4 ms·

==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 piec

==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.

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.