Really did say a lot about the state of government subsidizing big business that mayors and governors were falling over themselves to offer tax rebates to one of the richest companies on earth.
I agree it does seem crazy but if these businesses bring about a net benefit to where they are located it can't be all bad?
I'm not familiar with the US tax system but in the UK, and much of Europe, the system is lagging behind the real world of business by a measure of decades.
For example, EU forces Ireland to collect taxes from Apple, because it deemed such rebates to be illegal state aid. See https://en.wikipedia.org/wiki/EU_illegal_State_aid_case_agai...
What member countries really should do is similar to the revenue tax that was recently proposed. But not exactly, because that's a pretty blunt tool. Instead, the calculation should go something like this.
# Exclude payments to/from subsidiaries.
global_revenue = all external revenue
global_expenses = all external non-tax costs
global_profit = global_revenue - global_expenses
global_tax = this_country_tax_rate * global_profit
country_tax = this_country_revenue / global_revenue
* global_tax
Require the company to estimate and pay this tax quarterly, and provide reasonable fines for underpayment. Granted the first two lines might be difficult to compute, so you would only do this for companies big enough to be worth going through the trouble for.
Disclaimer: not a tax policy expert. Would love to be corrected. Please poke holes.
I think the EU has done a pretty good job to find a balance here: when Ireland joined the EU in the 70s, it was among the poorest countries west of Moscow and north of Morocco. It became one of the largest recipients of net transfers over the next 30 years, but everyone knew that their chances of catching up required some economic competitiveness, and that it would take decades to pull even in terms of "Features" (infrastructure, local market etc)
Low taxes were therefore the only viable path to attract investments. That scenario is explicitly accepted even among those advocating for coordinated taxation.
In the case of Ireland, everything actually worked out extremely well: Speaking something almost resembling the english language, and having the strength of character to make peace with the English, Ireland established world-class universities and a rather remarkable knowledge economy in just one generation.
Dude... not cool.
This is an extreme case, but I had a previous employer, a large multinational conglomerate, that moved my particular product team's home office twice in six years. Both moves were motivated by tax incentive. The cities would place conditions on how many jobs they had to "create" in order to get their perks, and they would "create" those jobs by relocating people from some other office in a town that was no longer giving them tax breaks.
The Foxconn deal in Wisconsin has been criticized for being a bad deal for several important reasons,
- Wisconsin competed and surpassed the tax incentive offers from Michigan and Ohio making for a tight margin,
- I've heard claims Foxconn has a reputation for making promises and then scaling back their plans. It's looking like this has happened. Foxconn change their factory plans from 'Generation 10.5 facility' to 'Generation 6 facility',
- Foxconn has promised to hire 13,000 employees at the plant. Scaled back plans might reduce those numbers to 3,000,
- Foxconn says not enough qualified engineers in Wisconsin, and may employ Chinese Engineers at the plant.
- Foxconn project went ahead without an environmental impact statement and will use over 5 million gallons of water per day from Lake Michigan,
When people vote with their paycheck, a tax incentive deal is certainly a political win. At least for this Foxconn deal, it remains to be proven if the deal is a net long term improvement for workers in Wisconsin.
Wisconsin has suffered underemployment in a depressed employment environment. Even with these downsides, maybe it's the deal that Wisconsin needs. And really, what's the impact to me if Wisconsin residents suffer from negative environmental impacts from this plant--I don't live there.
https://www.jsonline.com/story/money/business/2018/08/23/fox...
https://www.jsonline.com/story/news/politics/2018/04/25/dnr-...
https://www.businessinsider.com/why-foxconns-wisconsin-facto...
https://www.theguardian.com/cities/2018/jul/02/its-a-huge-su...
https://www.jsonline.com/story/opinion/contributors/2018/06/...
https://www.forbes.com/sites/stuartanderson/2018/11/06/why-f...
> Amazon is uniquely large impact
Amazon's impact happens regardless of them offering jobs in your city. If you want to address their impact on local business then you the city should work out a local tax on good delivered to the city. Preventing Amazon to bring jobs in a city has zero impact on lost retail jobs!
> makes no sense to cut tax deals
A city should offer incentive for potential new employers, promise to augment public transport, accelerate the red tape to build their building (maybe the city hires more people temporarily to deal with that extra work?), possibly cut tax for the first few years in exchange of some written commitment. But I agree with you that it has to be financially sound long term, a tax break for ever that ends up being subsidized by the tax payer makes no sense except for somebody looking for re-election.
All those employees will also bolster the community with purchases and what not.
Incentives for small local community buisnesses that care about your community should be a higher priority for all Americans.
Seeking favors and special treatment under false pretenses is bad. Amazon is in the wrong, clearly, since they actively misled others.
If my city got a second headquarters for Amazon, I would have been ecstatic.
Price obfuscation is bad for the payer (taxpayers in this case). The goal should be to be as clear and transparent as possible.
Would you have been ecstatic if that came at a cost of $5000 a year (out of your pocket)? There's a really big problem with these competitions in that the world sees the benefits (and even benefits that are more wishful thinking than actual) but they don't see the cost.
Maybe a simpler way to look at the issue is to ask why local governments don't pay people to move into their cities. After all, growth is a good thing, more people means more jobs, more jobs means more income, more stuff gets sold, more tax revenue comes in. All the supposed benefits that come from the Amazon HQ apply equally to paying people to move to the city. Yet it's rare to hear anyone argue for that policy.
> Maybe a simpler way to look at the issue is to ask why local governments don't pay people to move into their cities.
Vermont is doing that right now. https://www.nytimes.com/2018/06/01/us/vermont-moving-money.h... . The problem with that approach is that people usually move to where the jobs are, so paying corporations to move is more effective than paying people to do so.
Amazon could have at least let unchosen smaller cities believe they were seriously considered.
The announcement and the mundanity of the finalist cities was pretty shitty to all the smaller towns Amazon insinuated could be in the running.
I live in on the finalist cities, but I also have good friends in a nearby regional hub who made a good faith effort.
It would have been one thing to tell them "We didn't select you." It's something different to say "We're still considering cities, but definitely not yours."