4 ms·

One alternative: there are no tax breaks, the company has no reason to stay in the city and leaves, and the city is much worse off financially. These kinds of

One alternative: there are no tax breaks, the company has no reason to stay in the city and leaves, and the city is much worse off financially. These kinds of tax breaks and incentives between cities create an interesting market that acts as a check against excessive taxation, similar to how consumers force competing companies to lower prices and improve products. In my opinion, the problem is when the policies very clearly benefit a small group of players (or one) and aren't accessible to the market as a whole (which is quite frequent). Some federal verbiage preventing such specialized tax exemptions would go a long way, forcing cities to compete on city-wide tax plans, rather than being able to buy one big company at the expense of smaller taxpayers that have less power to relocate or negotiate.

im_down_w_otp 8y ago
I'm not familiar with any studies which confirm this assertion (i.e. that denying onerous tax-breaks causes big enterprises to leave town), but I am familiar with several which show the opposite to be true (i.e. companies depend on the labor pool, local environment, etc. and end up staying). The inverse of your claim is also evident even in other dimensions. Both NYC and SV are extremely capital inefficient places to operate your business and scale up an organization relative to other locations. The high cost of living, commercial real estate, and upward adjusted compensation expectations, are a kind of implicit tax relative to other areas, but... that hasn't stopped nearly the entirety of the financial and tech markets from hunkering down in their respective locales for a whole variety of reasons which make that comparative nominal capital inefficiency assumed to be more than worth it by employers and investors. Can you elaborate and/or substantiate your position?
- lend000 8y ago
  The amount of location-agnostic industry (e.g. software) in Texas or the number of companies officially headquartered in Nevada are some obvious examples of the intuitive statement: the attractiveness of business policy affects where businesses organize on a macro scale. A recent example is Washington state -- already a finance averse state -- which added complex cryptocurrency broker dealer requirements in 2017 and overnight, most of the reputable exchanges serving US customers except Coinbase closed down operations in the state[0]. The world isn't black and white -- there are more factors in the world of business than just city tax policy. Weather, labor supply, image, capital supply, access to global trade, desirability for company decision makers, and other network effects explain NYC and SV. I hope that isn't controversial. For cities that have similar 'intangibles' going for them, I'd imagine city policy makes a big difference. [0] https://www.geekwire.com/2017/new-bitcoin-regulations-shake-washington-states-cryptocurrency-industry/ https://www.geekwire.com/2017/new-bitcoin-regulations-shake-...
  - im_down_w_otp 8y ago
    You're using "reputable cryptocurrency" exchanges as a counter-example? Just trying to clarify.
thefounder 8y ago
I believe this is called state-aid in the E.U and is forbidden. If the said state wants to provide a "tax break" it must provide it to everyone(i.e the whole industry)
- Zecar 8y ago
  It should be federally illegal here. Corporate welfare is theft.

im_down_w_otp 8y ago

I'm not familiar with any studies which confirm this assertion (i.e. that denying onerous tax-breaks causes big enterprises to leave town), but I am familiar with several which show the opposite to be true (i.e. companies depend on the labor pool, local environment, etc. and end up staying). The inverse of your claim is also evident even in other dimensions. Both NYC and SV are extremely capital inefficient places to operate your business and scale up an organization relative to other locations. The high cost of living, commercial real estate, and upward adjusted compensation expectations, are a kind of implicit tax relative to other areas, but... that hasn't stopped nearly the entirety of the financial and tech markets from hunkering down in their respective locales for a whole variety of reasons which make that comparative nominal capital inefficiency assumed to be more than worth it by employers and investors. Can you elaborate and/or substantiate your position?

lend000 8y ago
The amount of location-agnostic industry (e.g. software) in Texas or the number of companies officially headquartered in Nevada are some obvious examples of the intuitive statement: the attractiveness of business policy affects where businesses organize on a macro scale. A recent example is Washington state -- already a finance averse state -- which added complex cryptocurrency broker dealer requirements in 2017 and overnight, most of the reputable exchanges serving US customers except Coinbase closed down operations in the state[0]. The world isn't black and white -- there are more factors in the world of business than just city tax policy. Weather, labor supply, image, capital supply, access to global trade, desirability for company decision makers, and other network effects explain NYC and SV. I hope that isn't controversial. For cities that have similar 'intangibles' going for them, I'd imagine city policy makes a big difference. [0] https://www.geekwire.com/2017/new-bitcoin-regulations-shake-washington-states-cryptocurrency-industry/ https://www.geekwire.com/2017/new-bitcoin-regulations-shake-...
- im_down_w_otp 8y ago
  You're using "reputable cryptocurrency" exchanges as a counter-example? Just trying to clarify.

thefounder 8y ago

I believe this is called state-aid in the E.U and is forbidden. If the said state wants to provide a "tax break" it must provide it to everyone(i.e the whole industry)

Zecar 8y ago
It should be federally illegal here. Corporate welfare is theft.