5 ms·

This should be illegal. First off, it is deeply immoral to tax employees and give the money straight to their employer. But also, you don’t want to have this

This should be illegal. First off, it is deeply immoral to tax employees and give the money straight to their employer. But also, you don’t want to have this situation where states are competing with each other to see who can give the most corporate welfare- it creates a race to the bottom that forces all the tax burden onto the middle class in every state. It ought to be a level playing field by federal law.

function_seven 5y ago
Planet Money did a good episode on this[0], looking at businesses in Kansas City (which straddles two states), and how they would pit Missouri and Kansas against one another for tax breaks, without having to move their operations very far. [0] https://www.npr.org/sections/money/2018/11/16/668769284/episode-699-kansas-city-vs-kansas-city https://www.npr.org/sections/money/2018/11/16/668769284/epis...
travisjungroth 5y ago
I agree about the consequences about governments competing on taxes. The problem is that this: "It ought to be a level playing field by federal law." would darn near mean we wouldn't have states. One of the defining things about a government is they set their own tax rates. Doing it federally wouldn't even mean a level playing field. Countries compete on tax rates, too.
- staticman2 5y ago
  I wouldn't mind seeing the federal government say if a business gets a better tax deal than any other business in the locality, the federal government raises taxes to wipe out the difference. (That said I don't know in practice if this can be implemented) This wouldn't prevent states from competing on tax rates, but they couldn't compete on special tax incentived to large businesses.
- trentnix 5y ago
  Countries competing on tax rates is exactly why Janet Yellen has floated the idea of a 'Global Minimum Tax'. Countries competing gets in the way of the grand vision she and her ilk share for how they want to organize society.
- fallingfrog 5y ago
  The difference is that on the national level you can use tariffs and other such tools to make things more fair, but there are no state level tariffs.
- nrmitchi 5y ago
  But this isn't really about setting tax rates, is it? This discussion seems more about states purposely going around their existing tax rates and structures in order to create sweetheart deals for corporation.
  - travisjungroth 5y ago
    You could change what I said to governments setting their own tax laws.
deleted 5y ago
[deleted]
klyrs 5y ago
As unsettling as this is, the article doesn't seem to specify whether it's all employee income tax, or just state income tax. I doubt NC could afford to pick up the tab on federal income tax. North Carolina has a flat income tax of 5.25% -- other states, like Washington, have no income tax. Leveling the playing field, as you say, would be a significant infringement of state rights.
- dragonwriter 5y ago
  > Leveling the playing field, as you say, would be a significant infringement of state rights. States don’t have rights, like any other level of government they jave powers granted by the people. Further, when it comes to acts affecting interstate commerce, the federal government has been granted preemptive powers, since the adoption of the Constitution, for the exact purpose of levelling the playing field. So even if one makes the terminological error of referring to states powers reserved against the federal government as “rights”, this very much would not violate those “rights”.
- hervature 5y ago
  By the numbers, 3,000 employees at $187,000 for 39 years. At 5.25% tax, that is $1.15B which already exceeds the kickback. Of course, Apple gets 90% starting in 2032 and only "a bit over 50%" for the first 10 or so years. Those numbers should work out exactly to $845.8M.
anotha1 5y ago
> you don’t want to have this situation where states are competing with each other to see who can give the most corporate welfare- it creates a race to the bottom that forces all the tax burden onto the middle class in every state. This right here needs to be emphasized. It's easy for everyone to look at this and go "20MM/year for billions of investment? Yeah, that makes sense, right?" Not right. This is overlooking externalities beyond those in the local area, such as the race-to-the-bottom possibility mentioned in the parent comment.
bpodgursky 5y ago
The thing about states is that they make their own laws. So it is illegal -- until the state legislature makes it legal. Then it is legal! That is how democracy works.
- fallingfrog 5y ago
  Yeah but if the country votes on the national level to not allow corporations to play states off against each other, that is also democracy. Edit: I cannot reply since my original post generated too much controversy. I do not believe I am engaging in flame war behaviors of course. But: to answer your question, first off, democracy is the process by which groups of people make decisions together that they all abide by. In any situation involving more than one person sometimes it won’t work to have every individual do their own thing; sometimes people have to coordinate. If they need to coordinate, but don’t want to be simply ruled by a despot, then they use democracy. Democracy is especially needed when some group of people is facing an organized enemy. Trying to fight an organized enemy as an uncoordinated mass is foolhardy. Your more specific question is: should there be any sort of international cooperation to prevent transnational corporations from playing countries off against each other? Yes! obviously. It would take treaties, negotiations, and so forth, but yes, we should absolutely do something about that.
  - bpodgursky 5y ago
    Is it? What if China, having 1.3 billion people, votes that the US should not allow corporations to play off different countries? Is that democracy? They've got way more votes, it would work. We're drawing arbitrary lines on what group of people should set impose rules on a geographic minority. In the absence of _very_ compelling reasons to move up the decision, it seems eminently more ethical to leave the decision at the lowest plausible level.
hervature 5y ago
It is immoral to have a longer term vision than a corporation? North Carolina gets the economic proceeds after 40 years and until Apple ceases to exist. Also, this particular way of doing things aligns Apple's promise for employment numbers because they don't get the kickback without the employees and high salaries. Sure, it might seem that the employees are paying their employer, but the nature of taxes is that you can't equivocate taxes one to one even if they are set up like that. Suppose the government came up with an appropriate tax credits for Apple that replicates/approximates this agreement. The flow is still employees -> state -> Apple. In my opinion, this is much more transparent and simpler to implement than negotiating a bespoke agreement. Personally, I think this is a great job by the state of North Carolina and now would consider moving there as the government seems like they have some aptitude.
- fallingfrog 5y ago
  But pretty soon every state has to do this to retain their businesses, and the net result is that the stockholder benefits and the middle class picks up the tab. Someone has to pay those taxes you know. Edit: you’re right! Working class is the more correct terminology. It is a labor vs capital conflict in the end.
  - dragonwriter 5y ago
    > But pretty soon every state has to do this to retain their businesses, and the net result is that the stockholder benefits and the middle class picks up the tab. The working class, really. If you aren’t dependent on your capital as much (in broad terms) as your labor for support, you are in the proletariat no matter how well paid and educated you are, not the petit bourgeoisie.
  - hervature 5y ago
    You say that with so much certainty. It is very expensive for a company to just get up and leave. Especially how Apple likes to get their IP so closely guarded, I can't imagine them to not balk at potentially thousands going across the street. Can you point to any example in history where a company moved an entire office out of spite of the state not willing to give them tax breaks after having a presence for 40 years? I'm sure you can't point to an example where it has happened twice.
scarface74 5y ago
I haven’t thought this through enough to say whether it’s good or bad. But who should make it illegal? The federal government? The state government? But anything to encourage tech companies to build offices and spread good paying jobs across the country seems like it would be a net positive.
JackFr 5y ago
> First off, it is deeply immoral to tax employees and give the money straight to their employer. I think another way to look at it is that North Carolina wants good jobs -- if Apple isn't providing good jobs. that is the kind of jobs that generate a good tax base -- Apple doesn't get anything. If you're going to offer sweetheart deals to lure companies to your state, I think this is a pretty good way to insure the deals pay for themselves.
- fallingfrog 5y ago
  Again, the big issue is that every other state has to do the same thing to compete, so the net result is that taxes on the middle class have to go up to make up the difference and the wealthy stockholders once again benefit at the expense of the middle class.

function_seven 5y ago

Planet Money did a good episode on this[0], looking at businesses in Kansas City (which straddles two states), and how they would pit Missouri and Kansas against one another for tax breaks, without having to move their operations very far. [0] https://www.npr.org/sections/money/2018/11/16/668769284/episode-699-kansas-city-vs-kansas-city https://www.npr.org/sections/money/2018/11/16/668769284/epis...

travisjungroth 5y ago

I agree about the consequences about governments competing on taxes. The problem is that this: "It ought to be a level playing field by federal law." would darn near mean we wouldn't have states. One of the defining things about a government is they set their own tax rates. Doing it federally wouldn't even mean a level playing field. Countries compete on tax rates, too.

staticman2 5y ago
I wouldn't mind seeing the federal government say if a business gets a better tax deal than any other business in the locality, the federal government raises taxes to wipe out the difference. (That said I don't know in practice if this can be implemented) This wouldn't prevent states from competing on tax rates, but they couldn't compete on special tax incentived to large businesses.
trentnix 5y ago
Countries competing on tax rates is exactly why Janet Yellen has floated the idea of a 'Global Minimum Tax'. Countries competing gets in the way of the grand vision she and her ilk share for how they want to organize society.
fallingfrog 5y ago
The difference is that on the national level you can use tariffs and other such tools to make things more fair, but there are no state level tariffs.
nrmitchi 5y ago
But this isn't really about setting tax rates, is it? This discussion seems more about states purposely going around their existing tax rates and structures in order to create sweetheart deals for corporation.
- travisjungroth 5y ago
  You could change what I said to governments setting their own tax laws.

deleted 5y ago

[deleted]

klyrs 5y ago

As unsettling as this is, the article doesn't seem to specify whether it's all employee income tax, or just state income tax. I doubt NC could afford to pick up the tab on federal income tax. North Carolina has a flat income tax of 5.25% -- other states, like Washington, have no income tax. Leveling the playing field, as you say, would be a significant infringement of state rights.

dragonwriter 5y ago
> Leveling the playing field, as you say, would be a significant infringement of state rights. States don’t have rights, like any other level of government they jave powers granted by the people. Further, when it comes to acts affecting interstate commerce, the federal government has been granted preemptive powers, since the adoption of the Constitution, for the exact purpose of levelling the playing field. So even if one makes the terminological error of referring to states powers reserved against the federal government as “rights”, this very much would not violate those “rights”.
hervature 5y ago
By the numbers, 3,000 employees at $187,000 for 39 years. At 5.25% tax, that is $1.15B which already exceeds the kickback. Of course, Apple gets 90% starting in 2032 and only "a bit over 50%" for the first 10 or so years. Those numbers should work out exactly to $845.8M.

anotha1 5y ago

> you don’t want to have this situation where states are competing with each other to see who can give the most corporate welfare- it creates a race to the bottom that forces all the tax burden onto the middle class in every state. This right here needs to be emphasized. It's easy for everyone to look at this and go "20MM/year for billions of investment? Yeah, that makes sense, right?" Not right. This is overlooking externalities beyond those in the local area, such as the race-to-the-bottom possibility mentioned in the parent comment.

bpodgursky 5y ago

The thing about states is that they make their own laws. So it is illegal -- until the state legislature makes it legal. Then it is legal! That is how democracy works.

fallingfrog 5y ago
Yeah but if the country votes on the national level to not allow corporations to play states off against each other, that is also democracy. Edit: I cannot reply since my original post generated too much controversy. I do not believe I am engaging in flame war behaviors of course. But: to answer your question, first off, democracy is the process by which groups of people make decisions together that they all abide by. In any situation involving more than one person sometimes it won’t work to have every individual do their own thing; sometimes people have to coordinate. If they need to coordinate, but don’t want to be simply ruled by a despot, then they use democracy. Democracy is especially needed when some group of people is facing an organized enemy. Trying to fight an organized enemy as an uncoordinated mass is foolhardy. Your more specific question is: should there be any sort of international cooperation to prevent transnational corporations from playing countries off against each other? Yes! obviously. It would take treaties, negotiations, and so forth, but yes, we should absolutely do something about that.
- bpodgursky 5y ago
  Is it? What if China, having 1.3 billion people, votes that the US should not allow corporations to play off different countries? Is that democracy? They've got way more votes, it would work. We're drawing arbitrary lines on what group of people should set impose rules on a geographic minority. In the absence of _very_ compelling reasons to move up the decision, it seems eminently more ethical to leave the decision at the lowest plausible level.

hervature 5y ago

It is immoral to have a longer term vision than a corporation? North Carolina gets the economic proceeds after 40 years and until Apple ceases to exist. Also, this particular way of doing things aligns Apple's promise for employment numbers because they don't get the kickback without the employees and high salaries. Sure, it might seem that the employees are paying their employer, but the nature of taxes is that you can't equivocate taxes one to one even if they are set up like that. Suppose the government came up with an appropriate tax credits for Apple that replicates/approximates this agreement. The flow is still employees -> state -> Apple. In my opinion, this is much more transparent and simpler to implement than negotiating a bespoke agreement. Personally, I think this is a great job by the state of North Carolina and now would consider moving there as the government seems like they have some aptitude.

fallingfrog 5y ago
But pretty soon every state has to do this to retain their businesses, and the net result is that the stockholder benefits and the middle class picks up the tab. Someone has to pay those taxes you know. Edit: you’re right! Working class is the more correct terminology. It is a labor vs capital conflict in the end.
- dragonwriter 5y ago
  > But pretty soon every state has to do this to retain their businesses, and the net result is that the stockholder benefits and the middle class picks up the tab. The working class, really. If you aren’t dependent on your capital as much (in broad terms) as your labor for support, you are in the proletariat no matter how well paid and educated you are, not the petit bourgeoisie.
- hervature 5y ago
  You say that with so much certainty. It is very expensive for a company to just get up and leave. Especially how Apple likes to get their IP so closely guarded, I can't imagine them to not balk at potentially thousands going across the street. Can you point to any example in history where a company moved an entire office out of spite of the state not willing to give them tax breaks after having a presence for 40 years? I'm sure you can't point to an example where it has happened twice.

scarface74 5y ago

I haven’t thought this through enough to say whether it’s good or bad. But who should make it illegal? The federal government? The state government? But anything to encourage tech companies to build offices and spread good paying jobs across the country seems like it would be a net positive.

JackFr 5y ago

> First off, it is deeply immoral to tax employees and give the money straight to their employer. I think another way to look at it is that North Carolina wants good jobs -- if Apple isn't providing good jobs. that is the kind of jobs that generate a good tax base -- Apple doesn't get anything. If you're going to offer sweetheart deals to lure companies to your state, I think this is a pretty good way to insure the deals pay for themselves.

fallingfrog 5y ago
Again, the big issue is that every other state has to do the same thing to compete, so the net result is that taxes on the middle class have to go up to make up the difference and the wealthy stockholders once again benefit at the expense of the middle class.