3 ms·

> Does it really matter to "St. Louisans" which side of this silly, arbitrary border they build their HQ? For those that pay taxes and use things paid for by t

> Does it really matter to "St. Louisans" which side of this silly, arbitrary border they build their HQ? For those that pay taxes and use things paid for by taxes, it matters. The services on the other side of that silly, arbitrary border is paid for with different funds and gets to make its own decisions about how money is spent or saved. > This system is ridiculous. Yes, but an alternative would be...what? Federally-mandated local-tax rates and policies or something? I like that my city (not on the HQ2 list) can control what it spends its money on and can decide if giving tax breaks to X would lead to suitable growth in Y and make the trade-offs with its tax-base in mind.

crdoconnor 9y ago
>Yes, but an alternative would be A federally mandated blanket prohibition on city tax incentives that companies can use to play cities off against one another. >I like that my city Can participate in this race to the bottom? I don't see the value in making cities compete with one another for jobs with tax breaks. It's simply a mechanism to create subsidies to big business because they are big that drains city budgets.
- ryanianian 9y ago
  My point: If the city decides the breaks are worth it, then the city has ended up ahead. Your point (I think): It's competing with other cities and taking less tax in doing so. So it may end up _less_ ahead than if there were no competition. Since every city is doing this, it makes sense to keep under-cutting other cities until the net-gain is effectively just larger than zero. Nobody forces the city to participate or offer incentives. This article advocates that they shouldn't. A city should be clever about its incentives and make them align with what the company wants so the outcome isn't so zero-sum. Many cities do this with zoning - only allowing waterfront building permits if the developer also builds parks or whatever. These increase the property-values for the developers while paying for a public-good that everyone can use. Something similar here may be to offer tax credits toward infrastructure near the campus. E.g. don't demand the taxes directly but instead force the company to build new roads. This is more or less an accounting-trick of course, but imho it's a lot less zero-sum and actually forces the company to consider how their incentives (or requirements) will actually benefit them. If you prohibit all tax-incentives, cities are effectively forced to pre-build or promise services to make themselves attractive to companies. This can lead to huge amounts of waste (4-lane roads that could have been 2 for example) and cities defaulting on bonds to build such things when the company ends up choosing another city etc. I don't know if this is much better than requiring clever accounting.
  - crdoconnor 9y ago
    >Nobody forces the city to participate or offer incentives. The fact that cities need jobs and an inflow of money in order to function means that they're forced. It's like saying that nobody forces you to take a job coz the park bench is always an option.
    - ryanianian 9y ago
      It's effectively no different than any other part of the US economy. If I'm happy living under the bench, I don't need a job. I decide what I want, I work and charge for it, and I can get what I want as a result. A city also has property taxes which make up a large portion of my city's budget. I pay ungodly sums in property taxes for a not-that-expensive condo. The city gets away with this because the location is desirable and we have great public-transit. Because of the property tax revenue, the city does give some companies a tax-break. But also because of the property tax, citizens keep a close eye on things, so most tax-breaks around here end up looking like forced-improvements or other public-goods. Each city is different and will find the best way to fund itself. Saying they can't pay less for something they want forces the funding problem elsewhere.
      - crdoconnor 9y ago
        My city has ridiculously low property taxes. I still pay the same amount I would because supply and demand determines prices, it's just that money goes to rentier landlords or to an investment portfolio's CDO via a mortgage instead of to schools and public services. The reason your condo was relatively cheap is because your city has high property taxes.
        ryanianian 9y ago
        Yup - each city is free to change their tax structure (for residents and businesses) in a way that makes sense for them. Your city may decide it wants to drive out rent-seekers by hugely taxing rental income or raising property taxes on rentals. This would effectively be a business tax. And the town next-door could decide it wants condo real-estate development to attract young urbanites, so it might notice your town's changes and offer tax-free rental income for N years. This allows each city to benefit their tax-base/residents the best.
dionidium 9y ago
You're just rephrasing the part that's ridiculous, which is that this sort of hyper-local competition for resources results in worse outcomes for all sides. St. Louis County comprises 90+ municipalities, each of which is presumably vying for Centene's tax money. Somebody working at Centene might drive across a dozen of these cities each morning on their way to work. That's absurd. Yes, as you say, it obviously matters who wins and who loses, but this is a system that's generating an enormous number of unnecessary losers.

crdoconnor 9y ago

>Yes, but an alternative would be A federally mandated blanket prohibition on city tax incentives that companies can use to play cities off against one another. >I like that my city Can participate in this race to the bottom? I don't see the value in making cities compete with one another for jobs with tax breaks. It's simply a mechanism to create subsidies to big business because they are big that drains city budgets.

ryanianian 9y ago
My point: If the city decides the breaks are worth it, then the city has ended up ahead. Your point (I think): It's competing with other cities and taking less tax in doing so. So it may end up _less_ ahead than if there were no competition. Since every city is doing this, it makes sense to keep under-cutting other cities until the net-gain is effectively just larger than zero. Nobody forces the city to participate or offer incentives. This article advocates that they shouldn't. A city should be clever about its incentives and make them align with what the company wants so the outcome isn't so zero-sum. Many cities do this with zoning - only allowing waterfront building permits if the developer also builds parks or whatever. These increase the property-values for the developers while paying for a public-good that everyone can use. Something similar here may be to offer tax credits toward infrastructure near the campus. E.g. don't demand the taxes directly but instead force the company to build new roads. This is more or less an accounting-trick of course, but imho it's a lot less zero-sum and actually forces the company to consider how their incentives (or requirements) will actually benefit them. If you prohibit all tax-incentives, cities are effectively forced to pre-build or promise services to make themselves attractive to companies. This can lead to huge amounts of waste (4-lane roads that could have been 2 for example) and cities defaulting on bonds to build such things when the company ends up choosing another city etc. I don't know if this is much better than requiring clever accounting.
- crdoconnor 9y ago
  >Nobody forces the city to participate or offer incentives. The fact that cities need jobs and an inflow of money in order to function means that they're forced. It's like saying that nobody forces you to take a job coz the park bench is always an option.
  - ryanianian 9y ago
    It's effectively no different than any other part of the US economy. If I'm happy living under the bench, I don't need a job. I decide what I want, I work and charge for it, and I can get what I want as a result. A city also has property taxes which make up a large portion of my city's budget. I pay ungodly sums in property taxes for a not-that-expensive condo. The city gets away with this because the location is desirable and we have great public-transit. Because of the property tax revenue, the city does give some companies a tax-break. But also because of the property tax, citizens keep a close eye on things, so most tax-breaks around here end up looking like forced-improvements or other public-goods. Each city is different and will find the best way to fund itself. Saying they can't pay less for something they want forces the funding problem elsewhere.
    - crdoconnor 9y ago
      My city has ridiculously low property taxes. I still pay the same amount I would because supply and demand determines prices, it's just that money goes to rentier landlords or to an investment portfolio's CDO via a mortgage instead of to schools and public services. The reason your condo was relatively cheap is because your city has high property taxes.
      - ryanianian 9y ago
        Yup - each city is free to change their tax structure (for residents and businesses) in a way that makes sense for them. Your city may decide it wants to drive out rent-seekers by hugely taxing rental income or raising property taxes on rentals. This would effectively be a business tax. And the town next-door could decide it wants condo real-estate development to attract young urbanites, so it might notice your town's changes and offer tax-free rental income for N years. This allows each city to benefit their tax-base/residents the best.

dionidium 9y ago

You're just rephrasing the part that's ridiculous, which is that this sort of hyper-local competition for resources results in worse outcomes for all sides. St. Louis County comprises 90+ municipalities, each of which is presumably vying for Centene's tax money. Somebody working at Centene might drive across a dozen of these cities each morning on their way to work. That's absurd. Yes, as you say, it obviously matters who wins and who loses, but this is a system that's generating an enormous number of unnecessary losers.