4 ms·

>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

>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.
        crdoconnor 9y ago
        I'm not exactly sure why cities having the 'freedom' to get played off against one another or to let rentiers suck wealth out of the system is such a good thing. I'd rather politicians didn't have the "freedom" to knuckle under pressure from plutocratic forces and just told large companies and rich individuals to go fuck themselves when they come around demanding handouts.
- dionidium 9y ago
  The problem is deeper than that. This isn't Chicago competing against St. Louis. This is St. Louis competing against St. Louis. There's a reason I don't separate the finances of my kitchen from the finances of my living room. The whole household is the right unit of measure. Chopping up one "city" into 90+ smaller "cities" is a legal fiction. In some very real sense -- in almost every real sense -- it's just one city. All these nonsense ways of chopping it up further are an historical accident. It's all contingent bologna.
  - ryanianian 9y ago
    That sounds like a real pain. New Jersey is famously divided into extremely small towns and it leads to lots of redundancy and waste and probably unhealthy competition between the towns. To be honest, the problem may be the dividing of the cities as such. The solution may instead tax and run all of them as a single block (e.g. minimize city government in favor of county) or even combine into a single city. This is moving the goalpost of the conversation above a bit, but my point is that the problem may not necessarily be "cities compete," the problem may be with the local bureaucracy. This can manifest in lots of ways like you describe.

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.
      - crdoconnor 9y ago
        I'm not exactly sure why cities having the 'freedom' to get played off against one another or to let rentiers suck wealth out of the system is such a good thing. I'd rather politicians didn't have the "freedom" to knuckle under pressure from plutocratic forces and just told large companies and rich individuals to go fuck themselves when they come around demanding handouts.
dionidium 9y ago
The problem is deeper than that. This isn't Chicago competing against St. Louis. This is St. Louis competing against St. Louis. There's a reason I don't separate the finances of my kitchen from the finances of my living room. The whole household is the right unit of measure. Chopping up one "city" into 90+ smaller "cities" is a legal fiction. In some very real sense -- in almost every real sense -- it's just one city. All these nonsense ways of chopping it up further are an historical accident. It's all contingent bologna.
- ryanianian 9y ago
  That sounds like a real pain. New Jersey is famously divided into extremely small towns and it leads to lots of redundancy and waste and probably unhealthy competition between the towns. To be honest, the problem may be the dividing of the cities as such. The solution may instead tax and run all of them as a single block (e.g. minimize city government in favor of county) or even combine into a single city. This is moving the goalpost of the conversation above a bit, but my point is that the problem may not necessarily be "cities compete," the problem may be with the local bureaucracy. This can manifest in lots of ways like you describe.