8 ms·

A lot of cities are making shortsighted deals to attract companies and sports teams, and that's bad. On the other hand, if companies (and individuals) were not

A lot of cities are making shortsighted deals to attract companies and sports teams, and that's bad. On the other hand, if companies (and individuals) were not able to shop around for the tax regimes they prefer, there would be nothing to prevent extortionate taxation -- companies and people wouldn't be able to avoid it by going somewhere else, and governments would be able to do whatever they wanted. On balance, I prefer competition in the regulatory and taxation space over the alternative. It limits the ability of governments to use taxation as a weapon or a form of expropriation. I'd rather live in a world where governments need to attract investment rather than coerce it. Some might say that such competition would result in a race to the bottom, but we already have that competition and taxes are still quite high in many places -- a race to the bottom would have happened by now if it was going to happen.

tmpz22 8y ago
Honestly what qualifications do city officials have to make these kinds of ginormous financial decisions? Are super competent financial minds really at the heads of local governments?
- robotresearcher 8y ago
  "It has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time." https://richardlangworth.com/worst-form-of-government https://richardlangworth.com/worst-form-of-government
  - mikec3010 8y ago
    A democracy is rule by the people. We're living in the era of a government by the corporations, for the corporations. I honestly cannot understand how companies have any representation or access to politicians. The closest access to the system should be persuading their own employees to vote favorably or write their congressman. Lobbying should be entirely illegal because we are on track to making Idiocracy a reality.
    - deleted 8y ago
      [deleted]
    - killaken2000 8y ago
      A democracy is rule by some* people
    - twblalock 8y ago
      So, if you are a citizen you should have access to politicians, but if you start a company or get promoted to an executive position you suddenly get that access revoked? It would be pretty difficult to restrict lobbying without running into problems with the First Amendment. Most people who complain about corporate lobbying don't seem to mind when the EFF or the ACLU engages in lobbying, which indicates to me that they are really against corporate power, not lobbying per se.
      - s2g 8y ago
        > It would be pretty difficult to restrict lobbying without running into problems with the First Amendment. Then fuck the first amendment. Change it.
- iamdave 8y ago
  They sometimes don't, which is why many cities delegate that out to agencies like local Convention Bureaus/Tourism Boards where the requisite brainpower is concentrated and applied-they do the numbers, make recommendations and proposals and elected officials chose to approve or deny what is presented to them. Same way branches of the Federal Government delegates responsibilities and procedural obligations to the appropriate agencies.
lovich 8y ago
The government isn't a market. Treating it as such just leads to worse results for everyone except for the corporations and those wealthy enough to shop around. Everyone else who can't afford to just move across the country is SoL when basic services can no longer be paid for because there was a race to the bottom in tax rates
- sol_remmy 8y ago
  It is a market - that's the whole point of the federation of states system that the founding fathers put in place. If your state has bad laws, you can go to a different state. Using government as a market has worked very well for both marijuana legalization and gay marriage advocates.
  - kabulykos 8y ago
    Positive results for social policy. Questionable results for economic policy. Historically the latter has been driven by physiological particulars of a state — availability of farm land, coal mines, etc. Has anyone actually thought through how that transitions to a primarily services-based economy? (Aside: if state governments are a market, then the Senate is socialism, lol)
  - mikec3010 8y ago
    It's not a very liquid market however. Because the lawyers ensure that the deals are legally binding. It's not like a city can declare bankruptcy and reset the no-tax deals.
  - lovich 8y ago
    That's the US system, which is not everywhere and has been degraded heavily since the founding fathers of the US put it in place. Additionally moving from state to state was not a task most people could just do whenever they disagreed with the laws
  - s2g 8y ago
    > Using government as a market has worked very well for both marijuana legalization and gay marriage advocates. Except for people like you who are 100% in favour of stamping on people's rights because "it's a market".
fortythirteen 8y ago
These deals are far from short sighted. What the city may lose in corporate taxes is more than regained through the increase in revenue from middle class population growth. Sales tax and automobile tax revenues skyrocket with the all the people moving in. Businesses open to support the new residents and are taxed. More homes are built and property values go up, meaning an increase in property tax. Seriously, people who think giving a subsidy for a large tech company to move to your city is short sighted fail to understand the issue holistically. Nome a single American city that has seen it's overall revenue decrease from a large company with skilled workers moving into their area with a subsidy.
- slezakattack 8y ago
  I'd imagine a lot of the rural towns across middle America offering really large subsidies to build data centers that only employ 50 people probably don't see a return on their investment. [1] The city might be able to stimulate the local construction companies with some good business but the 50 employees aren't going to make up for the $250MM subsidy. [1] https://www.usatoday.com/story/tech/2017/08/24/apple-latest-tech-giant-drawn-iowa/597144001/ https://www.usatoday.com/story/tech/2017/08/24/apple-latest-...
  - fortythirteen 8y ago
    How many other businesses are going to open branches, if not headquarters, in Des Moines to be close to the Apple data center? How many other companies can they now attract with larger employee counts, as a town that was chosen by Apple? If I lived in that town, and wasn't a ruralist, I'd be thrilled with the city's decision.
    - msbarnett 8y ago
      > How many other businesses are going to open branches, if not headquarters, in Des Moines to be close to the Apple data center? Probably none? Almost everything that a Data Center needs to regularly purchase in volume is produced overseas. Micron and Seagate certainly aren't going to relocate to bumfuck Iowa. What business are you picturing that would possibly gain anything from opening new headquarters in Des Moines to service a single data center?
ErikVandeWater 8y ago
> taxes are still quite high in many places Taxes for corporations are not very high at all. Fortune 500 companies routinely pay a less than 0 income tax at the federal level[0], and state level income taxes max out at 12% [1]. The race to the bottom has happened for the big businesses that have leverage. Just not for the little guy. [0] https://www.investopedia.com/news/how-fortune-500-companies-avoid-paying-income-tax/ https://www.investopedia.com/news/how-fortune-500-companies-... [1] https://taxfoundation.org/state-corporate-income-tax-rates-brackets-2018/ https://taxfoundation.org/state-corporate-income-tax-rates-b...
- twblalock 8y ago
  > Taxes for corporations are not very high at all. Fortune 500 companies routinely pay a less than 0 income tax at the federal level[0], and state level income taxes max out at 12% [1]. The way you quoted that Investopedia article is a bit misleading -- it says it identified 18 companies in the Fortune 500 that paid zero tax, and that 258 companies paid an average of 21.2%. 18 out of 500 companies paying zero tax is a pretty low bar for saying that paying zero tax is routine. Here's the quote from the article: > The Institute on Taxation and Economic Policy (ITEP), in a recent study, found that over the eight-year period from 2008 to 2015, 258 profitable Fortune 500 companies paid an average effective federal income tax rate of 21.2%. Over that same period, exactly 18 companies, including General Electric, International Paper, Priceline.com and PG&E Corp., avoided paying a single penny of federal income tax.
  - civilitty 8y ago
    You're being no less misleading than he is. > 258 profitable Fortune 500 companies paid an average effective federal income tax rate of 21.2% So of the Fortune 500, 242 companies are unprofitable. Seriously? That ignores all the companies using legislation they helped craft to give themselves tax credits and the accounting tricks they use to bring their profits to "zero." Hell, the list itself is pathologically biased towards those businesses. Seems the rest of the country has figured out Hollywood accounting.
    - deleted 8y ago
s2g 8y ago
I prefer we just don't listen to you and stop giving in to corporate greed. It's incredibly shortsighted and foolish. It is absolutely a race to the bottom and it's just increasing wealth inequality even further. But whatever, people like you will never learn.
- sctb 8y ago
  Would you please comment civilly and substantively? We've asked before and need you to start following the guidelines more closely. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

tmpz22 8y ago

Honestly what qualifications do city officials have to make these kinds of ginormous financial decisions? Are super competent financial minds really at the heads of local governments?

robotresearcher 8y ago
"It has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time." https://richardlangworth.com/worst-form-of-government https://richardlangworth.com/worst-form-of-government
- mikec3010 8y ago
  A democracy is rule by the people. We're living in the era of a government by the corporations, for the corporations. I honestly cannot understand how companies have any representation or access to politicians. The closest access to the system should be persuading their own employees to vote favorably or write their congressman. Lobbying should be entirely illegal because we are on track to making Idiocracy a reality.
  - deleted 8y ago
    [deleted]
  - killaken2000 8y ago
    A democracy is rule by some* people
  - twblalock 8y ago
    So, if you are a citizen you should have access to politicians, but if you start a company or get promoted to an executive position you suddenly get that access revoked? It would be pretty difficult to restrict lobbying without running into problems with the First Amendment. Most people who complain about corporate lobbying don't seem to mind when the EFF or the ACLU engages in lobbying, which indicates to me that they are really against corporate power, not lobbying per se.
    - s2g 8y ago
      > It would be pretty difficult to restrict lobbying without running into problems with the First Amendment. Then fuck the first amendment. Change it.
iamdave 8y ago
They sometimes don't, which is why many cities delegate that out to agencies like local Convention Bureaus/Tourism Boards where the requisite brainpower is concentrated and applied-they do the numbers, make recommendations and proposals and elected officials chose to approve or deny what is presented to them. Same way branches of the Federal Government delegates responsibilities and procedural obligations to the appropriate agencies.

lovich 8y ago

The government isn't a market. Treating it as such just leads to worse results for everyone except for the corporations and those wealthy enough to shop around. Everyone else who can't afford to just move across the country is SoL when basic services can no longer be paid for because there was a race to the bottom in tax rates

sol_remmy 8y ago
It is a market - that's the whole point of the federation of states system that the founding fathers put in place. If your state has bad laws, you can go to a different state. Using government as a market has worked very well for both marijuana legalization and gay marriage advocates.
- kabulykos 8y ago
  Positive results for social policy. Questionable results for economic policy. Historically the latter has been driven by physiological particulars of a state — availability of farm land, coal mines, etc. Has anyone actually thought through how that transitions to a primarily services-based economy? (Aside: if state governments are a market, then the Senate is socialism, lol)
- mikec3010 8y ago
  It's not a very liquid market however. Because the lawyers ensure that the deals are legally binding. It's not like a city can declare bankruptcy and reset the no-tax deals.
- lovich 8y ago
  That's the US system, which is not everywhere and has been degraded heavily since the founding fathers of the US put it in place. Additionally moving from state to state was not a task most people could just do whenever they disagreed with the laws
- s2g 8y ago
  > Using government as a market has worked very well for both marijuana legalization and gay marriage advocates. Except for people like you who are 100% in favour of stamping on people's rights because "it's a market".

fortythirteen 8y ago

These deals are far from short sighted. What the city may lose in corporate taxes is more than regained through the increase in revenue from middle class population growth. Sales tax and automobile tax revenues skyrocket with the all the people moving in. Businesses open to support the new residents and are taxed. More homes are built and property values go up, meaning an increase in property tax. Seriously, people who think giving a subsidy for a large tech company to move to your city is short sighted fail to understand the issue holistically. Nome a single American city that has seen it's overall revenue decrease from a large company with skilled workers moving into their area with a subsidy.

slezakattack 8y ago
I'd imagine a lot of the rural towns across middle America offering really large subsidies to build data centers that only employ 50 people probably don't see a return on their investment. [1] The city might be able to stimulate the local construction companies with some good business but the 50 employees aren't going to make up for the $250MM subsidy. [1] https://www.usatoday.com/story/tech/2017/08/24/apple-latest-tech-giant-drawn-iowa/597144001/ https://www.usatoday.com/story/tech/2017/08/24/apple-latest-...
- fortythirteen 8y ago
  How many other businesses are going to open branches, if not headquarters, in Des Moines to be close to the Apple data center? How many other companies can they now attract with larger employee counts, as a town that was chosen by Apple? If I lived in that town, and wasn't a ruralist, I'd be thrilled with the city's decision.
  - msbarnett 8y ago
    > How many other businesses are going to open branches, if not headquarters, in Des Moines to be close to the Apple data center? Probably none? Almost everything that a Data Center needs to regularly purchase in volume is produced overseas. Micron and Seagate certainly aren't going to relocate to bumfuck Iowa. What business are you picturing that would possibly gain anything from opening new headquarters in Des Moines to service a single data center?

ErikVandeWater 8y ago

> taxes are still quite high in many places Taxes for corporations are not very high at all. Fortune 500 companies routinely pay a less than 0 income tax at the federal level[0], and state level income taxes max out at 12% [1]. The race to the bottom has happened for the big businesses that have leverage. Just not for the little guy. [0] https://www.investopedia.com/news/how-fortune-500-companies-avoid-paying-income-tax/ https://www.investopedia.com/news/how-fortune-500-companies-... [1] https://taxfoundation.org/state-corporate-income-tax-rates-brackets-2018/ https://taxfoundation.org/state-corporate-income-tax-rates-b...

twblalock 8y ago
> Taxes for corporations are not very high at all. Fortune 500 companies routinely pay a less than 0 income tax at the federal level[0], and state level income taxes max out at 12% [1]. The way you quoted that Investopedia article is a bit misleading -- it says it identified 18 companies in the Fortune 500 that paid zero tax, and that 258 companies paid an average of 21.2%. 18 out of 500 companies paying zero tax is a pretty low bar for saying that paying zero tax is routine. Here's the quote from the article: > The Institute on Taxation and Economic Policy (ITEP), in a recent study, found that over the eight-year period from 2008 to 2015, 258 profitable Fortune 500 companies paid an average effective federal income tax rate of 21.2%. Over that same period, exactly 18 companies, including General Electric, International Paper, Priceline.com and PG&E Corp., avoided paying a single penny of federal income tax.
- civilitty 8y ago
  You're being no less misleading than he is. > 258 profitable Fortune 500 companies paid an average effective federal income tax rate of 21.2% So of the Fortune 500, 242 companies are unprofitable. Seriously? That ignores all the companies using legislation they helped craft to give themselves tax credits and the accounting tricks they use to bring their profits to "zero." Hell, the list itself is pathologically biased towards those businesses. Seems the rest of the country has figured out Hollywood accounting.
  - deleted 8y ago

s2g 8y ago

I prefer we just don't listen to you and stop giving in to corporate greed. It's incredibly shortsighted and foolish. It is absolutely a race to the bottom and it's just increasing wealth inequality even further. But whatever, people like you will never learn.

sctb 8y ago
Would you please comment civilly and substantively? We've asked before and need you to start following the guidelines more closely. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html