5 ms·

Even if the city gets back much more in tax revenue?

by lovecg 8y ago

Bucephalus355 8y ago
Lol dude that never happens.
- deelowe 8y ago
  Yes it does. It's extremely common for businesses to be offered incentives like this. They are usually bounded in a way to ensure it's beneficial to the city. The ones I've seen are requiring a certain number of headcount be maintained over a specific duration, a certain amount in salary be paid out over a specific period of time, and certain infrastructure be installed within a certain period. If these obligations aren't met, then the company is required to pay back the incentives plus penalties.
  - josefresco 8y ago
    Except this: https://www.chicagotribune.com/business/ct-wisconsin-foxconn-tax-incentives-20170808-story.html https://www.chicagotribune.com/business/ct-wisconsin-foxconn... Maybe an extreme example of a "bad deal" but these aren't always a slam dunk, and some of the math to justify (especially sports stadiums) can be a bit iffy.
  - throwaway2048 8y ago
    even if that is true (which it isn't) the HQ2 deal had no conditions like that attached.
- Guest42 8y ago
  https://en.wikipedia.org/wiki/Laffer_curve https://en.wikipedia.org/wiki/Laffer_curve But what about.....just kidding couldn't help it
CydeWeys 8y ago
No, because then it's a race to the bottom and all other companies start expecting these same deals (or even better), and eventually you do end up with a situation where the city does not get back more in tax revenue. It's simple negotiation; you may lose some money on that one deal, but you'll gain more in the end by not decreasing the value of all subsequent deals.
- natalyarostova 8y ago
  The counter-point to race to the bottom, is this is an important aspect of pressure in a democratic capitalism to prevent government as a leviathan. The government has a natural incentive to want to raise more revenue, and increase power. A strong market that can stifle these, at times potentially inefficient taxes, can provide a natural check on this. Obviously the truth is that there are bad aspects of a race to the bottom as well as positive attributes. Finding the balance requires nuance and grace by the leaders who navigate these uncertain waters.
- refurb 8y ago
  If a city signs up for a money losing deal, that’s on them. They should have negotiated better.
  - CydeWeys 8y ago
    I mean, clearly we haven't signed up for the money-losing deal, as the deal has been canceled because of opposition and no give-aways will ever be made to Amazon.
    - refurb 8y ago
      I wasn’t referring to the NYC deal specifically.
- SilasX 8y ago
  Or, you'll lose out on all the businesses that won't start or expand there because the baseline level of taxation is too unfavorable for the economy (in either sense of the word) that the city offers. It's almost like taxing easily-moveable economic activity is a bad idea.
jdhn 8y ago
You're getting downvoted, but it's true. If I recall, the city/state would've broken even not that far into the future, and then everything after that would've been pure profit for them.
- OldFatCactus 8y ago
  do you have a link to that data?
  - jdhn 8y ago
    Here you go[0]. Some highlights: 1. $2.988 billion in state/city subsidies (so ~$48,000 per job) 2. The state estimated that Amazon will generate $27.5 billion in state and city revenue over 25 years, a 9:1 ratio of revenue to subsidies. Using the numbers above, we can calculate that the state would break even in roughly 3 years if they're correct. [0]https://ny.curbed.com/2018/11/16/18098589/amazon-hq2-nyc-queens-long-island-city-explained https://ny.curbed.com/2018/11/16/18098589/amazon-hq2-nyc-que...
    - pzone 8y ago
      The subsidies themselves would have been given to Amazon over the course of several years. NY would be in the black after no more than a year.
- dralley 8y ago
  It's a matter of principle. NYC (or any municipality) shouldn't be bending over for massive multinationals. It's a form of corruption, one that's depressingly widespread, and it's a race to the bottom that, from a 30,000 foot view, accomplishes nothing but screwing over the taxpayers and smaller competitors lacking the leverage for these antics, and benefiting the corporations that are already enormous and powerful.
  - jas_far 8y ago
    I can’t believe you have to explain to people why corporatism is a bad thing. It underlies the largest problems in this country, and we should actively be protesting it.
bacondude3 8y ago
Even then, no. If a city wants businesses there, they should make it easier for everybody, not just big companies like Amazon.
deleted 8y ago
[deleted]

Even if the city gets back much more in tax revenue?

by lovecg 8y ago

Even if the city gets back much more in tax revenue?

Bucephalus355 8y ago

Lol dude that never happens.

deelowe 8y ago
Yes it does. It's extremely common for businesses to be offered incentives like this. They are usually bounded in a way to ensure it's beneficial to the city. The ones I've seen are requiring a certain number of headcount be maintained over a specific duration, a certain amount in salary be paid out over a specific period of time, and certain infrastructure be installed within a certain period. If these obligations aren't met, then the company is required to pay back the incentives plus penalties.
- josefresco 8y ago
  Except this: https://www.chicagotribune.com/business/ct-wisconsin-foxconn-tax-incentives-20170808-story.html https://www.chicagotribune.com/business/ct-wisconsin-foxconn... Maybe an extreme example of a "bad deal" but these aren't always a slam dunk, and some of the math to justify (especially sports stadiums) can be a bit iffy.
- throwaway2048 8y ago
  even if that is true (which it isn't) the HQ2 deal had no conditions like that attached.
Guest42 8y ago
https://en.wikipedia.org/wiki/Laffer_curve https://en.wikipedia.org/wiki/Laffer_curve But what about.....just kidding couldn't help it

CydeWeys 8y ago

No, because then it's a race to the bottom and all other companies start expecting these same deals (or even better), and eventually you do end up with a situation where the city does not get back more in tax revenue. It's simple negotiation; you may lose some money on that one deal, but you'll gain more in the end by not decreasing the value of all subsequent deals.

natalyarostova 8y ago
The counter-point to race to the bottom, is this is an important aspect of pressure in a democratic capitalism to prevent government as a leviathan. The government has a natural incentive to want to raise more revenue, and increase power. A strong market that can stifle these, at times potentially inefficient taxes, can provide a natural check on this. Obviously the truth is that there are bad aspects of a race to the bottom as well as positive attributes. Finding the balance requires nuance and grace by the leaders who navigate these uncertain waters.
refurb 8y ago
If a city signs up for a money losing deal, that’s on them. They should have negotiated better.
- CydeWeys 8y ago
  I mean, clearly we haven't signed up for the money-losing deal, as the deal has been canceled because of opposition and no give-aways will ever be made to Amazon.
  - refurb 8y ago
    I wasn’t referring to the NYC deal specifically.
SilasX 8y ago
Or, you'll lose out on all the businesses that won't start or expand there because the baseline level of taxation is too unfavorable for the economy (in either sense of the word) that the city offers. It's almost like taxing easily-moveable economic activity is a bad idea.

jdhn 8y ago

You're getting downvoted, but it's true. If I recall, the city/state would've broken even not that far into the future, and then everything after that would've been pure profit for them.

OldFatCactus 8y ago
do you have a link to that data?
- jdhn 8y ago
  Here you go[0]. Some highlights: 1. $2.988 billion in state/city subsidies (so ~$48,000 per job) 2. The state estimated that Amazon will generate $27.5 billion in state and city revenue over 25 years, a 9:1 ratio of revenue to subsidies. Using the numbers above, we can calculate that the state would break even in roughly 3 years if they're correct. [0]https://ny.curbed.com/2018/11/16/18098589/amazon-hq2-nyc-queens-long-island-city-explained https://ny.curbed.com/2018/11/16/18098589/amazon-hq2-nyc-que...
  - pzone 8y ago
    The subsidies themselves would have been given to Amazon over the course of several years. NY would be in the black after no more than a year.
dralley 8y ago
It's a matter of principle. NYC (or any municipality) shouldn't be bending over for massive multinationals. It's a form of corruption, one that's depressingly widespread, and it's a race to the bottom that, from a 30,000 foot view, accomplishes nothing but screwing over the taxpayers and smaller competitors lacking the leverage for these antics, and benefiting the corporations that are already enormous and powerful.
- jas_far 8y ago
  I can’t believe you have to explain to people why corporatism is a bad thing. It underlies the largest problems in this country, and we should actively be protesting it.

bacondude3 8y ago

Even then, no. If a city wants businesses there, they should make it easier for everybody, not just big companies like Amazon.

deleted 8y ago

[deleted]