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Comment by rayiner | Hacker News Reader

> Would we not be better off as a society if business-specific tax breaks were not an option? Wouldn't that 'level the playing field'? Wouldn't it decrease the incentive for local governments to gamble the city's financial future, placing bets on the whims of corporate boards? Can someone tell me what I'm missing?

The race to the bottom drives business taxes to zero, but it's not clear to me that's undesirable. Businesses are productive entities and create jobs. It's not clear to me that it's desirable to tax that. It makes more sense to simply raise taxes on the individuals who actually use those local services.

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"Businesses are productive entities and create jobs."

I'm not sure of the meaning of that statement. Anybody can do something, perhaps dig a ditch and fill it in again, and file appropriate paperwork to be recognized as a company by the state. If that activity does not create more value for society than it destroys, society ought not to encourage it, even though it creates one or more "jobs".

Companies are more aligned towards creating value than Hole Inc because they have a profit motive, and presumably can only make money from voluntary transactions. The "creating jobs" thing makes sense when it's taken implicitly that the market will demand that any jobs you create will be worth something to someone.

Also, a hole-based stimulus package might actually help the town's economy, just like a big government project to paint murals on every wall would. So in a sense, towns are agnostic about the big picture. This shows the mindset of the politicians who are trying to create jobs: the value provided to them is the income that the employees make, which they can tax the spending of.

You don't talk about creating jobs if you are a customer that will be buying the products of the big plant. In fact, creating jobs is a negative (an expense) for every organization involved except for the local government. It is the customers of US steel that care about the importance of whatever it is that the jobs are doing, and the local government that cares about the existence of the jobs.

The problem is that the taxes are zero for specific businesses. If I want to open a business in New York, I'd get nowhere near as much of a tax break that Amazon got. I agree that business taxes should be low, but they should also be consistent.

OTOH businesses can also be drains on the local economy when all profit is shipped out of the community in which it’s made. If you have a factory pulling out $200mil a year in profits in your town, all it will do much of the time is not have layoffs, while the Wall Street investors get all the benefit.

The fact that Gary is such a poor town seems to confirm your observation. The workers don't seem to be seeing a share of the profits.

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