Here in Africa when Authorities allow obscenely rich people/companies to get away without paying their legally-mandated share of taxes it's called "bribery".
Apparently in America it's just "business".
Citizens should be protesting in the streets about this. Their educated, healthcare and infrastructure sucks because of it.
Imagine you run a city where you tax businesses 1% of foo. For every dollar of foo tax you collect form a business, you actually collect another $0.50 in related taxes from company employees - buying lunch, staying in your hotels, etc. Let’s call that your bar tax.
A new company wants to move in that earns 3x as much foo as any other business in your town, but they are also looking at other towns that tax foo at 0.5% or even don’t tax foo at all. You can choose to tell them to go elsewhere, or you can give them an incentive - you’ll cut your foo tax to 0% for 10 years, knowing that you’ll be collecting more bar tax with the company there than you would with them not there.
At this point the calculation is simple - will having New Company in your city cost you more than you’ll be getting in bar tax? And if so, might it still be worth it in the long run to take those losses for 10 years until the foo tax kicks back in?
If not, don’t do it. The point is, this is not clear cut either way.
The whole system was designed with what you said in mind. The company is supposed to pay their taxes (foo) AND the city is supposed to collect the taxes from employees (bar). The whole system needs everyone to contribute their right amount so there is enough money for schools, health care, police, roads, libraries, etc. etc.
Yes, Amazon's foo is very large, because they make a massive amount of profit!! Also the bar they create will be very large, because they have a lot of employees. The fact it's a large amount changes nothing. The city they are in needs BOTH of those to function correctly. With all those massive buildings and employees the city will need new schools, roads, more police, more libraries, etc. etc.
Amazon get to use the roads of the town, the water infrastructure, the elec infrastructure, the education, the police, etc. etc. to make their massive profit.
Who do you expect to pay for all of that, other than Amazon through their foo tax? That's precisely why the foo tax exists, and amazon get to avoid paying it they can make massive profit without paying for the basic stuff - so now the regular citizens need to!
The whole thing requires the full amount of foo+bar to pay for all of that stuff.
But of course we all know America has terrible tax-payer funded services compared to the other OECD countries.
https://books.google.com/books?id=UVuiQ5HKgqoC&lpg=PA152&ots...
So there are in fact legal mechanisms, deeply rooted in the laws of municipalities. The stuff you are claiming is foundational to making the system work is just wrong.
I didn't go digging for an example that would prove my point, I searched for a city I recalled competing for the HQ2 and went with the second one I searched (The first page of results for Austin didn't turn up an obvious document).
But the other poster is making an argument that tax abatement is somehow against the system, something that is pretty obviously wrong.
They don't want to stick to arguing that it is anti-social or foolish or whatever, they've decided that abating taxes is illegal (even though it is legal) and that it is contrary to how cities are supposed to fund themselves (even though it is written into the foundational documents of many municipalities).
I'm guessing your answer would be it can design its tax code so long as the tax code applies to all comers that meet the agnostic definitions therein.
The problem, however, is that opens up the question as to how fine-grained the definitions can become. It's not very hard to write tax regulations that are so narrow they only apply to one company while still on the surface appearing to be agnostic and naming no company.
IMO, it's a sliding scale of specificity and maybe you're right that there is a line somewhere that shouldn't be crossed, but it's more difficult than you suggest to figure out and describe where that line should be.
That's a feature, not a bug. Quite many of us, including many of the Founders, believed/believe that the proper scope for government is very narrow, basically just "protect individual rights". Quite a few of us think, to this day, that the government is involved in too many taxpayer funded services as it is.
You are, of course, free to disagree with that position. But understand that things (w/r/t taxpayer funded services) operate the way they do here for a reason and not just due to happenstance.
I actually agree with you on that. My point was just that the US stance with regards to tax-payer subsidization isn't some accident. And, again, one can choose to disagree with those Americans who want an extremely limited government, but one has to acknowledge that this is a position that is held by many people, for very rational reasons.
And the rest of them believed that institutionalizing protection of the ability of the first set to do that was an acceptable cost of unity, such that the Constitution is riddled with elements contrived largely for that purpose, only some of which have since been purged by more enlightened successors to the Founders.
The rest of what you're saying is also rather inaccurate as well.
The problem is this anti-competitive preference counterbalances geographic incumbency bias. It's difficult to say which is worse--Amazon getting preferential treatment over a potentially-rivalrous upstart or the Midwest having no fiscal tools with which to fight coastal dominance.
It is form of legalized corruption. It is not the same as stimulus for development of certain areas.
Don't be naive. Do you think mayors are getting their nice positions on company advisory boards after active duty because they are so capable?
Richest man in the world
Richest company in the world
Plain history of boon doggles coming to town screwing locals
All this does is continue to validate corporateocracy
Fuck these clowns
Where is everyone else’s handout?
Here you go, Jeff, let’s boost YOUR wealth very plainly on the backs of others
There’s some free market competition huh? Are you rich? You win tax breaks!
Hey, why not give fat breaks to new players. Let them fill warehouses of crap to sell online. But no, kiss the rings
It’s simple and obvious and this mystifying with prognostications you can’t possibly validate because you’re no visionary with the ability to see the future (and are plainly ignoring the past [sports stadiums, etc]) is nonsense
Have you seen what happens when a politician tries to take away a single sick day or reduce their already-world-leading maternity leave? .. millions march in the streets for days and you can bet your bottom dollar come election time the responsible politician is swiftly voted out.
Those people care about what is happening in their country and how it impacts them. They know it's more important than football and cheap beer.
Americans have forgotten how to participate in Democracy.
The best way to protest is tell people you know you disagree and don’t care if the relationship sours because of it
People have to push back against the nonsense their friends and family spew
When someone spews
“It makes sense,” says and outside, “to burden another muni with generational debt for jobs today so we can keep selling trifles.”
You tell them they’re absurd
Grandpa spouting jingoist nonsense? You slap him in the mouth like he did you for swearing
Stop being afraid of each other and push back on plain stupid
Do you want to be slapped by young people in the future, when your politics are no longer fashionable?
Our total government spending per person (excluding defense spending) is higher than Canada’s, despite the fact we provide less services.
Additional facts: countries like Canada, France, Germany, etc., tax their corporations less than we do. Our taxes are a lot lower, but mainly because we have much lower taxes for the middle class.
Blatantly false. Our statutory tax rate may have been one of the highest in the Western World, but the effective tax rates before the Trump tax plan were some of the lowest after deductions and credits are taken into account.
E.g. the U.S. statutory rate was 38.9% (federal + the average of state and local rates), the highest in the G20. The effective rate (after deductions, etc.) was 18.6%, the fourth highest. Socialist France was 11.2%, and our neighbor to the north was 8.6%.
U.S. total tax burden is much lower than France, Germany, etc. If you look at where that difference comes from, it's not because those countries tax "corporations and rich people" more. It's because they impose massively higher taxes on the middle class. Look at tax brackets in Germany, France, Denmark, etc. It's typical for either to top bracket or the second-to-top bracket (just a few percent lower) to kick in around 70 thousand Euros.
The American tax code is far from perfect, with the scales favoring whoever can afford the best tax attorney. With that said, i think you are grossly oversimplifying the issue. The corporate tax rates (before the recent reforms) were the highest in the developed world. Amazon has every right to negotiate where they move their offices.
It's madness that a multi-billion dollar company doesn't have to help pay for things they get direct benefit from, and frankly it is supposed to be illegal. I'm not allowed to not pay my taxes, and that's a drop in the bucket compared to what Amazon should be paying.
But you ARE allowed and entirely free to move to cities with lower tax rates, or states with no income tax at all, or any other location that provides you a better balance of income to tax costs. Amazon is an entity with the same rights to make decisions about re-locating to the locality with the most advantageous income/cost ratio.
Absolutely. But I can't negotiate with those places to get a special tax rate just for me. There is no "Dan's tax rate" that is different from everyone elses.
Oh, but if I just get rich enough.... they I won't have to pay taxes the same as the common-folk.
That’s only because your tax contribution is very small and you don’t have leverage. If 60% of the residents of a city leave, you can bet the city will quickly lower or remove taxes to try to attract more people.
That's exactly right. E.g. Michigan has designated NEZ zones[1] offering tax breaks (e.g. sometimes half the tax rate) to attract potential homeowners to distressed neighborhoods like inner city Detroit.
Sure, residents in another wealthy city (like Bloomfield Hills) in Michigan might complain they don't get the same tax subsidies as downtown Detroit but it still doesn't change the fact that governments will offer tax incentives for certain people (not just companies) to justify a desired economic outcome.
Detroit has to make those tax concessions because residents are fleeing and the city suffers from a lower tax base. The more desirable cities like San Francisco don't have to make the same tax concessions.
(I make no comment on whether NEZ actually works as intended or whether it is a net positive economically.)
http://www.detroitnews.com/story/opinion/2016/06/22/detroit-...
Not that there aren't issues with our tax system but this is completely inaccurate[1]. It can certainly be argued that the top end of earners should pay more, but they already do carry the overwhelming majority of the income tax burden.
[1] https://taxfoundation.org/summary-latest-federal-income-tax-...
Amazon will absolutely be helping pay for things that they get a benefit from. I think you're misunderstanding the exchange that is happening. To oversimplify, it's basically this:
City: We'll give you tax breaks, decent infrastructure, low property prices and a good pool of local technical talent
Amazon: We'll give you tech jobs, lots of tax revenue from the business, lots of tax revenue from our employees and raised property values.
> I'm not allowed to not pay my taxes, and that's a drop in the bucket compared to what Amazon should be paying.
Not paying your taxes and receiving tax breaks are completely different. Do you take deductions on your taxes? Even the standard deduction? Those are tax breaks.