I don't think a megacorporation should be having its jobs (which it was going to create anyways!) subsidized by the taxpayers of relatively small, desperate localities engaged in a race-to-the-bottom against other similarly small, desperate localities.
I grew up in a Midwestern small town with one major employer. It’s not a sustainable way of life. When that employer inevitably pulls out, the taxpayer pays the brunt of their externalities and the people pay with their QALYs.
I see no reason to incentivize that kind of development no matter how badly some people think they want it.
Well I agree with that, subsidising industry with public money is not fair to everyone else and doesn't necessarily pay off at all. But having, even those relatively small number of jobs in a community could really help depending on the city size, it seems find to court business but using tax money or offering big tax cuts is kind of BS.
The Government should not pick winners and losers. It is unfair for one company to get these great incentives. Also, the taxpayer ends up subsidizing all their monetary benefits for choosing the city. I am glad that both sides agree that this is wrong.
I absolutely agree. Essentially, corporations with huge revenue streams get major tax advantages that are not available to local companies in exchange for "creating jobs".
It turns out that each of those jobs is so costly to taxpayers that the only real benefit is for the politicians that announce the "partnerships" (and the receiving company, obviously).
Here's a couple of interesting articles on the matter:
I don't really understand that even booming areas like Northern VA and NYC have to give a company subsidies to settle there. I can see this as a tool to help disadvantaged areas but I don't think we should subsidize wealthy companies to settle in already wealthy areas.
As an ex-small business owner I would much prefer if little companies got more incentives.
It's inevitable that tax subsidies, if available, will go to companies that can negotiate the best for them. Large enterprises have more lobbying power, and more ability to play cities against each other. So I think there's little hope of city officials finding the best corporate citizens to subsidize.
I appreciate you trying to make OP's case, and I'm genuinely interested in changing my mind about this. What do you think should be done? Should growing companies be prevented from expanding because it might 'erode the character of the city'?
I'm not in favor of the city subsidizing a company's growth, even if it does stimulate the economy in the long-run, but I just can't get behind any policy that would prevent a growing company due to something as nebulous as the erosion of the city's character.
They should levy taxes on people living in the municipality, not a company thousands of miles away that is not using their resources in any way whatsoever.
No, the idea that the city should have to provide roads, utilities, etc to a huge, rich corporation and get nothing back for their trouble is terrible.
That is unfair and hurtful, Chris. I'm encouraging people to support local business, not because I'm a luddite but because I don't want to see local business starved to death by global megacorps. It hasn't happened yet, and I'm pointing out a harder option, and in good faith. I'd appreciate it if you'd be open and clear about any objections you might have to this, rather than resort to sarcasm and innuendo. Thanks.
A big company wants to bring some high paying jobs to a large, prosperous metro area that’s doing just fine without them: shower them with money!
Someone is on the verge of literally starving to death: make them pee in a cup before you give them any food to make sure they’re not an addict.
The Feds ought to use their interstate commerce power to put a stop to these races to the bottom to court individual projects. If some locality wants to be low-tax and business-friendly then go for it, but do it for everyone.
I've never been a fan of granting special treatment to specific businesses. It's completely unfair to local competitors who have been quietly paying their taxes; You can boast about the economic gains, but don't forget about the harm inflicted on the rest of the sector.
There’s totally something wrong with favouring local businesses owners at the expense of local consumers. The benefits accrue mostly to people with incomes far in excess of the average.
Corporations benefit and profit from municipal services, same as people do. Should they be able to use those services for free?
Kansas massively cut their corporate taxes in 2012, with the implicit promise that lowering taxes for "job creators" would pay for itself. The deficit for the state became so massive as their revenue dropped, that the state had to close education and other municipal services. [1] Kansas is now heralded as an example of how 'trickle down' economics of cutting taxes for 'makers' fails. [2]
You're right to identify tax revenues as the source of funding for local services but there's a strong case to be made for taxing people and not corporations.
Corporations don't pay taxes, they simply pass the burden on to customers/employees/shareholders. It would be simpler (and arguably it would allow the market to allocation resources more efficiently) if corporations paid 0 tax and people paid taxes. Consider this:
And you're right to point out that companies bid jurisdictions against each other. But many bid winners wouldn't get the facility without a special accommodation. I'm sure Apple chose this town because of the benefits, and this town is better off for it. I'm also sure this town wouldn't have been selected if there weren't any 'wooing' process, so this town is strictly better off.
If the town can serve its citizens with fewer tax revenue, then they're doing something right and hopefully they can expand and more people will choose to live there.
This helps incentivize communities to operate more efficiently and that's a good thing.
IMO the bigger problem is corporate free loaders. All the local walmarts use way more police time than the targets, but Walmart doesn't pay additional fees for the intensive use of police. The simple solution is a corporate tax but that isn't good because it doesn't incentivize more or less use of the police, ideally we'd charge them according to use which is different from a tax and more closely aligned with our preferences (e.g preference for less police work at walmart).
I agree about the game theory/race to the bottom as an incentive. I think there are more great reasons compounding these decisions that others point out too.
Large corporations love to hold cities and states hostage and make them bid against each other. AMZN is a great example with their campus 2 bidding war. I am glad NY had the cajones to stand up to them.
Most cities and states even have dedicated EcoDevo staff to actively seek out these companies.
Cities and states compete to give the largest tax benefits, usually something like you don't have to pay ___ taxes for __ years (like 10, worth tens of millions). Plus they'll spend on infrastructure and give preferential zoning, city regs, etc.
Sure having more jobs probably creates more incoming/housing taxes for the city.
But states like Texas win this race to the bottom (TSLA and Musk personally) and in my opinion the costs of these corporate incentives (imho handouts) are just passed along to citizens in the cost of less societal services and needs, less school funding, less everything. Just a funnel up.
I think this kind of subsidy is only slightly better than sports stadiums. They both are shades of the bad parts of capitalism.
If only all states could agree to not give preferential treatment via tax subsidies. It'd be nicer for companies to pick their location based on geography and work force along with tax reasons.
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