7 ms·

> Google is promising to bring 50 full-time positions to the area. The company also projects that it will create 2,300 jobs during the 18–24 month construction

by kartan 8y ago

> Google is promising to bring 50 full-time positions to the area. The company also projects that it will create 2,300 jobs during the 18–24 month construction window. Is this a joke? > State Sen. Andrew Mathews (R–Milaca) and state Rep. Shane Mekeland (R–Clear Lake) recently introduced a bill to provide an additional $20.1 million in state bonds to give the Becker Business Park—where the data center would be built—a facelift. So, invest 1 million in politicians get tens of millions from the public treasury. > Such incentives are typically justified by politicians as a crucial way to stimulate the economy. Probably their own personal economies. There are reasons to give corporations tax breaks. Like for example to expand green energy or to give jobs to people in risk of exclusion, or another hundred reasons. But, it looks like now it is used for everything without any real justification beyond "the company will bring business to the town". That can be covered by any kind of business willing to pay for lobbying and that does not present any social benefit. And it is a zero-sum game where another town loses the possibility for you to gain it. It is hardly a justifiable situation.

moorhosj 8y ago
==And it is a zero-sum game where another town loses the possibility for you to gain it. It is hardly a justifiable situation.== This is the most critical piece. What would legislation to address this at the national level even look like?
- alehul 8y ago
  The only way seems to be to either to completely outlaw these negotiations, or create a standard rate (i.e. if the project will bring 100 jobs, the cities have the option but not the obligation to offer $10m in various forms of tax breaks— or maybe capped at $10m). The trouble is that, at a higher level, this unwillingness to play ball may just result in the companies fleeing to other countries rather than other states. This involves a higher switching cost for most companies, and would require more incentives than that for intra-nation migration, but it's still possible.
  - jamiequint 8y ago
    You can't outlaw them without modifying the US Constitution due to the 10th Amendment as it concerns states rights. Individual states could outlaw it, but they would just be putting themselves at a disadvantage relative to other states that did not.
    - zeckalpha 8y ago
      Interstate commerce?
    - gwright 8y ago
      I'd like to understand why the 14th Amendments provisions for due process and equality under the law aren't applicable. Seems to me that whatever taxing regime a state designs should be applicable equally to all legal entities (people/corporations/llc/etc). No favorites.
  - AJ007 8y ago
    It seems like the federal tax code could be changed so local tax breaks or incentives just count as fully taxed income.
  - kartan 8y ago
    > this unwillingness to play ball may just result in the companies fleeing to other countries rather than other states If they could they will do it. But it is not possible as you need data locality. If your data center is in China, it cannot compete in speed with a local data center. And this is true in different ways for a lot of businesses. That is one of the many reasons why all business are not already in India even that everything is way cheaper there. And how a small company can compete with this kind of deals? Google is already having a scale advantage add to that tax breaks and it's impossible to compete with them. These tax breaks have a very bad impact on any capitalist economy.
    - chrisco255 8y ago
      Well, small companies don't have a need to build large multi million dollar data centers, for one. Data centers, we can all agree, are kind of like a utility that favors scale. But there's lots of businesses and industries where this is true.
- logfromblammo 8y ago
  Minimum wage for municipalities. Establish a federal minimum for local taxes. No sweetheart deal in the country entice the business more than the minimum allowable by law. Might as well go ahead and also ban cities from building stadiums at taxpayer expense, but for some sports team owner's near-exclusive benefit. It's the same kind of extortion: give us what we want, or we go to another city.
- toomuchtodo 8y ago
  > What would legislation to address this at the national level even look like? Any tax breaks offered to and accepted by a corporation reduce federal dollars provided to the state where the tax breaks were provided. Let the state deal with the accounting internally if you want to penalize locals directly for their actions. This doesn't outlaw the tax breaks, but it does force states to feel the pain of doing it by making it net out. No different than when the federal government requires states to raise the drinking age to 21 by withholding highway funds. If we can cap SALT deductions, this isn't much of a stretch beyond that.
Gpetrium 8y ago
@kartan, there is a lot of valid reasons to give an incentive such as a tax break to a large company, I will list a few: 1. Brand name corporation in your community, leading to new businesses propping up 2. Increase land-value in the area, leading to higher city taxes 3. Income, corporate and other taxes associated with the company's project & continuous operation 4. Long-term certainty. Most companies wont build a data center only to scrap the project in 2 years. 5. Economic multiplier. If we assume that each job is tied to $100,000 in income, taxes, benefits, etc and there are 2,300 jobs for 24months, we are looking at $345M-460M in 2 years. Run an economic multiplier and you may be reaching the billion mark 6. Plenty of city,state,federal projects run at a negative or neutral economic value. Having a business such as Google offering to bring business to your hometown will certainly make you listen to them and consider their offer. It becomes a matter of cost/benefit analysis and ensuring that the community accepting this transaction understands and has the option to complain about it. I agree that if everyone plays this game, we may reach a point where governments are fully subsidizing every business (there are already plenty of businesses subsidized by governments). It is a matter of finding the right balance.
- tw04 8y ago
  1. There are already dozens of datacenters in Minnesota. They aren't prompting other businesses to pop up because they are self-contained and self-serving. Furthermore there is no "brand recognition" they are giant unmarked warehouses that could be a datacenter or could just be another nameless storage facility. 2. Why would a datacenter increase land value? This isn't a corporate headquarters, it's a datacenter. 3. Taxes on what? That's what this package is, tax exemtpion. 4. Again, the datacenter employs "20 people" which is really like 4 FTEs and a bunch of cleaning staff. And likely part-time Security guards. 5. There won't be 2,000 jobs to build a datacenter, that's wildly exaggerated. And there's no way in hell that the average construction worker is making even half of the number you just stated. 6. If they were bringing actual jobs, and not a borderline-unmanned datacenter, sure. This isn't that.
  - Gpetrium 8y ago
    I will bite your response with the hopes you try to keep an open mind to the response you get instead of a preconceived notion of how things work. 1. Data centers are a symbol to a much larger economic schema that impacts quality of service to the area, economic prosperity, among other areas. Minnesota can literally come to prospect business and say "Look, Google, X, Y and Z companies gave us a seal of approval that our state is tech driven, come join them in the future of technology in America" You would be surprised how 1 transaction with a big brand can help future business opportunities. 2. One data center alone does not increase land value, the combination of all the variables I list ++++ do. 3. Every employee that is paid is taxed, every equipment they purchase is taxed, every goods or services they need is taxed, land is taxed. Taxation is not just what income tax and corporate tax. 4. You shouldn't be comparing a data center to a headquarter, they are two distinct parts of a business and the economy. You will have 20 people + the contractors needed from time to time + folks that need to fly to the data center 70% of their time + other marketing, sales jobs to sell the data center services to the state economy. Is it on the same degree as a headquarter? Never, nor should it be seeing as such 5. You could divide the number of jobs by 30 and you could still break-even as a city/state without accounting for the other benefits I list (and the ones I didn't). You are also forgetting that there are other costs associated with the job that are not construction work and even within construction work, there are specialists that make more money. Always remember, just because your paycheck says you make $15 an hour, it doesn't mean that your cost is a lot higher. 6. Refer to the other points and try to think of the ones I didn't list (improved disaster readiness in the region, energy consumption cost and taxes/jobs associated with it, promises to set-up green initiatives, etc) I hope this has helped you see a different side of the equation.
KorematsuFred 8y ago
This is in general a good thing if all companies can negotiate such deals. This leads to different administrative areas competing for different kid of projects and also lower the tax rate. All this results into more efficient government. Note that 15M means very little for Google any ways.But those jobs can have massive impact on the local economy creating millions more for the locals and as well as state.
- raphaelj 8y ago
  That is only true if it also works for smaller companies. Small corporations can't negotiate such deals, which will make them unable to efficiently compete against these larger companies.
  - KorematsuFred 8y ago
    Small corporations can't negotiate such deals because the value they could add is also significantly less, on other hand smaller corporations have the benefit of skirting most regulations that large corporations simply can not.
openloop 8y ago
Seems legit. Union contract? Nah...
buttcoinslol 8y ago
> The company also projects that it will create 2,300 jobs during the 18–24 month construction window. The number I've heard so far for project cost is 600 million dollars. You can figure roughly 300-350 million dollars going into the pockets of the local workers directly (2 years of labor [4160 hours] for 2300 people @ 35/hr), which is a rough average of MN prevailing wage determinations for trade workers if you account for the 20 -30 trades that will work on a project like this. The state benefits by bringing a highly-visible employer to an exurban area, even if it is only 50 full time jobs. They get an anchor tenant of sorts that may attract other real estate development and business in the area. There are plenty of benefits to be gained on a 20 million investment. Note, most of the labor will be local union tradespeople who pay state taxes and spend their money in the state. Disclaimer: My company will be bidding one (or multiple) part(s) of the construction part of this project.
- supernovae 8y ago
  Every data center I visit is always established in an economically depressed area by design. No one wants their data center costs to be increased because of massive commercial growth outside the scope of needing internet and power. The bulk of data center jobs are for 50 trade skill type people but all of the brogrammers and developers will be in major cities working remotely since no one these days gets or needs access to any facilities and it won't be long before those 50 people are replaced by robots. This is google after all.
  - chrisco255 8y ago
    There's no need to disparage software devs as brogrammers, especially in this context.
    - supernovae 8y ago
      Not sure why you felt the need to be offended.
      - chrisco255 8y ago
Proven 8y ago
> Like for example to expand green energy Why? It’s nonsense and if one type of energy is subsidized, others must be taxed even more to make up for the shortfall. It doesn’t make any sense. > or to give jobs to people in risk of exclusion, or another hundred reasons. Who is to say who’s “at risk” but the same politicians who you don’t believe can decide fairly? Just knock it off. Use your own money to fund people you deem to be “at risk”. It’s horrifying to see (in the comments) how many philosopher kings are on this site.
notatoad 8y ago
>So, invest 1 million in politicians i think you seriously overestimate how much it costs to purchase a state senator.

by kartan 8y ago

moorhosj 8y ago

==And it is a zero-sum game where another town loses the possibility for you to gain it. It is hardly a justifiable situation.== This is the most critical piece. What would legislation to address this at the national level even look like?

alehul 8y ago
The only way seems to be to either to completely outlaw these negotiations, or create a standard rate (i.e. if the project will bring 100 jobs, the cities have the option but not the obligation to offer $10m in various forms of tax breaks— or maybe capped at $10m). The trouble is that, at a higher level, this unwillingness to play ball may just result in the companies fleeing to other countries rather than other states. This involves a higher switching cost for most companies, and would require more incentives than that for intra-nation migration, but it's still possible.
- jamiequint 8y ago
  You can't outlaw them without modifying the US Constitution due to the 10th Amendment as it concerns states rights. Individual states could outlaw it, but they would just be putting themselves at a disadvantage relative to other states that did not.
  - zeckalpha 8y ago
    Interstate commerce?
  - gwright 8y ago
    I'd like to understand why the 14th Amendments provisions for due process and equality under the law aren't applicable. Seems to me that whatever taxing regime a state designs should be applicable equally to all legal entities (people/corporations/llc/etc). No favorites.
- AJ007 8y ago
  It seems like the federal tax code could be changed so local tax breaks or incentives just count as fully taxed income.
- kartan 8y ago
  > this unwillingness to play ball may just result in the companies fleeing to other countries rather than other states If they could they will do it. But it is not possible as you need data locality. If your data center is in China, it cannot compete in speed with a local data center. And this is true in different ways for a lot of businesses. That is one of the many reasons why all business are not already in India even that everything is way cheaper there. And how a small company can compete with this kind of deals? Google is already having a scale advantage add to that tax breaks and it's impossible to compete with them. These tax breaks have a very bad impact on any capitalist economy.
  - chrisco255 8y ago
    Well, small companies don't have a need to build large multi million dollar data centers, for one. Data centers, we can all agree, are kind of like a utility that favors scale. But there's lots of businesses and industries where this is true.
logfromblammo 8y ago
Minimum wage for municipalities. Establish a federal minimum for local taxes. No sweetheart deal in the country entice the business more than the minimum allowable by law. Might as well go ahead and also ban cities from building stadiums at taxpayer expense, but for some sports team owner's near-exclusive benefit. It's the same kind of extortion: give us what we want, or we go to another city.
toomuchtodo 8y ago
> What would legislation to address this at the national level even look like? Any tax breaks offered to and accepted by a corporation reduce federal dollars provided to the state where the tax breaks were provided. Let the state deal with the accounting internally if you want to penalize locals directly for their actions. This doesn't outlaw the tax breaks, but it does force states to feel the pain of doing it by making it net out. No different than when the federal government requires states to raise the drinking age to 21 by withholding highway funds. If we can cap SALT deductions, this isn't much of a stretch beyond that.

Gpetrium 8y ago

@kartan, there is a lot of valid reasons to give an incentive such as a tax break to a large company, I will list a few: 1. Brand name corporation in your community, leading to new businesses propping up 2. Increase land-value in the area, leading to higher city taxes 3. Income, corporate and other taxes associated with the company's project & continuous operation 4. Long-term certainty. Most companies wont build a data center only to scrap the project in 2 years. 5. Economic multiplier. If we assume that each job is tied to $100,000 in income, taxes, benefits, etc and there are 2,300 jobs for 24months, we are looking at $345M-460M in 2 years. Run an economic multiplier and you may be reaching the billion mark 6. Plenty of city,state,federal projects run at a negative or neutral economic value. Having a business such as Google offering to bring business to your hometown will certainly make you listen to them and consider their offer. It becomes a matter of cost/benefit analysis and ensuring that the community accepting this transaction understands and has the option to complain about it. I agree that if everyone plays this game, we may reach a point where governments are fully subsidizing every business (there are already plenty of businesses subsidized by governments). It is a matter of finding the right balance.

tw04 8y ago
1. There are already dozens of datacenters in Minnesota. They aren't prompting other businesses to pop up because they are self-contained and self-serving. Furthermore there is no "brand recognition" they are giant unmarked warehouses that could be a datacenter or could just be another nameless storage facility. 2. Why would a datacenter increase land value? This isn't a corporate headquarters, it's a datacenter. 3. Taxes on what? That's what this package is, tax exemtpion. 4. Again, the datacenter employs "20 people" which is really like 4 FTEs and a bunch of cleaning staff. And likely part-time Security guards. 5. There won't be 2,000 jobs to build a datacenter, that's wildly exaggerated. And there's no way in hell that the average construction worker is making even half of the number you just stated. 6. If they were bringing actual jobs, and not a borderline-unmanned datacenter, sure. This isn't that.
- Gpetrium 8y ago
  I will bite your response with the hopes you try to keep an open mind to the response you get instead of a preconceived notion of how things work. 1. Data centers are a symbol to a much larger economic schema that impacts quality of service to the area, economic prosperity, among other areas. Minnesota can literally come to prospect business and say "Look, Google, X, Y and Z companies gave us a seal of approval that our state is tech driven, come join them in the future of technology in America" You would be surprised how 1 transaction with a big brand can help future business opportunities. 2. One data center alone does not increase land value, the combination of all the variables I list ++++ do. 3. Every employee that is paid is taxed, every equipment they purchase is taxed, every goods or services they need is taxed, land is taxed. Taxation is not just what income tax and corporate tax. 4. You shouldn't be comparing a data center to a headquarter, they are two distinct parts of a business and the economy. You will have 20 people + the contractors needed from time to time + folks that need to fly to the data center 70% of their time + other marketing, sales jobs to sell the data center services to the state economy. Is it on the same degree as a headquarter? Never, nor should it be seeing as such 5. You could divide the number of jobs by 30 and you could still break-even as a city/state without accounting for the other benefits I list (and the ones I didn't). You are also forgetting that there are other costs associated with the job that are not construction work and even within construction work, there are specialists that make more money. Always remember, just because your paycheck says you make $15 an hour, it doesn't mean that your cost is a lot higher. 6. Refer to the other points and try to think of the ones I didn't list (improved disaster readiness in the region, energy consumption cost and taxes/jobs associated with it, promises to set-up green initiatives, etc) I hope this has helped you see a different side of the equation.

KorematsuFred 8y ago

This is in general a good thing if all companies can negotiate such deals. This leads to different administrative areas competing for different kid of projects and also lower the tax rate. All this results into more efficient government. Note that 15M means very little for Google any ways.But those jobs can have massive impact on the local economy creating millions more for the locals and as well as state.

raphaelj 8y ago
That is only true if it also works for smaller companies. Small corporations can't negotiate such deals, which will make them unable to efficiently compete against these larger companies.
- KorematsuFred 8y ago
  Small corporations can't negotiate such deals because the value they could add is also significantly less, on other hand smaller corporations have the benefit of skirting most regulations that large corporations simply can not.

openloop 8y ago

Seems legit. Union contract? Nah...

buttcoinslol 8y ago

> The company also projects that it will create 2,300 jobs during the 18–24 month construction window. The number I've heard so far for project cost is 600 million dollars. You can figure roughly 300-350 million dollars going into the pockets of the local workers directly (2 years of labor [4160 hours] for 2300 people @ 35/hr), which is a rough average of MN prevailing wage determinations for trade workers if you account for the 20 -30 trades that will work on a project like this. The state benefits by bringing a highly-visible employer to an exurban area, even if it is only 50 full time jobs. They get an anchor tenant of sorts that may attract other real estate development and business in the area. There are plenty of benefits to be gained on a 20 million investment. Note, most of the labor will be local union tradespeople who pay state taxes and spend their money in the state. Disclaimer: My company will be bidding one (or multiple) part(s) of the construction part of this project.

supernovae 8y ago
Every data center I visit is always established in an economically depressed area by design. No one wants their data center costs to be increased because of massive commercial growth outside the scope of needing internet and power. The bulk of data center jobs are for 50 trade skill type people but all of the brogrammers and developers will be in major cities working remotely since no one these days gets or needs access to any facilities and it won't be long before those 50 people are replaced by robots. This is google after all.
- chrisco255 8y ago
  There's no need to disparage software devs as brogrammers, especially in this context.
  - supernovae 8y ago
    Not sure why you felt the need to be offended.
    - chrisco255 8y ago

Proven 8y ago

> Like for example to expand green energy Why? It’s nonsense and if one type of energy is subsidized, others must be taxed even more to make up for the shortfall. It doesn’t make any sense. > or to give jobs to people in risk of exclusion, or another hundred reasons. Who is to say who’s “at risk” but the same politicians who you don’t believe can decide fairly? Just knock it off. Use your own money to fund people you deem to be “at risk”. It’s horrifying to see (in the comments) how many philosopher kings are on this site.

notatoad 8y ago

>So, invest 1 million in politicians i think you seriously overestimate how much it costs to purchase a state senator.