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I am always struck at the amount that states and municipalities are willing to write off in order to attract companies. On one hand, I understand that companies

I am always struck at the amount that states and municipalities are willing to write off in order to attract companies. On one hand, I understand that companies want to take the best deal, but on the other hand, at times local governments are willing to give up so much money in tax revenue. I remember reading about the competitions for Google Fiber and Amazon's second HQ - it felt absurd the amount cities and states were willing to drop, financially speaking. I'm glad this one has been renegotiated (especially seeing that the proposed plant never happened), but I'd like to see these deals be more level-headed before they get to this point.

luckylion 5y ago
They don't have a choice between Amazon HQ or 50 medium sized new businesses, they often have Amazon HQ or nothing new. In that case, whatever they get is more than they have now, isn't it? New jobs that will bring other new businesses and local taxes etc are a bonus.
- wavefunction 5y ago
  Places that were serious contenders for Amazon HQ definitely have other employers and options. There is no way that Amazon HQ is ending up in Sioux Falls or Laramie or something.
- insert_coin 5y ago
  It looks that way in the end, with no other alternative but to yield, but at some point there were many options, that is how the town, city, county or state came to be in the first place. The problem is that they gave so many concessions just to get a short term political advantage, that real productive and sustainable jobs couldn't compete with corruption. Now because of the giant snowball made from all the little policy mistakes that sounded insignificant at first, or ever worse, sounded sound! I mean who wouldn't want high paying jobs that barely require any training? the only option in many places is to keep the charade, but at some point politics need to give way to real production, and that only means real competition.
danhak 5y ago
They’re not really “giving up” anything if they attract a business that otherwise wouldn’t be there at all. It’s still a net gain to have a major employer in your locale, along with all the other economic benefits and tax revenue that entails.
- Taylor_OD 5y ago
  It could be a net gain. Dropping a few thousand jobs and a factory into an area changes said area. Sometimes for the better. Sometimes not.
  - cycrutchfield 5y ago
    Most communities tend to prefer having lots of jobs available versus having too few jobs available.
    - Taylor_OD 5y ago
      Absolutely. But I don't know anyone who likes having the added traffic that thousands of jobs bring. And increased housing prices. And yada yada. More jobs isnt always positive and at the very least have some downsides.
- 34679 5y ago
  They're giving up fairness and equality- equal treatment under the law. If the entire state wasn't completely devoid of any entities looking to compete in that space, it probably is now. Anyone making LCD panels in Wisconsin suddenly has a $80,000,000 greater financial gap from their largest competitor. If the lower taxes are good for creating jobs at a net gain to the local economy, then the lower rate should be applied equally among all similarly taxed entities.
  - dntrkv 5y ago
    > If the lower taxes are good for creating jobs at net gain to the local economy, then the lower rate should be applied equally among all similarly taxed entities. I agree with the premise here, but in reality, you can see that won't actually work. You have existing businesses in an area paying a certain amount in taxes. You want to attract a new major business. If you lower your taxes for all the businesses in hopes of attracting the new business, you just lost a huge chunk of revenue for something that might not come to fruition. Whereas if you don't lower your taxes, that new business has no incentive to go with your locale, and will instead, settle somewhere there is an already established talent-base/infrastructure/etc. Furthering the economic inequality between the regions. I am not a fan of these tax incentives, but I can't blame these places for using them.
tppiotrowski 5y ago
I think it’s a zero-sum game. Only one of your competitors has to offer a concession to win the business so you have to compete.
rchaud 5y ago
> but I'd like to see these deals be more level-headed before they get to this point. I don't think that's possible considering the incentives at play. Politicians always have the next election in mind, and what better way to try to win it then sign a deal that promises jobs? Doesn't matter if the numbers bandied about are too good to be true --- just get pen to paper and point the finger at your opponent and decry him as anti-business.
fnord77 5y ago
it's a pretty low risk gamble for the politicians and there's almost always a reward for them even if the deal falls through.
- vmchale 5y ago
  In this case because Scott Walker lost re-election.
  - fnord77 5y ago
    > On July 16, 2019, President Trump announced his intent to appoint Walker to be a Member (Private Life) of the Board of Trustees of the Woodrow Wilson International Center for Scholars in the Smithsonian Institution he was rewarded with a sinecure.
grecy 5y ago
> local governments are willing to give up so much money in tax revenue It's literally a race to the bottom, and for some reason people are eager to win!
AzzieElbab 5y ago
you cant "give up" tax revenue you haven't collected
- nindalf 5y ago
  You're right, but you can contribute to a race-to-the-bottom where no one collects any tax.
  - j_walter 5y ago
    You get taxes in other ways through new building permits, higher property taxes, local sales tax, etc...there is more going on than just collecting corporate taxes in a municipality. The more people you draw the better your overall tax revenue is...and the taxes you are willing to put off are limited in time and generally expire after 5-10 years.
    - jrumbut 5y ago
      This is all true but it just describes why jurisdictions are willing to join the race to the bottom.
      - AzzieElbab 5y ago
        But “the bottom” is not really a bottom then. It is like a joint private/public venture. What is wrong with that?
        jrumbut 5y ago
        It's not really a problem for the partners in the joint private/public venture. It is a problem for the next jurisdiction that is now facing companies' expectations of massive incentives, for the existing residents and businesses that are paying normal taxes because they aren't new, for any but the largest businesses who don't have lobbyists on staff, etc. There's also the general wisdom that life is better when you're competing to offer more value for more money, not just cutting costs as far as you can
r00fus 5y ago
Let's just call it what is is: corruption. Corruption isn't just something that happens in 3rd world countries. Alive and well in the US of A.
- data_spy 5y ago
  In this case, it was actually a Governor who didn't know math more so than corruption. At least for the original terms in 2017.
  - r00fus 5y ago
    Do you actually believe that? Gov. Walker was notorious for various other corrupt activities as well. In other terms, grey's law applies here: Any sufficiently advanced incompetence is indistinguishable from malice
    - imtringued 5y ago
      It would be corruption if he personally benefits from the project, e.g. by selling land to Foxconn. I don't know the specific details to know if it really was a case of corruption.
      - r00fus 5y ago
        A load of bitcoin in a hidden wallet? Not that visible. Easy to disguise. The payoff could be very hard to find, but the malfeasance in public office is clear as day.
- imtringued 5y ago
  It's corporate welfare.
specialist 5y ago
Close the deal, claim credit, move on before the inevitable consequences. Just like a sales driven tech company. Heroes for booking sales. Score fat commission. Loser developers and clients are left holding the bag.

luckylion 5y ago

They don't have a choice between Amazon HQ or 50 medium sized new businesses, they often have Amazon HQ or nothing new. In that case, whatever they get is more than they have now, isn't it? New jobs that will bring other new businesses and local taxes etc are a bonus.

wavefunction 5y ago
Places that were serious contenders for Amazon HQ definitely have other employers and options. There is no way that Amazon HQ is ending up in Sioux Falls or Laramie or something.
insert_coin 5y ago
It looks that way in the end, with no other alternative but to yield, but at some point there were many options, that is how the town, city, county or state came to be in the first place. The problem is that they gave so many concessions just to get a short term political advantage, that real productive and sustainable jobs couldn't compete with corruption. Now because of the giant snowball made from all the little policy mistakes that sounded insignificant at first, or ever worse, sounded sound! I mean who wouldn't want high paying jobs that barely require any training? the only option in many places is to keep the charade, but at some point politics need to give way to real production, and that only means real competition.

danhak 5y ago

They’re not really “giving up” anything if they attract a business that otherwise wouldn’t be there at all. It’s still a net gain to have a major employer in your locale, along with all the other economic benefits and tax revenue that entails.

Taylor_OD 5y ago
It could be a net gain. Dropping a few thousand jobs and a factory into an area changes said area. Sometimes for the better. Sometimes not.
- cycrutchfield 5y ago
  Most communities tend to prefer having lots of jobs available versus having too few jobs available.
  - Taylor_OD 5y ago
    Absolutely. But I don't know anyone who likes having the added traffic that thousands of jobs bring. And increased housing prices. And yada yada. More jobs isnt always positive and at the very least have some downsides.
34679 5y ago
They're giving up fairness and equality- equal treatment under the law. If the entire state wasn't completely devoid of any entities looking to compete in that space, it probably is now. Anyone making LCD panels in Wisconsin suddenly has a $80,000,000 greater financial gap from their largest competitor. If the lower taxes are good for creating jobs at a net gain to the local economy, then the lower rate should be applied equally among all similarly taxed entities.
- dntrkv 5y ago
  > If the lower taxes are good for creating jobs at net gain to the local economy, then the lower rate should be applied equally among all similarly taxed entities. I agree with the premise here, but in reality, you can see that won't actually work. You have existing businesses in an area paying a certain amount in taxes. You want to attract a new major business. If you lower your taxes for all the businesses in hopes of attracting the new business, you just lost a huge chunk of revenue for something that might not come to fruition. Whereas if you don't lower your taxes, that new business has no incentive to go with your locale, and will instead, settle somewhere there is an already established talent-base/infrastructure/etc. Furthering the economic inequality between the regions. I am not a fan of these tax incentives, but I can't blame these places for using them.

tppiotrowski 5y ago

I think it’s a zero-sum game. Only one of your competitors has to offer a concession to win the business so you have to compete.

rchaud 5y ago

> but I'd like to see these deals be more level-headed before they get to this point. I don't think that's possible considering the incentives at play. Politicians always have the next election in mind, and what better way to try to win it then sign a deal that promises jobs? Doesn't matter if the numbers bandied about are too good to be true --- just get pen to paper and point the finger at your opponent and decry him as anti-business.

fnord77 5y ago

it's a pretty low risk gamble for the politicians and there's almost always a reward for them even if the deal falls through.

vmchale 5y ago
In this case because Scott Walker lost re-election.
- fnord77 5y ago
  > On July 16, 2019, President Trump announced his intent to appoint Walker to be a Member (Private Life) of the Board of Trustees of the Woodrow Wilson International Center for Scholars in the Smithsonian Institution he was rewarded with a sinecure.

grecy 5y ago

> local governments are willing to give up so much money in tax revenue It's literally a race to the bottom, and for some reason people are eager to win!

AzzieElbab 5y ago

you cant "give up" tax revenue you haven't collected

nindalf 5y ago
You're right, but you can contribute to a race-to-the-bottom where no one collects any tax.
- j_walter 5y ago
  You get taxes in other ways through new building permits, higher property taxes, local sales tax, etc...there is more going on than just collecting corporate taxes in a municipality. The more people you draw the better your overall tax revenue is...and the taxes you are willing to put off are limited in time and generally expire after 5-10 years.
  - jrumbut 5y ago
    This is all true but it just describes why jurisdictions are willing to join the race to the bottom.
    - AzzieElbab 5y ago
      But “the bottom” is not really a bottom then. It is like a joint private/public venture. What is wrong with that?
      - jrumbut 5y ago
        It's not really a problem for the partners in the joint private/public venture. It is a problem for the next jurisdiction that is now facing companies' expectations of massive incentives, for the existing residents and businesses that are paying normal taxes because they aren't new, for any but the largest businesses who don't have lobbyists on staff, etc. There's also the general wisdom that life is better when you're competing to offer more value for more money, not just cutting costs as far as you can

r00fus 5y ago

Let's just call it what is is: corruption. Corruption isn't just something that happens in 3rd world countries. Alive and well in the US of A.

data_spy 5y ago
In this case, it was actually a Governor who didn't know math more so than corruption. At least for the original terms in 2017.
- r00fus 5y ago
  Do you actually believe that? Gov. Walker was notorious for various other corrupt activities as well. In other terms, grey's law applies here: Any sufficiently advanced incompetence is indistinguishable from malice
  - imtringued 5y ago
    It would be corruption if he personally benefits from the project, e.g. by selling land to Foxconn. I don't know the specific details to know if it really was a case of corruption.
    - r00fus 5y ago
      A load of bitcoin in a hidden wallet? Not that visible. Easy to disguise. The payoff could be very hard to find, but the malfeasance in public office is clear as day.
imtringued 5y ago
It's corporate welfare.

specialist 5y ago

Close the deal, claim credit, move on before the inevitable consequences. Just like a sales driven tech company. Heroes for booking sales. Score fat commission. Loser developers and clients are left holding the bag.