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Used correctly, those tax breaks are a small price to pay for additional jobs in your community.

mikestew 5y ago
And communism could work if only it were implemented correctly. But once one gets outside that ivory tower of hypotheticals, all too often it would seem those tax breaks still end up being a net deficit. See also: "Revenues from hot dogs and ticket sales means the sports stadium that we've so handsomely subsidized will pay for itself in a couple of years."
- sosborn 5y ago
  Stadiums are generally done as Public-Private Partnerships, which typically go way beyond tax breaks.
  - aynyc 5y ago
    Almost every stadium deals in the US has been a disaster for locals. I'm not talking about the group of folks who get displaced and have no place to go. I'm talking about local shops, businesses that aren't into venue-related businesses.
    - sosborn 5y ago
      My statement was an indictment of stadium deals, not an endorsement.
      - aynyc 5y ago
        Ah, got ya.
alistairSH 5y ago
But are they? Or is this just like pro sports stadiums, where the company/team reaps the lions share of benefits, and the town is mostly left with low income jobs and a pile of debt?
- sosborn 5y ago
  Of course the company will reap the lion's share. The town has to decide if the remaining bits are worth the tax break they give the company. Sometimes they are, sometimes they aren't.
Seattle3503 5y ago
Wouldn't the tax breaks be pushed zero marginal utility. Ie the benefits you get in employment and other impacts is exactly offset by the tax loss. It also gives an advantage to larger players who can negotiate these deals, and the little guy is left in the cold.
- gentleman11 5y ago
  Worse. The tax breaks can cost you money overall in the long run but a politician might need to generate jobs so badly they will write off the long term bad trade off
HWR_14 5y ago
As far as I know, in the case of stadiums and other relocation and retention tax breaks, almost every case of tax breaks have been less effective at economic stimulation than chopping up same amount and mailing reasonable chunks to random (or all if finely chopped enough) citizens in the area. That's postmortem analysis, not the rosy promises that never pan out.
rytor718 5y ago
This doesn't seem to be borne out in any research on this question within the past 40 years[0]. Only competent policy-making can decide whether a tax break, of any sort, will be beneficial to the local economy where it's enacted. Obviously the answer to the question of "do tax breaks generate jobs/stimulate economic development" is very context sensitive; policies that work in San Francisco may be wholly unsuitable for NYC or Topeka, Kansas or what have you. But there is an overall consensus of data as to what generates good outcomes for towns/states and what doesn't in terms of job creation and economic development: - Corporate tax breaks, by and large, do NOT generate more economic development for the cities/states that offer them and produce the smallest gains in job creation than any other option. They do however generate more wealth for that particular company. - Income tax breaks for lower and middle class income earners are more effective at stimulating growth and produce more jobs. - Strong unemployment benefits stimulate the most growth and economic activity and the most job creation by a very long shot. The linked reports provide many citations for the points it makes. It's conclusions also align with everything we've been hearing and seeing for the past 20 years with our own eyes in the USA. I liked the observation made in the report that 3M, based out of Minnesota, saw corporate tax cuts offered to them by competing states wreaked of desperation in their minds, not business opportunity. Very intriguing food for thought. I have to say, chances are low that any other company would see this any differently. Its just that companies such as Amazon thrive on the economic desperation of their workers as evidenced by Amazon's own behavior. On that last bullet point, I'm willing to bet the current "boom" in economic activity is due in large part to the generous unemployment benefits that COVID has forced our government into the past year. The current mobility of many workers I think can be attributed to this, thus stimulating job creation and more competitiveness for companies to make better job offerings. We've seen how companies have behaved in this environment -- lots of layoffs, furloughs and outright job cuts. Mind you, I don't think all companies are evil or some such. Rather, business incentives in the USA are rarely aligned with the economic benefits of the places they ply their trades/services. [0] https://www.thebalance.com/do-tax-cuts-create-jobs-3306325 https://www.thebalance.com/do-tax-cuts-create-jobs-3306325
- prirun 5y ago
  Just as an example, I live in a city that has an Amazon warehouse. It's freaking HUGE!! I think it is 2M sqft. I read somewhere that they paid $40K for the land. My house in a subdivision has a land value of $41K according to my tax assessment.

And communism could work if only it were implemented correctly. But once one gets outside that ivory tower of hypotheticals, all too often it would seem those tax breaks still end up being a net deficit. See also: "Revenues from hot dogs and ticket sales means the sports stadium that we've so handsomely subsidized will pay for itself in a couple of years."

sosborn 5y ago
Stadiums are generally done as Public-Private Partnerships, which typically go way beyond tax breaks.
- aynyc 5y ago
  Almost every stadium deals in the US has been a disaster for locals. I'm not talking about the group of folks who get displaced and have no place to go. I'm talking about local shops, businesses that aren't into venue-related businesses.
  - sosborn 5y ago
    My statement was an indictment of stadium deals, not an endorsement.
    - aynyc 5y ago
      Ah, got ya.

alistairSH 5y ago

But are they? Or is this just like pro sports stadiums, where the company/team reaps the lions share of benefits, and the town is mostly left with low income jobs and a pile of debt?

sosborn 5y ago
Of course the company will reap the lion's share. The town has to decide if the remaining bits are worth the tax break they give the company. Sometimes they are, sometimes they aren't.

Seattle3503 5y ago

Wouldn't the tax breaks be pushed zero marginal utility. Ie the benefits you get in employment and other impacts is exactly offset by the tax loss. It also gives an advantage to larger players who can negotiate these deals, and the little guy is left in the cold.

gentleman11 5y ago
Worse. The tax breaks can cost you money overall in the long run but a politician might need to generate jobs so badly they will write off the long term bad trade off

HWR_14 5y ago

As far as I know, in the case of stadiums and other relocation and retention tax breaks, almost every case of tax breaks have been less effective at economic stimulation than chopping up same amount and mailing reasonable chunks to random (or all if finely chopped enough) citizens in the area. That's postmortem analysis, not the rosy promises that never pan out.

rytor718 5y ago

This doesn't seem to be borne out in any research on this question within the past 40 years[0]. Only competent policy-making can decide whether a tax break, of any sort, will be beneficial to the local economy where it's enacted. Obviously the answer to the question of "do tax breaks generate jobs/stimulate economic development" is very context sensitive; policies that work in San Francisco may be wholly unsuitable for NYC or Topeka, Kansas or what have you. But there is an overall consensus of data as to what generates good outcomes for towns/states and what doesn't in terms of job creation and economic development: - Corporate tax breaks, by and large, do NOT generate more economic development for the cities/states that offer them and produce the smallest gains in job creation than any other option. They do however generate more wealth for that particular company. - Income tax breaks for lower and middle class income earners are more effective at stimulating growth and produce more jobs. - Strong unemployment benefits stimulate the most growth and economic activity and the most job creation by a very long shot. The linked reports provide many citations for the points it makes. It's conclusions also align with everything we've been hearing and seeing for the past 20 years with our own eyes in the USA. I liked the observation made in the report that 3M, based out of Minnesota, saw corporate tax cuts offered to them by competing states wreaked of desperation in their minds, not business opportunity. Very intriguing food for thought. I have to say, chances are low that any other company would see this any differently. Its just that companies such as Amazon thrive on the economic desperation of their workers as evidenced by Amazon's own behavior. On that last bullet point, I'm willing to bet the current "boom" in economic activity is due in large part to the generous unemployment benefits that COVID has forced our government into the past year. The current mobility of many workers I think can be attributed to this, thus stimulating job creation and more competitiveness for companies to make better job offerings. We've seen how companies have behaved in this environment -- lots of layoffs, furloughs and outright job cuts. Mind you, I don't think all companies are evil or some such. Rather, business incentives in the USA are rarely aligned with the economic benefits of the places they ply their trades/services. [0] https://www.thebalance.com/do-tax-cuts-create-jobs-3306325 https://www.thebalance.com/do-tax-cuts-create-jobs-3306325

prirun 5y ago
Just as an example, I live in a city that has an Amazon warehouse. It's freaking HUGE!! I think it is 2M sqft. I read somewhere that they paid $40K for the land. My house in a subdivision has a land value of $41K according to my tax assessment.