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Iowa's handout to Apple illustrates the folly of corporate welfare deals

latimes.com

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Re: Iowa's handout to Apple illustrates the folly of corporate welfare deals

#41

Post by JumpCrisscross »

colechristensen wrote: post #24

These are property tax abatements. I don't see the big deal. Apple has to pay the property tax equal to the farmland for the next 20 years instead of the much higher tax on the datacenter property. Who cares? Unless someone is arguing the datacenter is going to use a lot of tax funded city services (police? fire? ... ?), Waukee isn't giving Apple anything. On top of that Apple is pledging to give them $100M for vario…

It sounds sensible for cities and states to consider extending farmland tax breaks to data centers. Both have low infrastructure footprints relative to their land area. Both provide people close by with potential benefits in the form of better service, e.g. fresher fruits and vegetables and faster pings, respectively.

Re: Iowa's handout to Apple illustrates the folly of corporate welfare deals

#42

Post by colek42 »

BurningFrog wrote: post #27

These things feel to me like when cities pay tons of money to get a sports team. It's always sold as an investment that will pay off, but in reality it's - In My Cynical Opinion - about local pride. With an NFL team, Shelbyville becomes a major city, and with an Apple data center Iowa becomes a high tech state. Expensive, sure, but the good things in life aren't free!

The state isn't paying for the data center, they are lowering the tax burden.

Re: Iowa's handout to Apple illustrates the folly of corporate welfare deals

#43

Post by kartan »

diddid wrote: post #19
quasse wrote: post #2

Luckily Wisconsin figured out the solution to this problem... Make the corporate welfare deals an order of magnitude larger and give 3 billion to Foxconn instead of a piddly tenth of that. Even in the best case for "jobs created" (10,000) pushed by our politicians the state might as well just give 10,000 people $30,000 a year for 10 years. Realistic estimates are saying the new jobs might be more in the range of 3,00…

Nobody is giving anyone money, they are just not charging them tax. It's an important distinction I don't understand how people keep glossing over it. If it creates 10,000 local jobs, those 10,000 jobs are still going to get taxed. So the locale is going to get money, just not from the corporate tax. So it's not a great deal but it's not a horrible deal. I'd prefer nobody made them but once on place does they all hav…

> so some slice of the pie is better than none.

That's a run to the bottom. Where's the limit? The USA is already lacking in education, health care, and infrastructure. This is only going to make the problem worse.

> If it creates 10,000 local jobs, those 10,000 jobs are still going to get taxed. So the locale is going to get money, just not from the corporate tax.

If those jobs have been created in another state without the tax cut they would have gotten the corporate tax and the local jobs taxes (both of them). So you can see it as one state stealing the job taxes from another state at the cost of giving back the corporate tax. One state loses, another wins. The USA as a country just loses because what one loses is bigger than the other wins (being the difference the corporate tax). Only the corporation gets a positive outcome. The country is now in a worse situation.

Re: Iowa's handout to Apple illustrates the folly of corporate welfare deals

#44

Post by [deleted] »

cmurf wrote: post #39
throwaway2048 wrote: post #32

Earlier quoted context omitted.

If nobody cut deals like this, apple would be forced to pay taxes somewhere, so no matter what _somewhere_ is losing a huge amount of tax. Its a race to the bottom.

Fairness and consistency is not a race to the bottom. It's what builds trust.

[deleted]

Re: Iowa's handout to Apple illustrates the folly of corporate welfare deals

#45

Post by [deleted] »

throwaway2048 wrote: post #31
gtCameron wrote: post #25

Earlier quoted context omitted.

What year would Wisconsin turn a profit off of Foxconn if it didn’t build a factory there at all?

This is very much a prisoner's dilemma race to the bottom situation. What if nobody was willing to pander to foxconn at all? How much tax would they be paying then?

[deleted]

Re: Iowa's handout to Apple illustrates the folly of corporate welfare deals

#46

Post by kartan »

gtCameron wrote: post #8
drewg123 wrote: post #4

So $208M for 50 jobs. Wouldn't they be better off just giving those 50 lucky folks $4M each? Or giving 800 people $250K ? At least those 800 people would likely spend the money locally and stimulate the state economy.

They aren’t handing Apple $208m. They are giving them tax breaks. If Apple didn’t build a data center in Iowa they would also collect $0 in taxes from them. The cost/benefit calculation is no where as simple as this article or comments make it out to be. It could still be a bad deal, but there is not really an honest attempt to figure that out here.

> If Apple didn’t build a data center in Iowa they would also collect $0 in taxes from them.

Iowa can't do that. But the USA can. If another state (instead of Iowa because of the tax break) has gotten the revenue of that taxes and the federal government gets it from that state. The USA can give that money to the Iowa residents.

Re: Iowa's handout to Apple illustrates the folly of corporate welfare deals

#47

Post by Clubber »

colechristensen wrote: post #24

These are property tax abatements. I don't see the big deal. Apple has to pay the property tax equal to the farmland for the next 20 years instead of the much higher tax on the datacenter property. Who cares? Unless someone is arguing the datacenter is going to use a lot of tax funded city services (police? fire? ... ?), Waukee isn't giving Apple anything. On top of that Apple is pledging to give them $100M for vario…

Yes, anyone can use that. If you buy a bunch of property, just plant trees and get the state / city to come out and verify that you are growing trees and your property taxes are 1/10th of what they were. Trees are probably the lowest maintenance crop you can grow, and the property might already have them.

We had a family that owned a LOT of land in our city put a few cows on it to save money on property taxes.

Re: Iowa's handout to Apple illustrates the folly of corporate welfare deals

#48

Post by kkielhofner »

diddid wrote: post #19
quasse wrote: post #2

Luckily Wisconsin figured out the solution to this problem... Make the corporate welfare deals an order of magnitude larger and give 3 billion to Foxconn instead of a piddly tenth of that. Even in the best case for "jobs created" (10,000) pushed by our politicians the state might as well just give 10,000 people $30,000 a year for 10 years. Realistic estimates are saying the new jobs might be more in the range of 3,00…

Nobody is giving anyone money, they are just not charging them tax. It's an important distinction I don't understand how people keep glossing over it. If it creates 10,000 local jobs, those 10,000 jobs are still going to get taxed. So the locale is going to get money, just not from the corporate tax. So it's not a great deal but it's not a horrible deal. I'd prefer nobody made them but once on place does they all hav…

Some estimates show that to cover the generous incentives Wisconsin will most likely need to pay Foxconn cash from the treasury for the foreseeable future:

http://www.jsonline.com/story/news/politics/2017/07/28/foxco...

The "local jobs" argument is eroded further for Wisconsin when you consider that the proposed sites are all well within commute range for a large population of Illinois residents - something that didn't seem to occur to WI legislators until far too late in this "deal":

https://www.reuters.com/article/us-foxconn-wisconsin-illinoi...

As a Wisconsin resident who's town (near the proposed sites) is overrun with Illinois license plates this was an obvious issue from the beginning (on top of everything else).

My (somewhat cynical) belief is that Foxconn has been several steps ahead of our local politicians (who are desperate to put up healthy job numbers). This "realization" of the proximity to Illinois is likely (and unfortunately) the first of many ways Wisconsin is going to get schooled by Foxconn here.

Re: Iowa's handout to Apple illustrates the folly of corporate welfare deals

#49

Post by geofft »

colek42 wrote: post #36
diddid wrote: post #19

Earlier quoted context omitted.

Nobody is giving anyone money, they are just not charging them tax. It's an important distinction I don't understand how people keep glossing over it. If it creates 10,000 local jobs, those 10,000 jobs are still going to get taxed. So the locale is going to get money, just not from the corporate tax. So it's not a great deal but it's not a horrible deal. I'd prefer nobody made them but once on place does they all hav…

Thank you. It would be like saying Wal-Mart is giving a customer $5 because DVD is $15 there vs. $20 at Best Buy. Yes, if nobody gave tax breaks companies would have to pay more taxes, but that will never happen, Congress likely does not have the power to force states or municipalities to do so either. edited, spelling.

But what is Wal-Mart's cost of buying the DVD? If they get it from their wholesaler at $19.99 and Best Buy is turning the tiniest profit, Wal-Mart selling it for $15 is effectively giving the customer $5. Sure, they can do it if they want to, but that would raise immediate and valid questions about whether the money would be better used in some other way (giving customers $5 without making them buy a DVD), whether this is the sort of anti-competitive behavior that a long-term-productive capitalist society should regulate, and whether there's something shady going on between Wal-Mart and the DVD supplier.

Re: Iowa's handout to Apple illustrates the folly of corporate welfare deals

#50

Post by thanatropism »

Pretty much unrelated, but that columnist's piece on price-gouging[0] is so analytically atrophied and emotionally charged that I can't help but imagine him as Tom Jumbo-Grumbo, the whale-news announcer from Bojack Horseman[1]

[0] http://www.latimes.com/business/hiltzik/la-fi-hiltzik-price-...

[1] https://www.youtube.com/watch?v=lMePJM86Ueo

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