The sick part is Amazon is asking cities to fight over the privilege to kiss it's ass. So the bidding goes higher and higher as the people get robbed more and more.
And I bet when/if Wisconsin stops kissing Foxconn's butt, Foxconn will threaten to move. And if threatening fails then they'll move. The Wisconsin/Foxconn deal is a horrible deal for Wisconsin.
The Foxconn deal is interesting for a number of reasons.
First, it's huge, and in a state that arguably does not have the population or state budget to support the subsidies. ie - Whether or not Wisconsin can actually afford this is an open question.
Secondly, just as you mentioned, if Foxconn does start up in Wisconsin, and they eat up all of the subsidies... what is to stop them from moving?
Lastly, the Foxconn deal is a very 20th century attempt at growth in what a lot of smart people claim is a new 21st century reality.
One thought experiment put forth recently noted that there are roughly 3 or 4000 STEAM and business school graduates from Wisconsin universities every year. A 21st century attempt at growth might be to dole out seed level startup grants for those graduates with good enough ideas... something in the ... say ... 20000USD range. With the money they will give to Foxconn... They could do that for EVERY STEAM or business graduate, for EVERY year... for the next 50 or so years. It's hard to imagine that they wouldn't hit a high enough valuation on their portfolio to make their money back. I thought that was kind of a good point.
So, I'd be very curious to see some states try the "state run ycombinator" thing, while others try the old give lots of subsidies to big companies thing...
and see which model is more successful long term?
We'll likely never see that... but it would be interesting from a purely academic perspective.
We could do that, if we could get an idea of the number of years that Foxconn is likely to continue doing business in Wisconsin. I'd imagine no one really knows that right now. So if we have a 50 year "y combinator" type fund, it might be a little unfair to compare the money generated from the companies started through that fund to the money generated by Foxconn if Foxconn only stays in Wisconsin for... say... 10 years.
We just have no good data on that. How long will they stay? My COMPLETELY UNEDUCATED guess would be more than 5 years, but likely much less than 50 years.
We could compare the income taxes generated, but my gut tells me that doing so would put the young STEM and business types even further ahead in terms of ROI. That's just a guess though.
I don't have data regarding the number of STEM grads though.
The only thing I know is that there are roughly 3 or 4000 STEAM and Business school graduates. So that's what I have to go with.
Besides, there are obviously LESS than 3 or 4000 STEM grads, so the program would last LONGER than 50 years in that case.
(Although I think cross functional STEAM/Business teams are a better bet anyway... but even if you believe the STEM guys are capable of going it alone... it only makes the guy's argument more strong. Because the funding would last decades longer.)
Or to hedge against the US immigration policy that could hurt their labor supply in the long term. It was not lost on me that half my engineering grad school classmates wouldn't pass the Bannon/Miller test.
It's a joke -- (Steve) Bannon and (Stephan) Miller are notoriously xenophobic, nationalist aides to President Trump known for their hardline stance on immigration.
Toronto has a better infrastructure than most US cities on the list, saner immigration policies, wages low enough (even if you compare the total cost of employment) to possibly make up for any tax discount. Canada's image is good among European and East Asian tech workers willing to relocate. And its tech scene, while not huge, is decently sized.
The point is Toronto isn't offering any special deal and yet is competitive with cities offering massive incentives. A lot of news outlets are discounting it.
What evidence is there that they are actually competitive with the other cities and not just throw into the mix in an attempt to extract concessions from the US federal government in addition to the local governments?
That's kind of my point. How do we know Toronto is competitive? It's just a list Amazon put together. Maybe they have zero intention of ever picking Toronto.
I think that’s a popular sentiment - IIRC before they announced this whole process they had expressed interest in two cities specifically (Toronto and Boston, if I’m not wrong). Would not be surpised if it ends up being one of those
It fascinates me that Americans tolerate this kind of behavior.
This is an extremely rich and profitable company negotiating so they can get out of paying taxes they and everyone else are ordinarily obligated to pay. Why anyone thinks that is OK shocks me.
Do small businesses get out of paying these taxes? do individuals?
Why does a multi-billion dollar company not have to contribute their legally-obligated share to society?
It shocks and staggers me because at the end of the day it's regular citizens and American society in general that suffers. There is less money for teachers, schools, police, roads, drinking water and all the things these tax dollars are supposed to pay for while a company that already has hundreds of billions gets to keep all that money.
There is no need to wonder why America has crumbling infrastructure, no universal healthcare, sky-rocketing education expenses, etc. etc. etc.
Lots of jurisdictions have zones where they reduce taxes to encourage development. Small businesses can get the benefit simply by opening a location inside one.
This Amazon deal is likely to be neutral or beneficial for whichever government manages to pull them in. It's a race to the bottom but it likely isn't really deeply harmful.
(the employees will pay property taxes and spend money in the community...)
> This Amazon deal is likely to be neutral or beneficial for whichever government manages to pull them in. It's a race to the bottom but it likely isn't really deeply harmful.
(the employees will pay property taxes and spend money in the community...)
There is absolutely no world where this is neutral or beneficial for any government.
Of course the employees will pay property taxes and spend money.... but our whole society and tax system is based on the idea that the employees pay taxes AND the employer pays taxes. Just because employees are paying doesn't mean the employer shouldn't.
The government should be collecting millions (billions?) in property taxes and spending from the employees AND billions from Amazon - that's how the whole system was designed and is supposed to function. That's how roads are built and teachers are paid.
The government will lose billions of tax dollars from Amazon they should be getting, which is absolutely 'deeply harmful'
I have no idea why anyone would want to be part of a race to the bottom. The drive to increase corporate profits is gutting America, and the kind of reasoning you use simply justifies it.
Neutral would be everyone following the law and the tax code as it is laid out. "Neutral" should be the government getting billions from Amazon, as they are legally obligated to pay.
It's clearly harmful because revenue is supposed to be going up A LOT more than it will be.
I agree with you that these kinds of transactions are regrettable and they leave a bad taste in my mouth. At the same time, you haven't convinced me that local governments are making a bad decision by playing this game.
I think perspective is key here. From a broad economic perspective, Amazon is going to build this thing somewhere, and so these kinds of trade-offs seem pointless. Economists likely object because the whole thing is economically inefficient from a broad (national) perspective.
But from the perspective of a local government, that may not be the case. A local government is concerned about the local economy more than the national economy, and so offering these perks makes sense.
Again, I agree that the whole thing is regrettable, and that it probably hurts the economy as a whole. I wish Amazon didn't play these games. But I also think it's worth pushing back against the idea that these local governments are clueless idiots. They may very well be making a good decision from their narrow perspective, and the city that Amazon chooses may very well see a net increase in tax revenue.
This has nothing to do with Amazon "playing games" and everything to do with politicians making deals so multi-billion dollar companies can avoid their tax obligations. Hilarious, anywhere else in the world it's called corruption, but in America "It's just business"
>They may very well be making a good decision from their narrow perspective, and the city that Amazon chooses may very well see a net increase in tax revenue.
There is no universe where that is true. It just means all the cities are in a race to the bottom competition. Sure their tax revenue may have net increased, but it will be by a much lower amount than it should be.
"Net increase in tax revenue at all costs" is not the goal here.
What do you think is going to happen when this happens all across America, and every time a monster company does something they get out of paying billions in tax?
A city's tax revenue isn't "lower than it should be" with Amazon's headquarters (subsidized by the taxpayer). If they don't attract Amazon, they don't get any money at all. With Amazon, they get increased employment and all the taxes employees are now paying. And all the benefits of having a tech giant centered in your jurisdiction. It's a win-win for Amazon and any cities willing to play.
I feel like you missed my point. I'm not saying this is good or that it should continue.
I'm saying that, in the context of the world as it exists today, if I am the mayor of Boston, it will benefit my city to offer Amazon tax breaks to entice them to build there.
With an infinite amount for investment I'd agree with you, no city would need or want to proffer incentives. But with only $x to go around for investment countrywide, how do I attract a percentage of that to my city? I'd like to see how that would work sans a centrally planned economy.
Tax relief doesn't do any direct harm and comprises the largest share of most incentives packages.
Infrastructure spending that isn't paid for by increased tax revenues is clearly harmful, but people aren't exactly tossing out case studies about how that always happens.
The real issue is that local governments have a long history of spending beyond their means. Infrastructure isn't crumbling because of all the businesses that have been granted tax incentives, it's crumbling because taxes aren't high enough in general when you look at the obligations that local governments have entered into.
>Tax relief doesn't do any direct harm and comprises the largest share of most incentives packages.
Great, so the extra tax I'm levied to make up for Amazon's skipping on theirs, you'll be paying, I assume? You've said it's harmless, so pay up.
>Infrastructure isn't crumbling because of all the businesses that have been granted tax incentives, it's crumbling because taxes aren't high enough in general when you look at the obligations that local governments have entered into.
Yes, obligations such as the routine subsidizing of intensely wealthy employers in an acknowledged race to the bottom.
Great, so the extra tax I'm levied to make up for Amazon's skipping on theirs
The argument I'm making is that this is largely supposition and that no additional taxes will be imposed as a result of Amazon picking a given city. So sure, if your taxes don't go up at all, I'll gladly pick up that difference.
Of course I haven't proven my case that taxes won't go up; but neither has anyone in this thread made a case for them inevitably going up.
The incentive packages obviously violate some peoples ideas about what is fair, but that is different than the incentive packages obviously being an economic negative.
>but neither has anyone in this thread made a case for them inevitably going up.
Anyone unaware of the very tired routine by now has no business commenting on the role of private subsidy in public taxation.
Not only have you missed that historically, taxes of all kinds as a category overwhelmingly rise, you have forgotten that taxes circulate back to taxpayers in the form of services and infrastructure. You are proposing diverting some chunk of this circulation into Cayman Island bank accounts while you are at the same time pretending there might be no net cost to this diversion for those who depend upon these services that they alone pay for but that all benefit from, not the least of which being beneficiaries such as tax deadbeats like Amazon. You believe in magic, or at least you believe in the proposals of intensely wealthy persons seeking subsidy. Same difference.
Subsidizing intensely wealthy employers in an acknowledged race to the bottom may or may not immediately force non-subsidized taxpayers to pay x% more in tax or in now-privatized fees, but sure as shit these non-subsidized persons are forced to receive back less and less for what they pay. That is where and why the crumbling happens, you see: the rich asserting a quasi-divine right to get paid while bridges collapse, social fabric is torn and government is blamed.
I'll never understand the head-splitting rage about certain topics, but blind indifference to others (that often would seem to have a far greater impact). No reasoning. I don't believe that's nation-specific, though.
> It fascinates me that Americans tolerate this kind of behavior.
They don’t have a choice to “tolerate” it or not. America is a completely free market internally, with no legal, language, or cultural barriers to companies moving around. States are perfectly free to offer more attractive terms to companies, and other states can either match those offers, or watch their economies pack up and move to Tennessee, Georgia, Texas, etc.
That said, lack of corporate taxation isn’t to blame for America’s ills. If you compare the US to Germany, Canada, or France, you don’t see those latter countries taxing corporations more. Indeed, the total tax burden is probably less. (Not just the paper rate, but the actual average tax rate after “loopholes”). The French “real” corporate tax rate is almost half of what it is in the US (the on-paper rate is like 1/3 of the US). They also don’t really tax their rich people more. Someone making a million dollars a year would pay similar taxes in New Jersey as in Canada or Germany. A Californian might pay less.
No, the real reason America’s public services are crumbling are (1) we are extraordinarily inefficient; (2) we tax the middle class far less than Canada, Germany, etc.
Of course they do. They vote out the politicians that allow multi-billion dollar companies to avoid their tax obligations and they vote in ones that don't.
Americans have utterly forgotten they are in charge of their country.
You're evading his point. You can vote out those politicians, but not giving breaks to companies isn't the only effect that will have; the other effect is that companies will stop moving into your state. Voters on message boards might be motivated by your notions of fairness, but real voters are motivated by jobs.
That's the headline federal rate. New York, Califorinia, or Illinois add another 7-9%, for 28-30% total. In the U.K., in comparison, the total rate is 19%. Sweden, Denmark, and Norway are 22-24% total.
Where ever Amazon goes, please do not come to Austin. If that happens, I will be in one of the groups to protest on street.
We can no longer afford a huge deep-blue-brush to paint this great little city. Austin has been ranked as the best cities of living for years for a reason, jumbo Amazon could just ruin it permanently.
I'm an Amazon customer, a prime member, but I do not want it to have a headquarter in a place I live, as I do not feel it is a good fit, physically or otherwise.
Who's making the decision: owner/board/executive committee?
I'd imagine that whoever it is already has a gut choice or two in mind, as people typically do when making decisions about anything (new job/hire/partner/significant other/car).
Would you please not vent like this in HN threads? If you have a substantive point to make, make it thoughtfully; if you don't, please don't comment until you do.
"Amazon said it would create as many as 50,000 jobs with an average compensation of $100,000, but that number is contingent upon how many people it transfers from its Seattle office."
It's going to be very hard to get people to move from West to East, let alone Seattle to Newark. Sure, employees don't have to live IN Newark. Most of them would end up living in Newport NJ or nicer suburbs to the west, but houses and property tax are extremely high.
I really hope they don't come to Atlanta. We are already overly congested with traffic, mass transportstion is completely inadequate. We already have the busiest airport in the world.
I hope they do come to Atlanta. It'll cement our city as a new, burgeoning tech hub. Amazon's move here will only bring more tech companies along with them.
It's not Atlanta will stop growing if Amazon doesn't come, so I don't see the point of your argument.
I've been living and working in Atlanta for 20 years. During that time there has never been a shortage of well paying tech jobs. Sure they are mostly corporate jobs and not the cool hipster startup jobs, but right now the salary for developers with at least 5-8 years of experience in the right stack is $100K. On the upper end $140K+.
That salary affords you a house in one of the 20 most affluent cities in the US (Johns Creek) or one of the 20 most affluent counties (Forsyth) without being house poor.
I work for a tech company in Atlanta, and my starting salary was your "5-8 years" salary. In under four years, my stock options made me a couple million dollars.
Atlanta needs more "hipster" startup jobs. More real tech jobs.
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[ 4.5 ms ] story [ 73.2 ms ] threadFirst, it's huge, and in a state that arguably does not have the population or state budget to support the subsidies. ie - Whether or not Wisconsin can actually afford this is an open question.
Secondly, just as you mentioned, if Foxconn does start up in Wisconsin, and they eat up all of the subsidies... what is to stop them from moving?
Lastly, the Foxconn deal is a very 20th century attempt at growth in what a lot of smart people claim is a new 21st century reality.
One thought experiment put forth recently noted that there are roughly 3 or 4000 STEAM and business school graduates from Wisconsin universities every year. A 21st century attempt at growth might be to dole out seed level startup grants for those graduates with good enough ideas... something in the ... say ... 20000USD range. With the money they will give to Foxconn... They could do that for EVERY STEAM or business graduate, for EVERY year... for the next 50 or so years. It's hard to imagine that they wouldn't hit a high enough valuation on their portfolio to make their money back. I thought that was kind of a good point.
So, I'd be very curious to see some states try the "state run ycombinator" thing, while others try the old give lots of subsidies to big companies thing...
and see which model is more successful long term?
We'll likely never see that... but it would be interesting from a purely academic perspective.
We just have no good data on that. How long will they stay? My COMPLETELY UNEDUCATED guess would be more than 5 years, but likely much less than 50 years.
We could compare the income taxes generated, but my gut tells me that doing so would put the young STEM and business types even further ahead in terms of ROI. That's just a guess though.
The only thing I know is that there are roughly 3 or 4000 STEAM and Business school graduates. So that's what I have to go with.
Besides, there are obviously LESS than 3 or 4000 STEM grads, so the program would last LONGER than 50 years in that case.
(Although I think cross functional STEAM/Business teams are a better bet anyway... but even if you believe the STEM guys are capable of going it alone... it only makes the guy's argument more strong. Because the funding would last decades longer.)
Toronto has a better infrastructure than most US cities on the list, saner immigration policies, wages low enough (even if you compare the total cost of employment) to possibly make up for any tax discount. Canada's image is good among European and East Asian tech workers willing to relocate. And its tech scene, while not huge, is decently sized.
Jesus, Amazon is milking this for all it can and nearly every city is bending over backwards for Amazon.
This is an extremely rich and profitable company negotiating so they can get out of paying taxes they and everyone else are ordinarily obligated to pay. Why anyone thinks that is OK shocks me.
Do small businesses get out of paying these taxes? do individuals?
Why does a multi-billion dollar company not have to contribute their legally-obligated share to society?
It shocks and staggers me because at the end of the day it's regular citizens and American society in general that suffers. There is less money for teachers, schools, police, roads, drinking water and all the things these tax dollars are supposed to pay for while a company that already has hundreds of billions gets to keep all that money.
There is no need to wonder why America has crumbling infrastructure, no universal healthcare, sky-rocketing education expenses, etc. etc. etc.
This Amazon deal is likely to be neutral or beneficial for whichever government manages to pull them in. It's a race to the bottom but it likely isn't really deeply harmful.
(the employees will pay property taxes and spend money in the community...)
(the employees will pay property taxes and spend money in the community...)
There is absolutely no world where this is neutral or beneficial for any government.
Of course the employees will pay property taxes and spend money.... but our whole society and tax system is based on the idea that the employees pay taxes AND the employer pays taxes. Just because employees are paying doesn't mean the employer shouldn't.
The government should be collecting millions (billions?) in property taxes and spending from the employees AND billions from Amazon - that's how the whole system was designed and is supposed to function. That's how roads are built and teachers are paid. The government will lose billions of tax dollars from Amazon they should be getting, which is absolutely 'deeply harmful'
I have no idea why anyone would want to be part of a race to the bottom. The drive to increase corporate profits is gutting America, and the kind of reasoning you use simply justifies it.
Mine is that revenues go up more than costs of services.
It's clearly harmful because revenue is supposed to be going up A LOT more than it will be.
I think perspective is key here. From a broad economic perspective, Amazon is going to build this thing somewhere, and so these kinds of trade-offs seem pointless. Economists likely object because the whole thing is economically inefficient from a broad (national) perspective.
But from the perspective of a local government, that may not be the case. A local government is concerned about the local economy more than the national economy, and so offering these perks makes sense.
Again, I agree that the whole thing is regrettable, and that it probably hurts the economy as a whole. I wish Amazon didn't play these games. But I also think it's worth pushing back against the idea that these local governments are clueless idiots. They may very well be making a good decision from their narrow perspective, and the city that Amazon chooses may very well see a net increase in tax revenue.
This has nothing to do with Amazon "playing games" and everything to do with politicians making deals so multi-billion dollar companies can avoid their tax obligations. Hilarious, anywhere else in the world it's called corruption, but in America "It's just business"
>They may very well be making a good decision from their narrow perspective, and the city that Amazon chooses may very well see a net increase in tax revenue.
There is no universe where that is true. It just means all the cities are in a race to the bottom competition. Sure their tax revenue may have net increased, but it will be by a much lower amount than it should be.
"Net increase in tax revenue at all costs" is not the goal here.
What do you think is going to happen when this happens all across America, and every time a monster company does something they get out of paying billions in tax?
I'm saying that, in the context of the world as it exists today, if I am the mayor of Boston, it will benefit my city to offer Amazon tax breaks to entice them to build there.
What, may I ask, would meet your definition of deeply harmful in an acknowledged race to the bottom?
The bottom, you see, is pretty fucking harmful.
Infrastructure spending that isn't paid for by increased tax revenues is clearly harmful, but people aren't exactly tossing out case studies about how that always happens.
The real issue is that local governments have a long history of spending beyond their means. Infrastructure isn't crumbling because of all the businesses that have been granted tax incentives, it's crumbling because taxes aren't high enough in general when you look at the obligations that local governments have entered into.
Great, so the extra tax I'm levied to make up for Amazon's skipping on theirs, you'll be paying, I assume? You've said it's harmless, so pay up.
>Infrastructure isn't crumbling because of all the businesses that have been granted tax incentives, it's crumbling because taxes aren't high enough in general when you look at the obligations that local governments have entered into.
Yes, obligations such as the routine subsidizing of intensely wealthy employers in an acknowledged race to the bottom.
The argument I'm making is that this is largely supposition and that no additional taxes will be imposed as a result of Amazon picking a given city. So sure, if your taxes don't go up at all, I'll gladly pick up that difference.
Of course I haven't proven my case that taxes won't go up; but neither has anyone in this thread made a case for them inevitably going up.
The incentive packages obviously violate some peoples ideas about what is fair, but that is different than the incentive packages obviously being an economic negative.
Anyone unaware of the very tired routine by now has no business commenting on the role of private subsidy in public taxation.
Not only have you missed that historically, taxes of all kinds as a category overwhelmingly rise, you have forgotten that taxes circulate back to taxpayers in the form of services and infrastructure. You are proposing diverting some chunk of this circulation into Cayman Island bank accounts while you are at the same time pretending there might be no net cost to this diversion for those who depend upon these services that they alone pay for but that all benefit from, not the least of which being beneficiaries such as tax deadbeats like Amazon. You believe in magic, or at least you believe in the proposals of intensely wealthy persons seeking subsidy. Same difference.
Subsidizing intensely wealthy employers in an acknowledged race to the bottom may or may not immediately force non-subsidized taxpayers to pay x% more in tax or in now-privatized fees, but sure as shit these non-subsidized persons are forced to receive back less and less for what they pay. That is where and why the crumbling happens, you see: the rich asserting a quasi-divine right to get paid while bridges collapse, social fabric is torn and government is blamed.
Enough already. We see through this grift by now.
They don’t have a choice to “tolerate” it or not. America is a completely free market internally, with no legal, language, or cultural barriers to companies moving around. States are perfectly free to offer more attractive terms to companies, and other states can either match those offers, or watch their economies pack up and move to Tennessee, Georgia, Texas, etc.
That said, lack of corporate taxation isn’t to blame for America’s ills. If you compare the US to Germany, Canada, or France, you don’t see those latter countries taxing corporations more. Indeed, the total tax burden is probably less. (Not just the paper rate, but the actual average tax rate after “loopholes”). The French “real” corporate tax rate is almost half of what it is in the US (the on-paper rate is like 1/3 of the US). They also don’t really tax their rich people more. Someone making a million dollars a year would pay similar taxes in New Jersey as in Canada or Germany. A Californian might pay less.
No, the real reason America’s public services are crumbling are (1) we are extraordinarily inefficient; (2) we tax the middle class far less than Canada, Germany, etc.
Of course they do. They vote out the politicians that allow multi-billion dollar companies to avoid their tax obligations and they vote in ones that don't.
Americans have utterly forgotten they are in charge of their country.
Goverment’s second rule: “but if you create 5 workers that we can tax, we’ll give you a discount”
I don’t find this particularly offensive. Incentives are the only way a government can influence the market without owning industries outright.
We can no longer afford a huge deep-blue-brush to paint this great little city. Austin has been ranked as the best cities of living for years for a reason, jumbo Amazon could just ruin it permanently.
I'm an Amazon customer, a prime member, but I do not want it to have a headquarter in a place I live, as I do not feel it is a good fit, physically or otherwise.
Everybody else is welcome.
Who's making the decision: owner/board/executive committee?
I'd imagine that whoever it is already has a gut choice or two in mind, as people typically do when making decisions about anything (new job/hire/partner/significant other/car).
* Except to market-fundamentalist quacks who never found a boardroom they wouldn't fellate.
If you'd read https://news.ycombinator.com/newsguidelines.html, we'd appreciate it. Please don't miss the bits about uppercase and ideological battle.
It's going to be very hard to get people to move from West to East, let alone Seattle to Newark. Sure, employees don't have to live IN Newark. Most of them would end up living in Newport NJ or nicer suburbs to the west, but houses and property tax are extremely high.
It's not Atlanta will stop growing if Amazon doesn't come, so I don't see the point of your argument.
That salary affords you a house in one of the 20 most affluent cities in the US (Johns Creek) or one of the 20 most affluent counties (Forsyth) without being house poor.
Atlanta needs more "hipster" startup jobs. More real tech jobs.