Cities don't have to offer huge subsidies to companies like Apple and Amazon
theguardian.com
theguardian.com
The premise is usually jobs, local pride and prestige...and it usually ends really badly for the locals...
You'd also have to figure out the costs for gear, staff, and etc. You'd also have to figure out logistics for management, I imagine a trust would be the best middle ground. My best friend is from Cork City in Ireland, Cork FC is fan-owned which runs out of a trust. [0]
https://en.wikipedia.org/wiki/FORAS_(football_supporters%27_...
Side-bar: I am curious if MLS has banned fan-ownership. Edit: Unsure, seems like 4th Tier league allows fan-ownership. [1] https://en.wikipedia.org/wiki/List_of_fan-owned_sports_teams...
Second Edit: Reading [2], it seems like it'd be possible to have a European fan-ownership structure except that the team would own shares from MLS to have the team rights.
[2] https://en.wikipedia.org/wiki/Major_League_Soccer_owners
You might be able to do something like this with eSports teams or streamers.
There is speculation that this is part of the reason that he loves criticising the NFL for players taking a knee, and keeps insisting they're struggling and their numbers are down and they're failing. He's salty that they never let him have a team.
The only two professional sports teams that I know of that are owned by the community/fans are the Green Bay Packers and the Rochester Red Wings. Does anyone know of any others?
Edit: Did a small bit of research and it looks like the Toledo Mud Hens are community owned and the Syracuse Chiefs were community owned until this year when they sold to the Mets.
Edit: Oh, of course there's a Wikipedia page: https://en.wikipedia.org/wiki/List_of_fan-owned_sports_teams
https://www.reuters.com/article/us-sports-nfl-stadiums-insig...
I've noticed USC fills their stadium only when they're spectacular. Whereas other teams across the country fill it up when they're only OK (most of the big 10).
Anecdotal but probably understandable via stats.
http://www.latimes.com/business/la-fi-chargers-taxes-nfl-201...
>For decades, Angelenos went without a hometown NFL team in part because they were notoriously loath to spend taxes on one. Rams owner Stan Kroenke, worth $7.4 billion according to Forbes, made the league's return to Los Angeles possible because he was game to use his own money to develop the $2.66-billion Inglewood stadium that, starting in 2019, will be home base of his team and the Chargers.
>Inglewood will ultimately pay the project an estimated $60 million as a reimbursement for the development of roadwork, utilities and public parks on the site of the property.
>James T. Butts Jr., mayor of Inglewood, said he would not have agreed to a new NFL stadium if it required fans to chip in.
>"From our first talks, we made it clear that was not something we were going to do," Butts said. "We wanted a model that basically insulated the city from the buffeting winds of both the economy and ticket sales, and we have that now."
It's an open question who it'll work out for: both the Chargers and Rams were in LA before, before leaving for perceived greener pastures. The Rams' owners seem to be hedging their bets this time with the multi-purpose real-estate nature of the stadium. But will STL or SD really be that badly off? We'll see if they end up spending money in the future to get a team back... LA didn't, though.
The highlight - "However, the FAA only grants TFRs for stadiums and arenas that hold 30,000 or more, and since the StubHub Center capacity is under 30,000 — the Chargers announced a sellout at 25,386 during their game with the Kansas City Chiefs last Sunday — the FAA will not grant the TFR."
"Spanos had pledged $350 million to the stadium project in San Diego. But now that he’s moving, he’ll have to pay the NFL a $550 million relocation fee.
That’s right. For roughly the same amount of money he’s spending to flee the city that has loved his usually woeful team unconditionally for 56 years, Spanos could have had his new stadium. Instead, he fire bombed his fan base to relocate to a city so enthused by the move that it couldn’t even manage to stifle its yawn."
https://www.usatoday.com/story/sports/columnist/nancy-armour...
1. The Raiders (like, it's not even close)
2. The Rams (probably a little more popular after their good season last year)
3. The LA Galaxy (that's right, a soccer team)
4. The Chargers.
The Pelicans as far as I know don’t even get the historical numbers and seasons of the original location (Charlotte) team either. They go to the current Charlotte Hornets.
As a new team (Charlotte Bobcats) was created in Charlotte and fans had a successful campaign to rename that new team back to the Pelicans original team name, Charlotte Hornets.
Sorry if it’s confusing, but basically two NBA team name changes in this century and it wasn’t the biggest deal for the teams.
I can’t see the Chargers or Raiders being particularly hurt if they had to change their names when moving to their new location. Rams I guess would hurt a bit, but even then, doubt that much.
Also, what are fans going to do if their only local team that they’ve been long time fans of leaves? It’s hard for many fans to get emotionally invested into another team. And people enjoy being fans of local teams so the new location will bring new fans. Maybe Europe isn’t like that. I personally am not like that, but I’m def not the norm.
Sports fans are religious. Teams, for better or worse, have the power to rally voters in a way that makes them politically powerful.
Not sure about the US, but in countries in Europe and Latin America that I know of, that's very much the case -- sports fans (soccer in this case of course) are a very vocal group, and have much influence on politics, and always push for more government spending on stadiums.
Arsenal paid for their stadium when they moved from Highbury to Emirates. Tottenham is paying for renovation of White Heart Lane. Real Madrid will be paying out of their own pocket for renovation to Bernabeu. Fc Barcelona will be paying out of their own pocket to renovate Camp Nou.
I'm not aware the barbaric culture of billionaires using tax payers money to build a stadium and then keeping the profits from it anywhere outside US.
You'd be surprised.
"Taxpayers have criticised a "ridiculous" deal which means West Ham United will pay just a fraction of the £2.3m annual business rates bill on its London Stadium home.Owners E20 Stadium revealed the Hammers will only pay additional rates on the retail and office space in the 66,000-capacity ground after they secured the lease for just £2.5m a year in rent last year. Costs for the rest of the arena will have to be covered by E20, a joint venture between publicly funded London Legacy Development Corporation and Newham Council."
"English club Manchester City received more than $170 million in public funds for its Etihad Stadium, where it moved in 2002, because the grounds were built to host the Commonwealth Games. Tottenham Hotspur, another English club, will reportedly receive some sort of public aid, whether through tax breaks or other forms of relief, to build a new version of its White Hart Lane. West Ham is moving into London’s Olympic stadium, also built with public funds, though the club will pay a small amount of the conversion costs and will also pay annual rent (in two of these instances, you’ll notice, the stadiums were built for other events and are being utilized by clubs, which isn’t altogether a bad thing). And in Spain, Barça, Real Madrid, the world’s second most valuable franchise, and other clubs are under a European Union investigation for receiving improper tax breaks."
"When Juventus inaugurated the Juventus Arena in 2011 instead of the old Delle Alpi it became the first club in Italy to have stadium ownership while other clubs in Italy still rent a stadium from the local council. The main reason is for municipally owned stadiums is regulation and financial power of Italian clubs but this is starting to change now".
Even when you read about "renting" it, the deals are more than generous (nowhere near the costs), and accompanied with huge tax breaks and easy state or municipally-supported loans in tons of cases.
https://fivethirtyeight.com/features/were-the-billions-brazi...
(And let's not even discuss e.g. Greece and other soccer-obsessed countries)
The cost of opening a shop, gyp etc and equipping it at a regular location is already too large, without having to co-sponsor part of a stadium (which has huge costs to build and maintain) while at it.
I suspect big subsidies or tax cuts or something involved too.
Wisconsin also loves to use property taxes for various things, which is how it gets away with being slightly lower-taxed than neighboring MN while having a similar quality of life.
The Packers are owned by the fans, making them the only publicly owned, not-for-profit, major professional team in the United States. The Pack have been a fan-owned operation since the primitive pro football days of the nineteen-twenties, when N.F.L. teams could be won in card games and no one foresaw the awesome power this sport would hold over both the American imagination and the American wallet.... The Packers’ unique setup has created a relationship between team and community unlike any in the N.F.L. Wisconsin fans get to enjoy the team with the confidence that their owner won’t threaten to move to Los Angeles unless the team gets a new mega-dome.
https://www.newyorker.com/news/sporting-scene/those-non-prof...
The city has rejected another request for a MLS stadium. I guess they are wising up.
How about that?
Not to mention that in a pinch, a stadium can always be changed to fit a different sport (if the space is enough), for much less than to build another one.
On the other hand, the modal business has much more economic power and leverage than the modal individual. There's a reasonable argument that they should be held to a higher standard of responsibility and compliance because their contribution to the problem is magnified.
And in addition voters are stupid. Spending a million on a swimming pool for kids is waste but half a billion for a sports stadium is a must.
If a politician believes a single report prepared by a sports team over the literally dozens of peer reviewed academic studies that say the exact opposite, I blame the politician.
>And in addition voters are stupid. Spending a million on a swimming pool for kids is waste but half a billion for a sports stadium is a must.
That is democracy in action. More people want the sports stadium than the swimming pool. You might disagree with them, but that doesn't make them wrong.
Is this true? Was there a vote on this?
The politicians make the decisions and if people don't like it they can vote for someone else but I would bet in some deeply partisan districts they'd vote for anyone on their side. There's a lot of things the majority of the public want but the power that be say no.
You can't blame the voters, they are free to choose whoever they want!
You can't blame the lobbyists or the PACs, they just try to persuade voters!
You can't blame corporations for contributing to campaigns, they are just trying to create the most politically favorable environment to maximize profits!
You can't blame the shareholders, they just want a return on their investment!
It's no wonder that the entire concept of a modern democracy is a shame. You never really had control as a voter.
I like to think of it as going out to eat. In a modern democracy you get a choice of ketchup or mustard. Some may choose not to pick (not vote) or some may be able to even get a third choice like hot pepper added at one location.
During pre-election everyone is shouting back why ketchup is better than mustard. News anchors going on and on about how important you making a choice because your life will be better or worse with or without mustard. Money that could be better spent goes into advertising that blankets the air putting down ketchup by carefully leaking a photoshopped ketchup bottle at a murder scene.
No one asks why are we eating a hotdog in the first place.
If none of the political parties talk about increasing internet connectivity, but that's a very important issue for me, then I'm basically picking at random.
You can't blame the media because they're just giving the voters what they want.
You can't blame the education system because it was put in place by the politicians.
I can choose to find fault with tech companies and sports owners while still holding politicians accountable as well.
By this logic, as long as a politician makes such a deal in order to garner public support or votes, with no concern for the wellbeing of their constituents, we can't blame them either. They're not doing anything wrong, just responding to political incentives!
Those "perverse" tax incentives were a reasonable compromise between voters and businesses within a state. The perversion only exists at the interstate level, so which politician is "at fault"? The Washington legislature, responsible for all of Washington? Individual WA representatives, who get one vote regardless of their constituent's distance from the border? Or is it on the Oregon side?
If either state copied the other, there's no problem - but which one "wins", and how do those changes get implemented?
The politicians are ultimately accountable to their constituents. The people of Walla Walla likely have different opinions on sales tax than the people of Redmond. If the politicians don't represent those opinions then they should be voted out. If they do represent those opinions, it is simply a numbers game from there. If your side loses, that is just how democracy works. That applies to every level of government from the local up through the federal. It applies to individuals the same way it applies to businesses.
While this is true to some extent, changing the minds of politicians sometimes requires changing the minds of voters.
My representative fairly represents my district's sentiment. The policies we want are blocked by neighboring district representatives - who also fairly represent their districts. The compromises tend to land squarely in between the extremes. If we're not happy with the compromise, the answer is to try moving the opposing side closer... which means convincing citizens of that district to change their mind.
Citizen discourse is the core of effective democracies. Elections merely represent public sentiment - peer to peer discussions are how we change the status quo.
America's problem is we seem to have forgotten how to talk about politics. Even your language reflects that... no suggestion of civil debate, just a false dichotomy of surrendering to the numbers game or "attacking" other citizens.
Insults are an attack, but genuinely challenging beliefs is not an attack. My neighbor and I may disagree, but we aren't enemies - we are both citizens that want what's best for our family and friends. Talking politics is how we figure out what that means. Those discussions between private citizens is the decentralized process of moving a democracy forward.
I also wasn't attempting to setup a dichotomy between surrendering or attacking (although I can certainly see that implication after rereading my comment, sorry about that). I would consider civil discourse part of the "work harder to convince the politicians to change their mind" comment. You can convince a politician by talking directly to them or by rallying other citizens to your cause.
However the discussion was about "blame" and "fault". I think those are very aggressive words to use against other citizens you disagree with. If we are going to use those words, I think they should be focused towards politicians who are accountable to your wishes. Your neighbor or the citizens in the next district over are not accountable to you and therefore should not receive blame for disagreeing with you.
You're right. Technically the fault lies in the voters for voting in those politicians. In practice, it's the politicians that fail the voters though. That's literally what the politicians are voted to do, but they obviously operate under their own incentives, which is to get reelected.
The companies, by definition, act in the best interest of their shareholders. What if those also happen to be shareholders of a given company looking for a good deal?
At least it's usually subject to a vote. And it's hard to say it usually ends up bad for the locals unless you can quantify leisure. Some do, sure, but I wouldn't say usually and I definitely wouldn't say "really badly" compared to many other financial policies. By the same measures, tax funding of other arts like museums end up bad for the locals too.
I really don't get the fascination with subsidizing sports teams which via legal monopolization make money hand over fist.
You need universities driving research and producing competent technical graduates; you need to foster a entrepreneurial attitude and provide resources (accelerators, mentors, office space, etc) to would-be companies; you need a source of capital to fund these companies.
And then you wait for these companies to grow.
Courting a single, large entity is a lot simpler: they tell you what the want; you give it to them; jobs. That's a much easier sell for politicians and local governments. You'd need decades of cooperation between incoming and outgoing politicians to build a successful startup ecosystem.
Either way, whether growing local businesses or courting big ones from elsewhere, it can be a risky investment.
There is absolutely a cost associated with either option. There is absolutely a payoff period in years or decades with either option.
However, I do think it's easier to get a single company to say "yes", than it is to build an ecosystem; particularly in the context of an elected official's term in office.
The type of city that a big company would say “yes” to is the same type of city that could grow an ecosystem. Big established companies don’t like moving their headquarters into no-where-ville, they like being in places that any number of startups and fledging businesses could thrive in if the local municipality made that their economic development focus.
Look at the 20 finalists for Amazon’s second headquarters:
Atlanta, Georgia; Austin, Texas; Boston, Massachusetts; Chicago, Illinois; Columbus, Ohio; Dallas, Texas; Denver, Colorado; Indianapolis, Indiana; Los Angeles, California; Miami, Florida; Montgomery County, Maryland; Nashville, Tennessee; Newark, New Jersey; New York City, New York; Northern Virginia, Virginia; Philadelphia, Pennsylvania; Pittsburgh, Pennsylvania; Raleigh, North Carolina; Toronto, Ontario; Washington, D.C.;
All of these places are capable of developing their economy via creating an ecosystem that supports small business growth. And some of them, like Austin Texas and Denver Colorado, already have!
I wager that it’s better to support the 2X growth of 20 local businesses that are already doing 1 million dollars in profit annually (so companies of size ~5-10) than it is to bring in one 20-million-dollar business. It’s just not as sexy.
The "startup ecosystem" in the way SV denizens know it is terrible economy-wise. ROI - microscopic, human costs - humongous, employment impact - small, success rates - 0.2%.
Compare it, say, with a factory cluster: annual average ROI - ~8.75% (averaged over last 12 years, Chinese data) capital costs - sane, capital recovery - certain 60%-70%, success rate after 3 years - 60%-70%, employment impact - undisputedly apparent, human costs - you don't have to stake 5 years of your life on the latest fad.
People who advocate for copying that, advocate for copying a clearly failing model.
The human costs of factories are not nil either. Beijing is a polluted wasteland where if you wipe your nose it comes away black. Silicon Valley is still dealing with the toxic wastes from the last generation of industrial powerhouses, the semiconductor companies that dumped toxic waste straight into the ground. I would far rather waste 5 years of my life on the latest software fad than have 30 years of my life shaved off by cancer.
Don't romanticize the past. The average professional in Silicon Valley enjoys a standard of living much, much higher than the average factory worker in Shenzhen, or in Cleveland for that matter.
However, to suggest that 60-70% capital recovery is certain is silly. Maybe if you're manufacturing high precision parts for jet engines or missiles or something but then your capex is going to be in the tens of millions before you even get started and recovering the capital could take an indefinite amount of time.
It's not every day where people do capital intensive investments like those involved in factories, and they usually only do so when they're fairly certain they'll get a return. That contrasts with funding SV startups, which is probably comparable to throwing darts semi-blindfolded and hoping something sticks. Sometimes it does; it usually doesn't.
Also, the factories in the midwest were doing fine until they didn't; but nothing lasts forever. The factories in Shenzhen will similarly go under sooner or later. 3d printing, for instance, might bring some manufacturing jobs back to the US and Europe and put Chinese factories under pressure.
Well, first you have to buy a building properly fitted for a factory. Industrial plant property has never ever went down in price in South China. You can't legally run a factory business out of a garage anymore in China.
A factory with a top notch equipment today, will just be switching product tiers as it ages, without going down much in value. A factory, is not just its manufacturing machinery. It is also a well fit assembly line team, cherry picked team leads, on-site engineering, and shop floor knowhow.
And for everything else, a company being liquidated is usually sold as a whole to another entrepreneur. Who needs to pull apart a well oiled machine, which is an assembly line team, just to have to reassemble it later? Cases when the factory business being liquidated is sold above its book value, are not so infrequent.
A no-name shoe factory going bust is either result of a market force action, or the owner being reckless/dumb. It does not mean that the whole idea of a shoe as a product is a failure. It just means that the next owner, must be more financially conservative or needs to switch to fancier kind of shoes to stay afloat. Value-wise - there is not much change in tangible and intangible assets.
I grew up in New England, birthplace of the industrial revolution in America, and we had our manufacturing crisis just as the Midwest was ascending. The factories in Boston, Waltham, and Malden aren't factories any more; they're tech companies. The ones in Lowell are museums. The owners went bankrupt and packed up and then left the mess behind for decades before it was cleaned up. I was just at the Boott Cotton Mills Museum the day before I posted the original comment. It still has machinery from c. 1910 in it. Nobody wanted to buy it; it sat, derelict and rotting, for 60 years until the factory was turned into a National Park and restored with federal money.
Sure, but at what cost? Focusing specifically on San Francisco, you're talking about a standard of living that primarily benefits recent skilled migrants, and punishes nearly everyone else (I exclude "silicon valley" only because silicon valley was farmland until the 1960s).
High-tech job growth is a false idol for economic development, caused by a myopic fixation on wage growth as an economic indicator. Also, the choice isn't "silicon valley" or "industrial wasteland". There's a middle ground.
Cities should pay far more attention than they do to churn, net migration, and economic indicators for long-term residents. One side of this debate ends up relying on hand-wavy arguments about trickle-down benefits, but provides essentially no data to back their claims.
The average tech professional. Teachers and social workers are professionals too, and I dare say they're not enjoying a standard of living anywhere near that of tech professionals.
Seriously doubt that. Renting a single room for half your after tax income leaves you not much for yourself even in SV, not to say that SV does not score top score for livability
Silicon Valley certainly didn't do everything (or maybe even most things) right, but to claim it has created no economic value is silly.
Nothing. Most regions that don't already tilt toward a particular specialty dominated by a few large employers aren't specifically good at anything. This isn't a slight: it's just reality. The employment and talent base in most areas tilt toward retail (overwhelmingly consisting of national chains, and dominated by the likes of Walmart), human services (healthcare, education), and government. Small businesses then cover a wide gamut of services required for daily life, but don't stand out.
There are very regions whose competency comes from a convergence of independent actors, and most of these seem to focus on healthcare research intertwined with healthcare delivery, because the products, talents, and facilities aren't readily transplanted elsewhere: the article's example of NC Triangle, central Maryland, Cleveland, Grand Rapids. Rochester, MN would get an honorary mention, but it's dominated by a single actor -- the Mayo Clinic.
So what's everyone else to do? South Carolina began an ambitious plan that culminated in landing BMW in the 1990s, and now the state is a major center of automotive manufacturing and related businesses. For them, the gamble, even with generous incentives, paid off. This is the same kind of thinking behind northern Nevada's (and Arizona's) chasing of manufacturing and high-tech looking to flee from California. Rural areas chasing datacenters might seem a bit puzzling, but they support a comparable number of local jobs, while having fewer externalities than trucking distribution centers -- another typical rural development opportunity. On the other hand, the scope of the subsidies in the Foxconn plant and the nature of the behavior of Wisconsin officials are unjustifiable: it shows desperation, ruthlessness, and a disregard for local residents and local economic realities. Most cases are not that egregious.
A jurisdiction landing a large-footprint warehouse-like building, like a datacenter or a distribution center, or even a Walmart, offers a short-term boost of jobs in construction, and then a steady, if low, number of jobs in years to follow. It also vests national or international corporations to the local plant: these sorts of sites are unlikely to close or move. A few million dollar subsidy is comparable in cost to grading and paving roads for a new subdivision, or installing water and sewer service. To cities and counties competing for the long term, this is often seen as an investment in the future of the area.
However, I think an area makes a mistake in investing (via subsidies/tax breaks/whatever) in unskilled labor when it’s not tied to their natural resources. The difference is simple: you don’t gain the network effect from unskilled labor because, well, it’s unskilled. A distribution center doesn’t really make it better for a call center to pop up in the same area.
That said, all large business will cause at least somewhat of an incentive to build other large businesses by it due to infrastructure.
On the other hand, if companies (and individuals) were not able to shop around for the tax regimes they prefer, there would be nothing to prevent extortionate taxation -- companies and people wouldn't be able to avoid it by going somewhere else, and governments would be able to do whatever they wanted.
On balance, I prefer competition in the regulatory and taxation space over the alternative. It limits the ability of governments to use taxation as a weapon or a form of expropriation. I'd rather live in a world where governments need to attract investment rather than coerce it.
Some might say that such competition would result in a race to the bottom, but we already have that competition and taxes are still quite high in many places -- a race to the bottom would have happened by now if it was going to happen.
I honestly cannot understand how companies have any representation or access to politicians. The closest access to the system should be persuading their own employees to vote favorably or write their congressman. Lobbying should be entirely illegal because we are on track to making Idiocracy a reality.
It would be pretty difficult to restrict lobbying without running into problems with the First Amendment.
Most people who complain about corporate lobbying don't seem to mind when the EFF or the ACLU engages in lobbying, which indicates to me that they are really against corporate power, not lobbying per se.
Then fuck the first amendment. Change it.
Same way branches of the Federal Government delegates responsibilities and procedural obligations to the appropriate agencies.
If your state has bad laws, you can go to a different state.
Using government as a market has worked very well for both marijuana legalization and gay marriage advocates.
Historically the latter has been driven by physiological particulars of a state — availability of farm land, coal mines, etc. Has anyone actually thought through how that transitions to a primarily services-based economy?
(Aside: if state governments are a market, then the Senate is socialism, lol)
Uprooting your life and moving is nowhere near as trivial as dipshit market fetishists make it out to be for the majority of people.
You can't vote in your small local city to tax 100% of the profits of a local company and force them to stay.
Seriously, people who think giving a subsidy for a large tech company to move to your city is short sighted fail to understand the issue holistically. Nome a single American city that has seen it's overall revenue decrease from a large company with skilled workers moving into their area with a subsidy.
[1] https://www.usatoday.com/story/tech/2017/08/24/apple-latest-...
If I lived in that town, and wasn't a ruralist, I'd be thrilled with the city's decision.
Probably none? Almost everything that a Data Center needs to regularly purchase in volume is produced overseas. Micron and Seagate certainly aren't going to relocate to bumfuck Iowa.
What business are you picturing that would possibly gain anything from opening new headquarters in Des Moines to service a single data center?
I think that 50 full time employees are sufficient to manage the hardware maintenance issues that typically arise in a large data center, yeah. That's more-or-less the only reason to even have that many people on staff in a data center.
Building and A/C maintenance -- it's only one large building, and Des Moines has existing contractors fully capable of performing that kind of routine, infrequent servicing. This might stimulate one or two new hires at one or two firms, but I sincerely doubt it will require any more than that.
Literally nothing about this data center screams "slew of outside contractors" let alone "whole companies moving to Des Moines" to me.
Apple’s data center is also supposed to create 250 indirect contracting jobs for maintenance and security. But many in this close-knit town of about 3,400 people — it essentially shuts down Friday nights for high school football — do not know anyone working at Apple.
https://www.techrepublic.com/article/why-data-centers-fail-t...
"People thought when Microsoft came in it would create jobs, but that's just not the case," said E.W. Gregory, the head of the local International Brotherhood of Electrical Workers union. Instead, they brought in outside technicians to do most of the work, he added. About 25 local residents got jobs, primarily as administrative assistants or janitorial staff, Gregory said.
But why? Why should mom-n-pop have a higher fiscal hurdle than MegaCorp? If tax breaks are so good, why not give them to everyone?
> What the city may lose in corporate taxes is more than regained through the increase in revenue from middle class population growth
Then MegaCorp shouldn't have any qualms about entering into a binding agreement that the economic bounty will come, or else MegaCorp pays a penalty equal to that bounty. I wonder why they don't do that?
They don't. They have normal taxation. They wouldn't even have the opportunity to make profits, and hence be taxed, if the clientele never moved into the area.
> Then MegaCorp shouldn't have any qualms about entering into a binding agreement that the economic bounty will come, or else MegaCorp pays a penalty equal to that bounty. I wonder why they don't do that?
Because they're not shitty businesspeople? Remove the incentive and there's no motivation. It's basic behavioral economics.
Taxes for corporations are not very high at all. Fortune 500 companies routinely pay a less than 0 income tax at the federal level[0], and state level income taxes max out at 12% [1].
The race to the bottom has happened for the big businesses that have leverage. Just not for the little guy.
[0] https://www.investopedia.com/news/how-fortune-500-companies-... [1] https://taxfoundation.org/state-corporate-income-tax-rates-b...
The way you quoted that Investopedia article is a bit misleading -- it says it identified 18 companies in the Fortune 500 that paid zero tax, and that 258 companies paid an average of 21.2%.
18 out of 500 companies paying zero tax is a pretty low bar for saying that paying zero tax is routine.
Here's the quote from the article:
> The Institute on Taxation and Economic Policy (ITEP), in a recent study, found that over the eight-year period from 2008 to 2015, 258 profitable Fortune 500 companies paid an average effective federal income tax rate of 21.2%. Over that same period, exactly 18 companies, including General Electric, International Paper, Priceline.com and PG&E Corp., avoided paying a single penny of federal income tax.
> 258 profitable Fortune 500 companies paid an average effective federal income tax rate of 21.2%
So of the Fortune 500, 242 companies are unprofitable. Seriously? That ignores all the companies using legislation they helped craft to give themselves tax credits and the accounting tricks they use to bring their profits to "zero." Hell, the list itself is pathologically biased towards those businesses.
Seems the rest of the country has figured out Hollywood accounting.
You own article states the average rate in the US is 21.1%.
https://urbanmilwaukee.com/2018/07/02/the-state-of-politics-...
We are a small factory and we've been offered a 10 year moratorium if we build a new HQ across the street from our current offices.
Consolidation of capital which is only available to society on speculative grounds which demand returns at a rate unsustainable without exponential expansion of the western economy.
As a result, almost all of our society’s wealth is caught up in last ditch effort expansion schemes.
Startups were actually a decent band-aid in terms of continuing the madness but because they don’t effectively break the capital free from the consolidating parties, but merely stir it a bit, they wind up adding to the cesspool of desperate investments.
Rich people are freaking out right now because they can’t find ways to profit off the society without contributing to it.
Paper wealth will vaporize when inflation catches up to us. The people who own natural resources, public spaces and infrastructure will be in the best position.
I read this all the time: “There’s so much capital out there but nowhere to deploy it!” Our infrastructure is crumbling, the homeless and mentally ill cant get help, teachers have to buy their own school supplies, yet the rich have no idea what to do with all their money and are accumulating more and more by the second.
That this is even a distinction should indicate something in our conception of capitalism that doesn't click right. I'm decidedly pro-capitalist compared to most of my peers, but even I think that there's room for some targeted interventions that would both improve equality and make the system as a whole function better. (Top on my list would be for the government to start breaking up monopolies - or at least stop actively creating them, the way the FDA, patent system, and Sarbanes-Oxley do - and for higher taxes on certain economic rents like capital gains and a land-value tax.)
And this is the absolute crux of the problem! The continental divide between the right to own your own property vs the use of government force to redistribute wealth.
Seems like this one central problem/divide is the root of 90% of political and economic problems and the reason for our two-party system.
I'm not taking a side. It seems like it's a natural consequence of self-preservation and instinct for those with fortunes to not give them away. And it's the nature of government to be inefficient and ever-growing. This seems like the absolute core of the problem with capitalism.
Don't you notice that society is behind the decisions on how they invest their savings? You make it sound like it's a haves vs have nots situation where the have nots don't have any personal savings nor are they investing any cash on their own.
(In the case this isn't obvious: if you have no savings, you have no choice of where to invest your savings.)
https://humanprogress.org/article.php?p=597
Your statement is only true if you move a significant number of items like "Dishwasher" from want to need.
Clothing, Food, Appliances are all now significantly cheaper comparability. Housing is a serious issue that has not followed the progress made in other areas, but there is hope for the future even in that area.
[0] https://www.abi.org/newsroom/chart-of-the-day/price-changes-...
HumanProgress.org is a project of the Cato Institute with major support from the John Templeton Foundation and the Searle Freedom Trust, as well as additional funding from the Brinson Foundation and the Dian Graves Owen Foundation.
https://humanprogress.org/about
I suspected as much.
https://www.sourcewatch.org/index.php/Cato_Institute
https://www.sourcewatch.org/index.php/John_Templeton_Foundat...
https://www.sourcewatch.org/index.php/Searle_Freedom_Trust
https://en.m.wikipedia.org/wiki/Gary_P._Brinson
DGOF are dark money with virtually no footprint:
If you say this is how much a loaf of bread cost in 1965, and this is how much the average McDonalds worker was paid in 1965... then you do the same analysis for 2018, I think you have a interesting statement that could be shielded from politics.
Obviously if you are making bigger statements about quality of life, what is a WANT, and what is a NEED, then things get complicated and bias comes in.
It conflates mean measures of GDP with the far more valid median, or better, the quality of life of the least among us, the standard chosen by such eminant socialists as Adam Smith and John Stuart Mill.
Its gadget-based definitions of wealth fly in the face of fundamental necessities: food, water, shelter, medicine. Again you'll find this argument dismissed in Smith. I've taken my own whack at it, Maslow's smartphone:
https://old.reddit.com/r/dredmorbius/comments/2vwfb6/maslows...
See also Maslow's swimming pool:
Yes, we've got a swimming pool. But that won't feed my children." The BBC's Malcolm Brabant, quoting a doctor's wife in "The Human Toll of Greek Austerity", describing the impacts of Greece's austerity measures....
https://old.reddit.com/r/dredmorbius/comments/3ey7d1/maslows...
The most illuminating recasting of wealth and poverty I've seen in decades comes from a non-economist, Yonatan Zunger, who proposes the financial-shock wealth test:
What is the largest unexpected financial shock you could sustain without the cost of that to you suddenly becoming ten times the original cost or more? That number isn’t something easy to calculate; it depends on whether you have a family that can help you out, on your income, on whether that shock involves losing your job (and thus your health insurance, if you live in the US), on whether you have access to any other sources of security (including public assistance).
https://shift.newco.co/your-financial-shock-wealth-4845e6dc1...
The other side of this connects to the financial instability of income. How variable is same, and to what extent does expected perturbation of income (job loss, illness, shorted wages, etc.) put a household in threat of eviction, foreclosure, etc.
None of which are addressed by your source.
Its framing of the question is such that its response isn't even wrong. It's utterly irrelevant.
I made a simple statement, that was at least partially wrong, you replied with a ton of information so I could see another side to the issue. Your comment should be what Hacker News is about.
[0] https://www.cnbc.com/2017/08/24/most-americans-live-paycheck...
[1] https://www.huffingtonpost.com/entry/most-americans-cant-aff...
"almost all" is completely false. Bonds are in no way "last ditch effort expansion schemes", which massively dwarf the equities market.
All it produces a race to the bottom where businesses win and people lose. And it distorts the free market into an uneven playing field, creating situations which are a win to individual business but where the change/move is a net loss for the economy overall.
I don't understand why this isn't more of a hot-button issue. Everyone should care about this.
If only businesses win, then why do cities want the business to come to them in the first place?
That or local governments are just really bad at math. Do they really think a business starting in their community is going to give back more than the billions in breaks they're giving?
It also helps build your legacy. The guy who brings "The SportsTeamers" to a city is going to be remembered for exactly that, not the net economic effect. And yeah that does no doubt open the door to 'consulting positions' after leaving office though I do not think that's a primary driver in the deals, just icing.
http://money.cnn.com/2018/06/28/technology/foxconn-wisconsin...
Let's say there's 10 arbitrary 'units' of positive externalities, i.e. economic activity in a region, that comes from HQ coming to town. If no subsidies/tax-breaks/etc. are allowed, then those 10 units go to some town, chosen by some other merit. The 'people' win with 10.
If those 10 units are large in proportion to the marginal advantage a town has for selection (i.e. workforce availability, business fundamentals like logistics, etc.), then it's obvious what competing towns do: they offer up a slice of those 10 units. If town A offers 1 (keeping 9), town B can just offer 2, etc. So it's a race to the bottom, where nearly all the positive externalities are passed to the business in a bid to capture whatever remains. Even if you give up 9, it's worth it to have 1 vs. 0.
This kind of competitive behavior is fundamental to markets, and is the reason why price is so very often right at the 'pain point' for buyers and sellers.
The remaining question is whether those positive externalities (the jobs and economic activity a business can bring to a region) are rightly held by the people or by the business.
In your example, one city might bid 11 because they wanted to beat 9 and estimated the total utility at 13, not knowing it would be 10.
Midwestern metro areas are not going to be happy if there was a federal law that, for all intents and purposes, guaranteed that they were going to shrink, shrivel and eventually die. They have the right to fight for their community's existence with economic means: The "best" you could get is, instead of the government doing it, a private consortium of businesspeople doing the same thing with their own pockets, producing the same effect. The one difference only comes when you start from the dubious position that all government actions distort, while a trade association's never do.
Would the economy overall be better if San Francisco had 10 times its current population and we all moved there? In the short term, probably yes, but imagine what even larger differences in state population would do to politics.
Big metro areas tend to have very expensive workforces, and plenty of companies intentionally set up shop outside of them in order to gain a competitive advantage through cheaper labor, services, rent, etc.
No more tax incentives aren't going to cause metro areas to die. It just means companies won't be able to shop around for an artifically low price. They'll still wind up somewhere that isn't SF, but it won't be at the cost of local schools and pensions.
Aside from maybe being young, isn't this what tech companies are generally doing?... working on new ideas, not focusing on a single vertical and have multiple lines of somewhat experimental businesses?
Instead of arbitrary tax breaks, it sounds like some cities ought to mandate the benefactors create at least some n number of jobs with a total comp of $x for employees living within the same town, city, county or whatever municipality.
Directives like the ones to create more jobs in order to reach an arbitrary target set by the bureaucrats in the government adds needless pressure and thus might stifle the potential and resources for innovation and experimentation in an organization, especially for a startup.
If you're going to pay someone to do something, it makes sense to agree the details of what you're paying them to do - that seems like common sense to me.
Otherwise you might spend $$$$ thinking you're attracting a software development centre with 200 employees on low-six-figure salaries, but instead get a data centre with 20 employees on mid-five-figure salaries.
You can't go adding requirements in a race to the bottom. Cities are competing on tax incentives in order to attract business. If I start requiring contractual guarantees to those incentives it's functionally the same as just offering a smaller incentive and the business may go elsewhere. The problem is that cities are allowed to compete for business on this playing field at all.
That's not cool.
But yeah, if Racine County wanted to come up with the 4 billion on their own, that would be a whole different story.
I think you should since it's fundamentally distortive of the market. While a few giant corporations who are going to get the mayor and some council member's names splashed across the paper get billion dollar deals the rest of the employers in the area don't - it's an unfair competitive advantage.
There's two marketplaces at work here. One is with cities as atomistic units competing amongst themselves for jobs and the other is within cities with businesses competing amongst each other (on multiple dimensions.) Right now we corrupt both, the proper solution is to corrupt neither and that requires entirely ending these tax deals.
The ballot box is a very low resolution feedback tool and an election cycle is a very long iteration cycle.
Imagine you only had performance reviews every two years and the feedback from your boss was either "you're not as good as the next best choice, so you're fired" or "you're not fired right now."
Voter willpower is diffuse (different people care about different things at different times) and only infrequently expressed. Special interest willpower can be much more acutely and frequently applied. It's hard to see how you can correct the imbalance between these two things given the current system and the inertia of incumbents who benefit from it.
Term-defined performance goals. Before elections begin, each citizen can define a list of priorities, metrics, and multipliers of expected performance. These are used in a function to calculate a number that determines whether an elected official is performing according to the standards of the citizens.
These "expectations" are collected, anonymized, and split up into groups of similar expectations. A candidate for office can select to align themselves to a specific group of expectations, or define their own and run on that as a platform. Either way they're going to have to live up to that set of expectations. Citizens vote for the candidate they feel best represents those expectations. At this point we're just "hoping" they come through on their promises; there's no guarantees.
Once a candidate wins and begins their term, their performance is continually reviewed by the function. If a candidate's performance during their term drops below 50%, a performance review can be ordered, and more specific short term goals can be drawn up to see if they can rise to meet them. If their performance drops below 25%, a suggestion is automatically flagged to inform citizens they should vote this rep out at the next election cycle.
The end results should be that citizens can more effectively inform representatives of what they want, they can track the progress of these representatives, and stay informed so that at the next election cycle they aren't just re-voting for the incumbent even if the incumbent didn't live up to expectations. In addition, a citizen no longer needs to vote according to a party; they simply define their personal expectations for government, and "parties" may naturally form according to real issues, rather than rhetoric, tradition, etc.
I could easily see an Startup Center coworking space being put together which links accelerators(plural), local universities, the city, and relevant infrastructure to allow a huge working space for very cheap rent until success comes together.
It's not the original Aroma, but there's often a certain odor in the air in the morning.
Not that other major cities don't have issues there too.
This is one of the ways cities can create supra national entities that can become a counterweight against multinationals.
http://www.chicagotribune.com/g00/business/columnists/ct-fox...
I don't know how Chicago does it, but they always come out on top in any big deal that seems to happen in Wisconsin.
Now please excuse me while I go recharge my account to pay Illinois more of my money for the pleasure of using their iPass system on the weekends. :(
(Maybe I should change my HN screen handle to "AnotherWisconsinSucker"?)
Are you talking about the insane property taxes in Wisconsin? Or the insane property taxes in Illinois?
Also, unless you live south of Chicago or something, there really is no way I can see it taking you 3 hours to get to Racine even by car. It definitely won't take 3 hours from the north suburbs. And again, that's assuming all the FIB's use their cars. (And even a FIB is smart enough to use the train.)
It's the 3rd largest city in the US. How do land prices compare to NYC, LA, Houston, or SF (ranked 13th).
I love Wisconsin.
Do you
A) Demand your spouse move to middle-of-nowhere Wisconsin with you and forego his/her opportunity.
B) Move with your spouse to the hypothetical huge city and forego YOUR opportunity.
C) Move with your spouse to the hypothetical huge city and simply take the train to your job in middle-of-nowhere Wisconsin.
OR
D) Move to middle-of-nowhere Wisconsin, demand that your spouse move with you, and further demand he/she take the train to their job in the hypothetical huge city.
HINT: On most multiple choice tests, guessing "C" can increase your odds of getting a given question correct even when you are unsure of the correct response.
They won't be making that commute daily.
SV isn't the most important venture market in the world because it's in California it's because it was central to a technological revolution which created alumni of expertise from taxation and legislation to access to talent to knowledge to people who focus on building companies, academia supporting building and access to money (accumulated from the success of the revolution)
You need something to kickstart that somewhere else, something that SV doesn't see and then be right there while the market grows. It's not obvious what that would be, maybe China because they are less affected by ethical considerations which can give them an advantage.
It's hard to see it happening in any significant shape and form.
If you or I bribed our city council $1000 to abate $1700 we would be in jail. For Tim Cook it is "tax efficiency".
> Apple Inc. pledged up to $100 million to Waukee under a multi-decade partnership announced Thursday during a visit from Apple CEO Tim Cook.
> Waukee, in turn, will provide Apple with $194 million in tax abatement and infrastructure improvements.
> Apple's $100 million investment in Waukee likely will be paid out over decades and go toward things like street and sidewalk projects and quality-of-life amenities like libraries and parks, Cook said.
There are more details in the article, but it seems like the city is forgoing tax revenue with the understanding that Apple will be investing in the community.
http://www.latimes.com/business/hiltzik/la-fi-hiltzik-apple-...
With Apple bribe the city gets $100m and the schools/county/state get $0.
It also seems articles like these are really talking around the issue when the answer is right in front of us. Let's just ban cities and states from handing out these tax-breaks.
It's rarely that simple. I don't know exactly how local government works in the USA, but I presume the federal government can't just summarily revoke powers from cities and states?
This person has not read the part of the US constitution that says "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."
The chief problem here is convincing states that cities poaching their neighbor's businesses is harmful.
Wait, but then they'd have to invest in infrastructure and human capital... we can't have that sort of tax and spend socialism!
No single socially irresponsible corporate entity (these corporations are only responsible to their shareholders, by law) should be able to exert this much influence over social and business environment.
If taxes rises then property prices decrease in value and more money goes to public services. That in theory anyways.
It’s a risky strategy, but that can’t be ignored.
There is an enormous amount of effort required to "just" create a new city.
https://www.amazon.com/History-Future-Cities-Daniel-Brook/dp...