> Massachusetts and Boston officials said Wednesday they had offered incentives valued at as much as $145 million to lure the company to the city. The package included as much as $25 million in property-tax relief.
Essentially Boston just drove a wheelbarrow full of money up to GE's front door and said "Want this?" and Connecticut couldn't match it.
So by being "anti-business" what you mean to say is: "Didn't give away tons of tax payer's money to a private corporation." I'd prefer Connecticut to use money that would have gone to GE to generate other jobs, for example pay people to upgrade the state's infrastructure.
GE gets enough tax breaks and government subsidies as is.
GE chose to leave Connecticut because of a tax increase on profits made in other states by corporate subsidiaries. They're not the only corporation in Connecticut that's unhappy about the tax. Anti-business or not, it's not exactly a draw for corporations with subsidiaries across the country. The money that Boston threw at them was to keep them from moving to New York.
> So by being "anti-business" what you mean to say is: "Didn't give away tons of tax payer's money to a private corporation."
Actually, Connecticut only succeeds at maintaining huge corporations relying on government subsidies. Hartford, CT is the country's insurance capitol. The reason the state is so "anti-business" is precisely because they give a bunch of taxpayer's money to publicly-traded mega corporations. The income and property tax cost this saddles on normal taxpayers and small businesses is enormous, and they get very little benefit from it.
That and the fact that the CT government payroll/benefits expenditures are out of control. Lots of reasons for this but public sector unions and their relationship with politicians (in both parties) plays a big part.
They gave us the income tax, and it was supposed to be a temporary thing. We still have it many years later. Spending in CT is out of control. They keep revising the deficit as they use too many rosy assumptions in their budget projections.
As a software engineer in Boston this only confirms my feelings that we are a world leader in innovation. I'm looking forwards the the smart people that this will bring to my great city.
I'm not sure that a corporate headquarters is going to bring the kind of people you're assuming that it will bring into Boston.
Also, perhaps this win will offset the impending EMC layoffs. It's a good way for a politician to say they are doing something about the state jobs market, even though the package being offered to GE seems very generous and costly.
My take is that corporate HQs are the equivalent of a major league sports team (though orders of magnitude better for the economy than another stadium). You get a relatively small number of employees and some prestige, but not a lot of secondary industry compared to what production facilities generate -- or used to, anyway. Economic development's a tough game these days; the rules have changed and no one's really sure what the new ones are.
That's one way to see it. Another way to see it is MA competing with CT for an employer who would bring employment opportunities to the local economies.
It's like NV competing with CA for the gigafactory in the hopes it would jumpstart a more technology oriented economy in the area.
CT nor CA should have a monopoly on a company.
I'm not advocating that states should race to the bottom, but they should be able to attract employers, else they are not keeping their citizens interests' in mind.
I think they should discriminate. Why should MA try to attract a company in a dying industry? No, I think they should attract companies which fit into their future vision coupled with the characteristics of their present and predicted future workforce.
In other words, think ambitiously and progressively.
The tax breaks and special treatment chase states to compete with each other. It's a race to the bottom. It becomes a question of which state is willing to make its citizens sacrifice the most. It is sort like a feudal society.
$25m in free property tax from Boston and $120m in subsidies from the state for... (wait for it) 800 employees. I'm sure Boston/MA will be in the black on this well within our {great}^{999} grandkids' lifetimes...
They can't afford Geneva, Dublin more likely. As for your RFP: just don't do anything. You want to move here? Welcome. You don't. No big deal.
That's $181,250 per employee in tax-benefits. I'd be interested to hear what you think those 800 people "bring and represent" other than another screwing of tax-payers for the benefit of corporations.
800 probably well paid employees, that buy houses, who pay property tax, who pay local income tax, who pay for local restaurants, entertainment, and other items, a company that will hire from the local region, that will need services and provide revenue for many other local businesses.
And this is just after 3 seconds thought. Another 3 seconds will likely reveal more.
Another 3 seconds will reveal that your thinking is similar to the justification used for spending public money on stadiums, and giving tax breaks for movie filming. Both of which have been proven to have negative effects on the local economies.
There's a third option: forbid states and municipalities from offering incentives to individual organizations like this.
If the company wants to move to a location (or stay at one) to be there, fine; but it shouldn't move (or stay) because that location gave it the best bribe.
It's an incentive, not a bribe. No one is secretly getting money illegally.
I think governments should be able to make a calculus as to whether something like this will benefit their constituency.
This is not PR or high profile loss leader or trophy white elephant or other gimmick like the olympics or new stadiums. This is a bet on the company improving the local economy attracting other employers, competitors, increasing competition for employees, etc.
If I lived in MA I'd be all for this, just like SF bet on twitter reviving mid-Markt street --which it has.
That works out to $180k per employee. If average income per employee is $100k, at a 5% state income tax rate, it would take 36 years to make back the money.
There's the added costs for those additional people in terms of traffic congestion, schools, and other services. There's also the lack of a guarantee that GE will stay long enough, or that they won't demand an even bigger tax break when this one expires.
The subsidy gives GE a competitive advantage over their competition on every contract they bid on, every hire they offer a salary to, every item they sell on the open market.
GE can operate below the margin a fairly competing company operates at, forcing them out of business. The government picked a winner and created losers.
Convenient how they managed to get a handout so large it convinced them to move their international headquarters, yet so small it doesn't negatively affect their competition.
Long term strategy, leases, access to workforce, business climate, etc.
The money isn't nothing, but its also not a lot of money considering the size.
It's the equivalent of a sandwich shop selling $1,000,000 in yearly revenue worth of $8 sandwiches getting an $850 break on rent or taxes per year allowing half a penny in savings per sandwich served. Wow that really kills the competition.
I recall (meaning, I can't substantiate this) some years ago that someone concluded that corporate welfare (this included sports stadiums) ended up being a net loss in most cases. Sure wish I knew where to even start to find that.
Stadiums are a clear loss for the local economy, but isn't it totally different from a company like this with many high payed employees paying income tax, as well as demand for local prototyping / consulting services?
> Stadiums are a clear loss for the local economy, but isn't it totally different from a company like this with many high payed employees paying income tax, as well as demand for local prototyping / consulting services?
Yes, but from my understanding, the scenario you outlined does not exist (net benefit from tax incentives).
Example: Nevada has no income tax. The only benefits it'll see from the Tesla Gigafactory is any sales tax from the purchasing of manufacturing equipment for the location, and the trickle down from the economic activity from the workers who relocate to work there.
I only used Tesla as an example because it was fresh in my mind, and you asked about income tax, which Nevada doesn't have.
But that same welfare could be used other ways to create jobs. For example infrastructure jobs. Go spend $200m upgrading the state's infrastructure, that will require many jobs.
Or heck go start a startup incubator program. I bet you can get a lot of value out of that even if just to help new businesses cover the cost of a business license and to navigate employment law for their first few employees.
There's a bunch of ways to create jobs with a boat load of money, giving it to a corporation that barely pays taxes as is is not one of the better ways.
I'm unsure how this really matters in regards to GE HQ relocation?
They pay 100% of the taxes they are legally obligated to pay - if you're unhappy with that amount, change the laws. But lets not pretend they're an evil corporation solely on the grounds of them not paying more taxes.
It's not somehow patriotic to pay more in taxes than you legally owe.
> regulatory capture ... I believe we are in such an environment
I think we'll have to disagree on this. I don't see any signs or evidence that Boston politicians are cozying up with GE executives for kick-backs and what-not.
I don't either. I do see evidence of business interests ensuring that the effective tax rate on corporate profits is quite a bit lower than the nominal rate and that this fact will not change regardless of voter preferences.
I was moved by GE's patriotism when they realized they would have to dredge the PCB pollution dumped in the Hudson River -- then promptly lobbied for a retroactive tax cut to fund it.
> That's what they tried to do so GE left the state
This is what happens when states and nations have ridiculous tax laws and rates. People and corporations leave. If anything, we should be advocating CT fix their corporate tax laws, because it's costing them tax revenue.
> dodge taxes they're meant to legally owe using loopholes
That's the law you are describing. These so-called "loopholes" are parts of the tax code specifically inserted to allow people (and corporations) the ability to reduce their annual tax liability. Nobody (and no corporation) does any wrong by using the law to their advantage.
Change the law (remove the loopholes) if it's upsetting. Otherwise, they're doing things the right way.
To be fair, infrastructure jobs are almost all temporary while GE will generally provide permanent and higher quality positions. The incubator might be a better general idea, but I'm not sure Boston is the best city to take advantage of that considering that many of the region's colleges end up promoting local entrepreneurship in their own ways.
GE creates lots of middle-class jobs. Startups create very few jobs in comparison, the jobs they do create are often out of reach of ordinary people, and many startups probably destroy jobs on net by automating-away things that previously took human labor without growing the demand side of the equation.
This is a terrible deal for Boston and the commonwealth. $145 million for 800 employees, or $181,250 per employee, in a state that can't even keep its public transportation system running.
Thanks Governor Baker. Did this deal cost us just the Mattapan line? Or are we losing GLX too?
> $145 million for 800 employees, or $181,250 per employee
It seems like a lot, but this is the corporate HQ. The staffers will be re-located and/or hired from the surrounding area - and surely will make nice salaries.
Since these executives and other staffers will be living in the area (in large part), they'll put their salary right back into the local economy (buying groceries, cars, houses, paying bills, etc...).
Most of those employees will put far more than the $181,250 back into the local/state economy over their tenure at GE.
So? Couldn't one say that about any large company? Should states be constantly cutting taxes for these large companies, and shoving them onto the people who live there now?
It's not too uncommon that cities or states have tax incentives to encourage certain industries to set up shop in the area. Like Atlanta offers a significant tax credit for film, television, and digital entertainment (video games) companies, for example: http://www.georgia.org/competitive-advantages/tax-credits/fi...
The development of the Seaport/Fort Point area in Boston in the last 5-10 years is pretty crazy. My wife worked for John Hancock down there when we first started dating about a decade ago and there was nothing down there. Now I got to visit her at her job down there and I get lost half the time with all the new construction that is going up.
Regarding GE the only people this will really impact is the smaller tech companies as I'm sure it'll jack up the office rents even more.
On the bright side, Boston has multiple industries there, so when they decide to move again, they won't fucking blight the place like they did to Schenectady
What about $180k/employee tax breaks for new startups? These wouldn't irk me so much... if they were applied similarly across the board rather than through backroom deals for megacorps.
I'll leave the accounting ("Is this actually worthwhile for the city?") to others: How about equal treatment? I'd consider headquartering a startup in the major tech hubs if they made accommodations similar to what they give the big guys (as if they need it!).
I've always felt that these targeted tax incentives are in conflict with our notion of equality under the law, due process, and equal protection principles, and so on.
If we construct a political environment where is is perfectly acceptable for the government to throw around favors valued at $100M and more, effectively tilting the economic playing field in favor of certain organizations, is it any surprise that these same organizations spend a lot of time and money trying to get the field to tilt in their favor?
CT loves to pass their budgets in special sessions at midnight when the public cannot see what is in the budget. It is the total opposite of transparency. And Malloy is hoping for a new job at the federal level.
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[ 3.5 ms ] story [ 171 ms ] thread> Massachusetts and Boston officials said Wednesday they had offered incentives valued at as much as $145 million to lure the company to the city. The package included as much as $25 million in property-tax relief.
Essentially Boston just drove a wheelbarrow full of money up to GE's front door and said "Want this?" and Connecticut couldn't match it.
So by being "anti-business" what you mean to say is: "Didn't give away tons of tax payer's money to a private corporation." I'd prefer Connecticut to use money that would have gone to GE to generate other jobs, for example pay people to upgrade the state's infrastructure.
GE gets enough tax breaks and government subsidies as is.
Actually, Connecticut only succeeds at maintaining huge corporations relying on government subsidies. Hartford, CT is the country's insurance capitol. The reason the state is so "anti-business" is precisely because they give a bunch of taxpayer's money to publicly-traded mega corporations. The income and property tax cost this saddles on normal taxpayers and small businesses is enormous, and they get very little benefit from it.
I'm not sure that a corporate headquarters is going to bring the kind of people you're assuming that it will bring into Boston.
Also, perhaps this win will offset the impending EMC layoffs. It's a good way for a politician to say they are doing something about the state jobs market, even though the package being offered to GE seems very generous and costly.
Boeing has been here 15 years now.
It's like NV competing with CA for the gigafactory in the hopes it would jumpstart a more technology oriented economy in the area.
CT nor CA should have a monopoly on a company.
I'm not advocating that states should race to the bottom, but they should be able to attract employers, else they are not keeping their citizens interests' in mind.
Why does GE get special treatment (at everyone else's expense)?
In other words, think ambitiously and progressively.
What do you propose to do? Forbid them from moving to MA, forbid MA from attracting employers? Maybe just allow them to move to Geneva or Dublin.
That's $181,250 per employee in tax-benefits. I'd be interested to hear what you think those 800 people "bring and represent" other than another screwing of tax-payers for the benefit of corporations.
And this is just after 3 seconds thought. Another 3 seconds will likely reveal more.
If the company wants to move to a location (or stay at one) to be there, fine; but it shouldn't move (or stay) because that location gave it the best bribe.
I think governments should be able to make a calculus as to whether something like this will benefit their constituency.
This is not PR or high profile loss leader or trophy white elephant or other gimmick like the olympics or new stadiums. This is a bet on the company improving the local economy attracting other employers, competitors, increasing competition for employees, etc.
If I lived in MA I'd be all for this, just like SF bet on twitter reviving mid-Markt street --which it has.
GE can operate below the margin a fairly competing company operates at, forcing them out of business. The government picked a winner and created losers.
The money isn't nothing, but its also not a lot of money considering the size.
It's the equivalent of a sandwich shop selling $1,000,000 in yearly revenue worth of $8 sandwiches getting an $850 break on rent or taxes per year allowing half a penny in savings per sandwich served. Wow that really kills the competition.
If a state is competitive, then it should be able to be competitive without giving away sweetheart tax deals.
https://www.youtube.com/watch?v=xcwJt4bcnXs
http://www.theatlantic.com/business/archive/2012/09/if-you-b...
http://agrilifecdn.tamu.edu/cromptonrpts/files/2011/06/Full-...
Yes, but from my understanding, the scenario you outlined does not exist (net benefit from tax incentives).
Example: Nevada has no income tax. The only benefits it'll see from the Tesla Gigafactory is any sales tax from the purchasing of manufacturing equipment for the location, and the trickle down from the economic activity from the workers who relocate to work there.
I only used Tesla as an example because it was fresh in my mind, and you asked about income tax, which Nevada doesn't have.
Or heck go start a startup incubator program. I bet you can get a lot of value out of that even if just to help new businesses cover the cost of a business license and to navigate employment law for their first few employees.
There's a bunch of ways to create jobs with a boat load of money, giving it to a corporation that barely pays taxes as is is not one of the better ways.
I'm unsure how this really matters in regards to GE HQ relocation?
They pay 100% of the taxes they are legally obligated to pay - if you're unhappy with that amount, change the laws. But lets not pretend they're an evil corporation solely on the grounds of them not paying more taxes.
It's not somehow patriotic to pay more in taxes than you legally owe.
I think we'll have to disagree on this. I don't see any signs or evidence that Boston politicians are cozying up with GE executives for kick-backs and what-not.
That's what they tried to do so GE left the state...
> It's not somehow patriotic to pay more in taxes than you legally owe.
But they go one step further, they actually dodge taxes they're meant to legally owe using loopholes.
If GE paid the same proportional taxes as a locally owned sandwich shop I'd be happy.
This is what happens when states and nations have ridiculous tax laws and rates. People and corporations leave. If anything, we should be advocating CT fix their corporate tax laws, because it's costing them tax revenue.
> dodge taxes they're meant to legally owe using loopholes
That's the law you are describing. These so-called "loopholes" are parts of the tax code specifically inserted to allow people (and corporations) the ability to reduce their annual tax liability. Nobody (and no corporation) does any wrong by using the law to their advantage.
Change the law (remove the loopholes) if it's upsetting. Otherwise, they're doing things the right way.
Thanks Governor Baker. Did this deal cost us just the Mattapan line? Or are we losing GLX too?
It seems like a lot, but this is the corporate HQ. The staffers will be re-located and/or hired from the surrounding area - and surely will make nice salaries.
Since these executives and other staffers will be living in the area (in large part), they'll put their salary right back into the local economy (buying groceries, cars, houses, paying bills, etc...).
Most of those employees will put far more than the $181,250 back into the local/state economy over their tenure at GE.
Regarding GE the only people this will really impact is the smaller tech companies as I'm sure it'll jack up the office rents even more.
I'll leave the accounting ("Is this actually worthwhile for the city?") to others: How about equal treatment? I'd consider headquartering a startup in the major tech hubs if they made accommodations similar to what they give the big guys (as if they need it!).
Here is an interesting white paper in this regard, Corporate Tax Incentives and the Equal Protection Clause (http://www.taxanalysts.com/www/features.nsf/Articles/1FCB7D8...)