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Comment by grecy | Hacker News Reader

It fascinates me that Americans tolerate this kind of behavior.

This is an extremely rich and profitable company negotiating so they can get out of paying taxes they and everyone else are ordinarily obligated to pay. Why anyone thinks that is OK shocks me.

Do small businesses get out of paying these taxes? do individuals?

Why does a multi-billion dollar company not have to contribute their legally-obligated share to society?

It shocks and staggers me because at the end of the day it's regular citizens and American society in general that suffers. There is less money for teachers, schools, police, roads, drinking water and all the things these tax dollars are supposed to pay for while a company that already has hundreds of billions gets to keep all that money.

There is no need to wonder why America has crumbling infrastructure, no universal healthcare, sky-rocketing education expenses, etc. etc. etc.

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> It fascinates me that Americans tolerate this kind of behavior.

They don’t have a choice to “tolerate” it or not. America is a completely free market internally, with no legal, language, or cultural barriers to companies moving around. States are perfectly free to offer more attractive terms to companies, and other states can either match those offers, or watch their economies pack up and move to Tennessee, Georgia, Texas, etc.

That said, lack of corporate taxation isn’t to blame for America’s ills. If you compare the US to Germany, Canada, or France, you don’t see those latter countries taxing corporations more. Indeed, the total tax burden is probably less. (Not just the paper rate, but the actual average tax rate after “loopholes”). The French “real” corporate tax rate is almost half of what it is in the US (the on-paper rate is like 1/3 of the US). They also don’t really tax their rich people more. Someone making a million dollars a year would pay similar taxes in New Jersey as in Canada or Germany. A Californian might pay less.

No, the real reason America’s public services are crumbling are (1) we are extraordinarily inefficient; (2) we tax the middle class far less than Canada, Germany, etc.

Not really true. This is well inside the domain of the Interstate Commerce Clause of the Constitution. The Federal government could block it.

>They don’t have a choice to “tolerate” it or not

Of course they do. They vote out the politicians that allow multi-billion dollar companies to avoid their tax obligations and they vote in ones that don't.

Americans have utterly forgotten they are in charge of their country.

You're evading his point. You can vote out those politicians, but not giving breaks to companies isn't the only effect that will have; the other effect is that companies will stop moving into your state. Voters on message boards might be motivated by your notions of fairness, but real voters are motivated by jobs.

NB: US federal corporate tax rate is now 21%

That's the headline federal rate. New York, Califorinia, or Illinois add another 7-9%, for 28-30% total. In the U.K., in comparison, the total rate is 19%. Sweden, Denmark, and Norway are 22-24% total.

Lots of jurisdictions have zones where they reduce taxes to encourage development. Small businesses can get the benefit simply by opening a location inside one.

This Amazon deal is likely to be neutral or beneficial for whichever government manages to pull them in. It's a race to the bottom but it likely isn't really deeply harmful.

(the employees will pay property taxes and spend money in the community...)

> This Amazon deal is likely to be neutral or beneficial for whichever government manages to pull them in. It's a race to the bottom but it likely isn't really deeply harmful.

(the employees will pay property taxes and spend money in the community...)

There is absolutely no world where this is neutral or beneficial for any government.

Of course the employees will pay property taxes and spend money.... but our whole society and tax system is based on the idea that the employees pay taxes AND the employer pays taxes. Just because employees are paying doesn't mean the employer shouldn't.

The government should be collecting millions (billions?) in property taxes and spending from the employees AND billions from Amazon - that's how the whole system was designed and is supposed to function. That's how roads are built and teachers are paid. The government will lose billions of tax dollars from Amazon they should be getting, which is absolutely 'deeply harmful'

I have no idea why anyone would want to be part of a race to the bottom. The drive to increase corporate profits is gutting America, and the kind of reasoning you use simply justifies it.

What's your definition of neutral?

Mine is that revenues go up more than costs of services.

Neutral would be everyone following the law and the tax code as it is laid out. "Neutral" should be the government getting billions from Amazon, as they are legally obligated to pay.

It's clearly harmful because revenue is supposed to be going up A LOT more than it will be.

The good news is that the majority of cities bidding on the Amazon project will get that deal!

That's precisely my definition of beneficial. Neutral would be when the cost of additional services are equal to the benefits.

Yes I agree, I was just imprecise in my statement there.

I agree with you that these kinds of transactions are regrettable and they leave a bad taste in my mouth. At the same time, you haven't convinced me that local governments are making a bad decision by playing this game.

I think perspective is key here. From a broad economic perspective, Amazon is going to build this thing somewhere, and so these kinds of trade-offs seem pointless. Economists likely object because the whole thing is economically inefficient from a broad (national) perspective.

But from the perspective of a local government, that may not be the case. A local government is concerned about the local economy more than the national economy, and so offering these perks makes sense.

Again, I agree that the whole thing is regrettable, and that it probably hurts the economy as a whole. I wish Amazon didn't play these games. But I also think it's worth pushing back against the idea that these local governments are clueless idiots. They may very well be making a good decision from their narrow perspective, and the city that Amazon chooses may very well see a net increase in tax revenue.

> I wish Amazon didn't play these games.

This has nothing to do with Amazon "playing games" and everything to do with politicians making deals so multi-billion dollar companies can avoid their tax obligations. Hilarious, anywhere else in the world it's called corruption, but in America "It's just business"

>They may very well be making a good decision from their narrow perspective, and the city that Amazon chooses may very well see a net increase in tax revenue.

There is no universe where that is true. It just means all the cities are in a race to the bottom competition. Sure their tax revenue may have net increased, but it will be by a much lower amount than it should be.

"Net increase in tax revenue at all costs" is not the goal here.

What do you think is going to happen when this happens all across America, and every time a monster company does something they get out of paying billions in tax?

A city's tax revenue isn't "lower than it should be" with Amazon's headquarters (subsidized by the taxpayer). If they don't attract Amazon, they don't get any money at all. With Amazon, they get increased employment and all the taxes employees are now paying. And all the benefits of having a tech giant centered in your jurisdiction. It's a win-win for Amazon and any cities willing to play.

I feel like you missed my point. I'm not saying this is good or that it should continue.

I'm saying that, in the context of the world as it exists today, if I am the mayor of Boston, it will benefit my city to offer Amazon tax breaks to entice them to build there.

With an infinite amount for investment I'd agree with you, no city would need or want to proffer incentives. But with only $x to go around for investment countrywide, how do I attract a percentage of that to my city? I'd like to see how that would work sans a centrally planned economy.

> It's a race to the bottom but it likely isn't really deeply harmful.

What, may I ask, would meet your definition of deeply harmful in an acknowledged race to the bottom?

The bottom, you see, is pretty fucking harmful.

Tax relief doesn't do any direct harm and comprises the largest share of most incentives packages.

Infrastructure spending that isn't paid for by increased tax revenues is clearly harmful, but people aren't exactly tossing out case studies about how that always happens.

The real issue is that local governments have a long history of spending beyond their means. Infrastructure isn't crumbling because of all the businesses that have been granted tax incentives, it's crumbling because taxes aren't high enough in general when you look at the obligations that local governments have entered into.

>Tax relief doesn't do any direct harm and comprises the largest share of most incentives packages.

Great, so the extra tax I'm levied to make up for Amazon's skipping on theirs, you'll be paying, I assume? You've said it's harmless, so pay up.

>Infrastructure isn't crumbling because of all the businesses that have been granted tax incentives, it's crumbling because taxes aren't high enough in general when you look at the obligations that local governments have entered into.

Yes, obligations such as the routine subsidizing of intensely wealthy employers in an acknowledged race to the bottom.

Great, so the extra tax I'm levied to make up for Amazon's skipping on theirs

The argument I'm making is that this is largely supposition and that no additional taxes will be imposed as a result of Amazon picking a given city. So sure, if your taxes don't go up at all, I'll gladly pick up that difference.

Of course I haven't proven my case that taxes won't go up; but neither has anyone in this thread made a case for them inevitably going up.

The incentive packages obviously violate some peoples ideas about what is fair, but that is different than the incentive packages obviously being an economic negative.

>but neither has anyone in this thread made a case for them inevitably going up.

Anyone unaware of the very tired routine by now has no business commenting on the role of private subsidy in public taxation.

Not only have you missed that historically, taxes of all kinds as a category overwhelmingly rise, you have forgotten that taxes circulate back to taxpayers in the form of services and infrastructure. You are proposing diverting some chunk of this circulation into Cayman Island bank accounts while you are at the same time pretending there might be no net cost to this diversion for those who depend upon these services that they alone pay for but that all benefit from, not the least of which being beneficiaries such as tax deadbeats like Amazon. You believe in magic, or at least you believe in the proposals of intensely wealthy persons seeking subsidy. Same difference.

Subsidizing intensely wealthy employers in an acknowledged race to the bottom may or may not immediately force non-subsidized taxpayers to pay x% more in tax or in now-privatized fees, but sure as shit these non-subsidized persons are forced to receive back less and less for what they pay. That is where and why the crumbling happens, you see: the rich asserting a quasi-divine right to get paid while bridges collapse, social fabric is torn and government is blamed.

Enough already. We see through this grift by now.

I'll never understand the head-splitting rage about certain topics, but blind indifference to others (that often would seem to have a far greater impact). No reasoning. I don't believe that's nation-specific, though.

government’s first rule: “every worker pays taxes”

Goverment’s second rule: “but if you create 5 workers that we can tax, we’ll give you a discount”

I don’t find this particularly offensive. Incentives are the only way a government can influence the market without owning industries outright.

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