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Iowa is "giving money". If there is a greater than 0% chance Apple would have built on that site anyways, then Iowa is directly losing that money. And it seem

by birken 9y ago

Iowa is "giving money". If there is a greater than 0% chance Apple would have built on that site anyways, then Iowa is directly losing that money. And it seems based on the local advantages of the Iowa location there was a non-zero (and potentially high) chance Apple would have picked the site anyways. And even if Iowa isn't "giving money", somebody is. Maybe without the Iowa deal, Apple would have located in Kansas or Illinois and now those states are losing out on the money. And fine, maybe you say the deal wouldn't happen at all unless some state gave this deal; the deal is a requirement for the datacenter to exist. OK then. So why would we make the deal? Aren't the point of these regulations to incentivize land use in a way that we as society want? If we as a society decide farmland is incentivized over datacenters (by having lower taxes for that land use), then so be it. Why is putting a datacenter on the land assumed to be "good" when our tax laws say the opposite?

eridius 9y ago
> If there is a greater than 0% chance Apple would have built on that site anyways, then Iowa is directly losing that money. That doesn't make sense. Perhaps you meant to say if there's 100% chance Apple would have built there anyway?
- tpxl 9y ago
  It does make sense if you take the expected value of the money Iowa would get, ie probability * money = money gained. So if the probability was greater than 0, the expected value of the tax gain was greater than 0, which Iowa now lost.
  - eridius 9y ago
    That would only be true if that tax gain was literally the only benefit of having Apple pick Iowa (and if that were true, nobody would ever offer the tax breaks because there'd be no point in having the company pick your state anymore).
    - birken 9y ago
      The article quotes an economist that says there is no substantial benefit to the state from deals like these: > “There is virtually no association between economic development incentives and any measure of economic performance,” urban economist Richard Florida concluded in 2012. A study of his found “no statistically significant association between economic development incentives per capita and average wages or incomes; none between incentives and college grads or knowledge workers; and none between incentives and the state unemployment rate.” And look, maybe this economist is wrong. But I'm not sure why the knee-jerk reaction is that a datacenter is so good that who cares if a deal like this is made. Shouldn't the people who make this deal have to prove why it is necessarily? And if datacenters are so good for our society, why should Apple get the tax break and not everybody else? I'm quite sure there are other datacenters in Iowa provided the exact same benefits of this Datacenter while still paying the legal tax rate. I could also argue that this form of unfairness is itself a cost Iowa is paying when they make a deal like this.
      - eridius 9y ago
        > And look, maybe this economist is wrong. Even if the economist is right, there's still benefits to Iowa being there beyond economic development. Besides the fact that Apple is contributing money to a local infrastructure fund (even if it's just $20M instead of $100M), Iowa is in fact still taxing Apple, just at a much lower rate than they would have without the tax breaks. > But I'm not sure why the knee-jerk reaction is that a datacenter is so good that who cares if a deal like this is made. I think it's because this deal doesn't actually hurt Iowa. The only thing lost here is potential tax income if Iowa hadn't offered the tax break and Apple had chosen to build there anyway. It's not like Iowa is handing out cash to Apple. > And if datacenters are so good for our society, why should Apple get the tax break and not everybody else? Others do get tax breaks! Note here that the tax break offered to Apple is in fact the exact same one offered to farmers. The tax break here is just taxing Apple's data center at the same rate that Iowa taxes farmland. > I'm quite sure there are other datacenters in Iowa provided the exact same benefits of this Datacenter while still paying the legal tax rate. That's certainly possible. It's also quite likely that they negotiated their own tax breaks before building their data centers. > I could also argue that this form of unfairness is itself a cost Iowa is paying when they make a deal like this. How would you go about arguing that? "unfairness" isn't really something you can measure or put a cost on.

by birken 9y ago

eridius 9y ago

> If there is a greater than 0% chance Apple would have built on that site anyways, then Iowa is directly losing that money. That doesn't make sense. Perhaps you meant to say if there's 100% chance Apple would have built there anyway?

tpxl 9y ago
It does make sense if you take the expected value of the money Iowa would get, ie probability * money = money gained. So if the probability was greater than 0, the expected value of the tax gain was greater than 0, which Iowa now lost.
- eridius 9y ago
  That would only be true if that tax gain was literally the only benefit of having Apple pick Iowa (and if that were true, nobody would ever offer the tax breaks because there'd be no point in having the company pick your state anymore).
  - birken 9y ago
    The article quotes an economist that says there is no substantial benefit to the state from deals like these: > “There is virtually no association between economic development incentives and any measure of economic performance,” urban economist Richard Florida concluded in 2012. A study of his found “no statistically significant association between economic development incentives per capita and average wages or incomes; none between incentives and college grads or knowledge workers; and none between incentives and the state unemployment rate.” And look, maybe this economist is wrong. But I'm not sure why the knee-jerk reaction is that a datacenter is so good that who cares if a deal like this is made. Shouldn't the people who make this deal have to prove why it is necessarily? And if datacenters are so good for our society, why should Apple get the tax break and not everybody else? I'm quite sure there are other datacenters in Iowa provided the exact same benefits of this Datacenter while still paying the legal tax rate. I could also argue that this form of unfairness is itself a cost Iowa is paying when they make a deal like this.
    - eridius 9y ago
      > And look, maybe this economist is wrong. Even if the economist is right, there's still benefits to Iowa being there beyond economic development. Besides the fact that Apple is contributing money to a local infrastructure fund (even if it's just $20M instead of $100M), Iowa is in fact still taxing Apple, just at a much lower rate than they would have without the tax breaks. > But I'm not sure why the knee-jerk reaction is that a datacenter is so good that who cares if a deal like this is made. I think it's because this deal doesn't actually hurt Iowa. The only thing lost here is potential tax income if Iowa hadn't offered the tax break and Apple had chosen to build there anyway. It's not like Iowa is handing out cash to Apple. > And if datacenters are so good for our society, why should Apple get the tax break and not everybody else? Others do get tax breaks! Note here that the tax break offered to Apple is in fact the exact same one offered to farmers. The tax break here is just taxing Apple's data center at the same rate that Iowa taxes farmland. > I'm quite sure there are other datacenters in Iowa provided the exact same benefits of this Datacenter while still paying the legal tax rate. That's certainly possible. It's also quite likely that they negotiated their own tax breaks before building their data centers. > I could also argue that this form of unfairness is itself a cost Iowa is paying when they make a deal like this. How would you go about arguing that? "unfairness" isn't really something you can measure or put a cost on.