have gotten the corporate tax and the local jobs taxes (both of them). So you can see it as one state stealing the job taxes from another state at the cost of giving back the corporate tax. One state loses, another wins. The USA as a country just loses because what one loses is bigger than the other wins (being the difference the corporate tax). Only the corporation gets a positive outcome. The country is now in a worse situation.

rayiner 9y ago
> That's a run to the bottom. Where's the limit? The USA is already lacking in education, health care, and infrastructure. This is only going to make the problem worse. The U.S. spends more on education per student than any OECD country besides Switzerland. Even leaving out military spending, it spends more overall per capita than Canada and still doesn't manage to provide healthcare. NYC spends 2-8 times as much as European cities to build a mile of subway. Our problem isn't that we're not taxing Apple enough.

kkielhofner 9y ago

Some estimates show that to cover the generous incentives Wisconsin will most likely need to pay Foxconn cash from the treasury for the foreseeable future: http://www.jsonline.com/story/news/politics/2017/07/28/foxconn-could-get-up-200-million-cash-year-state-residents-up-15-years/519687001/ http://www.jsonline.com/story/news/politics/2017/07/28/foxco... The "local jobs" argument is eroded further for Wisconsin when you consider that the proposed sites are all well within commute range for a large population of Illinois residents - something that didn't seem to occur to WI legislators until far too late in this "deal": https://www.reuters.com/article/us-foxconn-wisconsin-illinois-idUSKCN1B42DZ https://www.reuters.com/article/us-foxconn-wisconsin-illinoi... As a Wisconsin resident who's town (near the proposed sites) is overrun with Illinois license plates this was an obvious issue from the beginning (on top of everything else). My (somewhat cynical) belief is that Foxconn has been several steps ahead of our local politicians (who are desperate to put up healthy job numbers). This "realization" of the proximity to Illinois is likely (and unfortunately) the first of many ways Wisconsin is going to get schooled by Foxconn here.

diddid 9y ago
Nowhere in that article does it state how they’ll just get checks. Maybe I’m not understanding tax credits because that article says the same thing, they will get up to 200 million a year in tax credits. If you have no tax, you get no credit. Better than a deduction, but not writing a check. Anything past that is all “some estimates” which really are just people making things up. Also, people commute, you can’t stop them all. That’s the nature for all business and it’s part of the game you play with these deals.
- kkielhofner 9y ago
  The article states: "... because Wisconsin already waives almost all taxes on manufacturing profits in the state, these incentives represent not a lost opportunity at collecting revenue but an obligation to pay cash to Foxconn out of the state treasury for up to 15 years." Put another way: http://fortune.com/2017/07/31/foxconn-wisconsin-plant-tax-breaks/ http://fortune.com/2017/07/31/foxconn-wisconsin-plant-tax-br... "Although the state measures to attract Foxconn are labeled tax incentives, they largely would be paid in cash since the effective Wisconsin state tax rate is 0.4% on manufacturers." Of course people commute (and they should)! However, for a state negotiating an incentive package they should have been aware of this basic fact, especially given the extremely close proximity to another state that (amazingly) isn't contributing to the incentive package.

Steko 9y ago

> Nobody is giving anyone money, Sure. > it's not a horrible deal. Less sure on this, I can see the argument that the sheer scale of the Foxconn credits could allow an end run around the normal plant operations and give them competitive advantages against other (tax paying) businesses. That would be bad and, as a precedent, it could be horrible.