You misunderstood me: I'm not saying the states shouldn't be competing for business.
I'm saying states shouldn't be allowed to give tax breaks to individual companies and not to others. That's effectively having different tax codes for different companies.
It's is analogous to having different laws for different people (which, I assume would not be constitutional).
The point is to create good economic environments without allowing corporations to play states against each other.
I'm curious why Congress has chosen not to regulate (or ban) the grant of tax incentives to companies as enticements for development; this seems to easily fall under the interstate commerce clause. All states lose out when they compete against each other in this way.
The US Federal government's role isn't to manage all commerce within the states. It's not a matter of what "federal law allows". Managing tax rates within states is not a Federal power enumerated in the Constitution.
It's a good thing that States are forced to compete with each other on offering suitable economic environments for the businesses that they wish to attract. Big corporations can offer significant tax revenues and employment opportunities for the states they call home. There's no reason why States shouldn't use whatever means are at their disposal to attract good companies for their citizens.
However, I would argue that situation runs directly against the broad tenants of American Democracy. Specifically, that states should regulate their internal commerce to some extent and the Federal government should regulate the rest. Here, you have one state that allows an end-run around both institutions (except for the minute number of people actually living in Delaware).
Yeah I'm not sure what a policy-solution would be here. I'm definitely for allowing states to do whatever they want. It's the great A/B test.
Just seems like the smallest businesses and the largest businesses get the most deals and those in the middle get hosed. Maybe that's working as intended.
Isn't that like exactly the sort of thing the interstate commerce clause was originally meant to stop? There shouldn't be such competition between states or local governments, whether real or just negotiation bluff.
There are ways to do the above without specifically restricting inter-state commerce. The CCPA is one example of a state raising the barrier to entry that a business can either comply with or leave the market. I wouldn't exactly call it an ideal situation, but if each individual state created their own version there would certainly be businesses that refuse to do business in certain states rather than dealing with the regulatory headaches.
This is a very naive statement! You are implying that the benefits of businesses and states are somehow exclusive to each other, but I believe there is plenty of historical precedent of situations where the "benefits" to a business prompt (in)action by states! The "benefits" to a state are so nebulous of a concept that I would argue that it is impossible to pin down any meaningful definition which we would be able to quantitatively use as a predictor for (in)action, except a cynical case where we define the "state" as "the groups/individuals in charge of governing a state," at which point it becomes trivial to reason out what the "benefits" to that "state" would be.
Individual states can't tax interstate commerce, that's the job of the feds. Actually, they can if they have a presence in both states - they can only tax a business that has a physical presence in that state. It isn't broken, it is part of the [inferred] Constitution. The idea is to not place burdens on interstate commerce. Without it the states would be free to give their state preference in commerce - to tax commerce interstate at a high rate so nobody wants to engage in interstate commerce.
"The central rationale for the rule against discrimination is to prohibit state or municipal laws whose object is local economic protectionism, laws that would excite those jealousies and retaliatory measures the Constitution was designed to prevent"
> Pass a law that each state can specify a single tax rate for any shipments into that state. Then all retailers everywhere would have to collect that tax and pass it on to the state.
At that point states would be able to set higher rates for shipping than for in-state sales tax. That would create a protectionist economy for their in-state businesses which is precisely what the founders feared would occur if you allowed states to control inter-state commerce.
States have a bias to their own businesses because their business owners/employees are also voters.
That requires individual states to be tax and business friendly. The Northeast and Pacific rim no longer make any attempt at this. The rust belt tries sometimes, but flip politically too often for companies to make big investments.
There's nothing meaningful congress can do to order states to be friendly to business.
> States are divested of the power to regulate interstate commerce. This is squarely jurisdiction of federal government, not the states.
It's not as simple as that. States can indeed apply their laws to interstate commerce in a myriad of ways, but not to the degree that the U.S. federal government can. States for example can force e-commerce companies to apply sales tax to purchases made by customers based in the given state, even though the business is based in another state. By your logic, the state should only be able to enforce their laws on the resident customer, but that's not true, they can apply their law to the online retailer who doesn't have a presence in the state and force them to collect the taxes on the state's behalf and remit the taxes to the state. [0]
As a second example, a state's minimum wage laws apply to any person who resides within the state, even if that person works remotely for a company based solely in another state. If you have a company in Illinois, your minimum wage is $12.00 per hour. If you employ a person who resides in California for remote work, you still must pay them the California minimum wage of $14.00 per hour. You must also adhere to other labor laws for the employee who resides in California for overtime, maximum hours worked per day, and others. [1]
> We simply disagree here. I see that they are purchasing IP within their state lines, you see something completely different.
We do disagree, but your opinion also disagrees with one-hundred years of U.S. employment case law, and so I would argue is factually incorrect.
If there were a law that states could not make deals with individual entities, it is likely both states and citizens would be better off, and companies would be unharmed.
It is one interpretation of Constitutional language, that hasn't been construed to say states can't tax these same purchases via a Use Tax. Only that states can't require an entity with no local presence to collect the Sales Tax.
Subsidiaries and affiliates are reasonably a local presence.
Congress should act; it definitely has the Constitutional power over interstate commerce and has been derelict on this issue.
No, I’m not conflating them. I do appreciate why they are written with geographical clauses, but I have always found it odd (and probably unenforceable).
I’m just saying that non-competes like this should be regulated under Federal authority because they explicitly cover geographic areas that include multiple states. That’s in addition to the impacts on “interstate commerce” proper (which as you said is basically all commerce).
Said another way: I find the argument that non-competes should be allowed or disallowed under the authority of only state laws to be lacking. If a contract in state A dictates what you can do in state B, it’s an interstate issue and Federal law could (should?) be involved.
Good point. I was just pointing out that the US constitution itself doesn't provide a protection, as the original comment suggested. You're right that states certainly could place additional requirements on businesses. I edited my post to reflect that. Thanks
Maybe not if it's the local government: have it so that the federal government collects the taxes from the state governments, who collect taxes from the local governments. That way, you (as an individual and a business) only deal with your local government.
I'm saying states shouldn't be allowed to give tax breaks to individual companies and not to others. That's effectively having different tax codes for different companies.
It's is analogous to having different laws for different people (which, I assume would not be constitutional).
The point is to create good economic environments without allowing corporations to play states against each other.
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