Forget Boeing, Microsoft's Tax Break Costs $776M
jeffreifman.com
jeffreifman.com
Here is a simple thought exercise: salaries -> area desirability -> high property taxes -> high budget.
I don't think this is a case of corrupt WA politicians being in the pocket of Big Business Co and writing off tax breaks for kickbacks. I think is a calculated deal in which tough negotiators for both sides reach an agreement benefiting both the state and the business. At 83.4 billion $ budget ([0]) WA state does not seem to get the short end of the stick...
[0] https://en.wikipedia.org/wiki/List_of_U.S._state_budgets
There is an argument that attracting company's that compensate well has a net positive impact. But, it takes a lot of of people to make up for these costs. If you assume an extra ~3,000$ per person per year over the areas average that's 230,000 workers which seems unlikely.
Remember everyone involved wants to make this seem like a great thing. But, even negative sum games can make someone rich.
This video shows that from times immemorial local authorities tried to attract business: https://www.youtube.com/watch?v=hExE6iLxfEw
Generally, but not always the case.
I lived in Redmond for ~5 years and saw a ton of small businesses close up shop since they couldn't afford to keep pace with market prices for leases/etc.
Heck we got our lease on our apartment terminated "early"(~2 month lead time) and the 1br/1ba was turned into a 300k condo. No way we could swing that price at the time(and it was crazy in retrospect). So we also moved out of the area.
By consistently increasing the tax and regulatory advantages for large firms, society is effectively paying for their inefficiencies. That society "chooses" actions contrary to its interests is an indictment of the political process.
However, being on the other end of this stick, I've slowly been seeing the huge extent that the regulations make it near impossible to start a business. You're almost guaranteed to be breaking some law, regulation or municipal by-law, because you have a preconceived notion about how lightly regulated society is. The only reason we don't hear more about this is because it's selectively applied and the police can't police everything.
On my local scale, what I've noticed with the above is that it penalizes those that actually go out and research the regulations. I.e. they self-regulate. Meanwhile, the "bad" actors simply don't, and rely on the lack of enforcement, giving them an unfair advantage over everyone else.
Washington state doesn't have a corporate or personal income tax, but they do have something called "Business and Occupation Tax", a tax on gross receipts which all corporations must pay, regardless of profit. There are all sorts of exemptions and exceptions, and of course MSFT and Boeing have their share. However, MSFT last year was singled out for the closing of a loophole to the tune of $57 million; they weren't named specifically but the law was directed at "software businesses with greater than 40,000 employees", an unusual maneuver to get more taxes from a specific company.
The blogger complains about a few hundred million and then goes on to fantasize about how this extra money could pay for all sorts of wonderful services in the state.
The fact is, however, in the real world, that chunk of tax revenue does not exist; you have to work with what you have, and in this case, Washington has to work within their $37 billion budget. Also worth noting is the unfortunate fact that public funds do not efficiently flow to an earmarked pool of deserving causes; much of it is sucked up by the bureaucracy, a certain amount stolen through graft and embezzlement and dirty contractors, a certain amount wasted, a certain amount subtly reassigned to other needs. $57 million designated for schools in underprivileged areas makes a great sound bite, but at the end of the day the deserving schools will see very little of that money.
Even if they paid zero local taxes, the money is still flowing into the local economy.
That's also true for my salary. My salary moves the local economy. Not so much, but if you get together $1B of taxpayer money we are talking about thousands of workers.
Some one has to pay for the cost of workers education/transport/police department/etc. So the argument doesn't makes so much sense. In the end this companies are the ones that get more benefits from the public infrastructures and services. Why they should be absent of paying for them?
The populist slogan "You didn't build that" doesn't stand up under scrutiny. Directly or indirectly, the companies in your state have paid for every inch of the roads, water pipes, and power lines, and they paid for every brick of every schoolhouse.
People -- not corporate taxes -- are the drivers of wealth in a local economy. WA state is wise to recognize this, not foolish.
If you think this is bad, look at last year's chevron v ecuador arbitration: http://www.corpwatch.org/article.php?id=15978. When small countries negotiate with large companies, they are on equal legal basis.