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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

#61

Post by vacri »

dahdum wrote: post #13
gtCameron wrote: post #8

Earlier quoted context omitted.

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.

Exactly - states competing on incentives obviously doesn't increase gross tax collection on a national level, but the article makes much bolder claims that it doesn't help anywhere. Specifically this claim: "There is virtually no association between economic development incentives and any measure of economic performance." The article states that the 1.3 billion dollar data center will get $39 million tax break up fro…

> Waukee will see a construction boom, higher employment, and more tax revenue.

The city will also now have a major corporation throwing its weight around to get its way; one with no loyalty to the residents or their concerns.

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

#62

Post by vacri »

jessriedel wrote: post #57
vacri wrote: post #53

Earlier quoted context omitted.

So Iowa doesn't have to deal with providing services to the site? Land management services, emergency services, water, sewerage, etc?

Why would Iowa agree to an amount of revenue that doesn't even cover the cost of additional services?

I'm just countering the idea that there is no cost to the state.

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

#63

Post by rtpg »

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…

why is there a different tax for farmland and for datacenters? Because we want datacenters to pay more!

I understand making some deals, but this is slightly much. You wouldn't make a deal like "Oh if you open a bank here we'll exempt you from capital requirements".

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

#64

Post by EpicEng »

vacri wrote: post #52
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…

> On top of that Apple is pledging to give them $100M for various things The article points out that the pledge contains the significant words "up to", and is actually only pledging $20M. So, for $20M, they get $20M off their taxes, plus a 20-year tax abatement worth $190M. Where can I, as an individual, sign up for such an awesome deal? I'll happily pay one year's income taxes to avoid the next 20.

>Where can I, as an individual, sign up for such an awesome deal?

Nowhere, because your tax dollars are a drop in the bucket. Don't pretend like you don't understand the difference between your few grand each year and Apple's tens of millions.

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

#65

Post by rtpg »

jessriedel wrote: post #57
vacri wrote: post #53

Earlier quoted context omitted.

So Iowa doesn't have to deal with providing services to the site? Land management services, emergency services, water, sewerage, etc?

Why would Iowa agree to an amount of revenue that doesn't even cover the cost of additional services?

because the decision makers on this deal are not those who have to manage the costs down the row? Pretty classic principle-agent problem

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

#66

Post by EpicEng »

vacri wrote: post #62
jessriedel wrote: post #57

Earlier quoted context omitted.

Why would Iowa agree to an amount of revenue that doesn't even cover the cost of additional services?

I'm just countering the idea that there is no cost to the state.

It's only a cost if the expenses are larger than the revenue...

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

#67

Post by yequalsx »

jessriedel wrote: post #57
vacri wrote: post #53

Earlier quoted context omitted.

So Iowa doesn't have to deal with providing services to the site? Land management services, emergency services, water, sewerage, etc?

Why would Iowa agree to an amount of revenue that doesn't even cover the cost of additional services?

Because they hope that the jobs created will provide enough of a boost to the economy to offset the cost of providing services for the land. Sometimes this is done in the hopes of encouraging other companies to set up shop in the area. Sometimes the Governor feels like he/she needs to reward a region for past votes or favors. Sometimes soft bribes are the reason.

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

#69

Post by birken »

vturner wrote: post #17

Just for all the inevitable comments about "the government should have just given X people Y dollars instead..." Iowa isn't "giving money." It does not have the additional revenue before Apple arrives, thus, it can't give anyone those revenues. All it can do is tell Apple you have to give us, Iowa, less than the state next door... now whether this is a good economic plan I disagree. I'd rather have a thousand small b…

Iowa is "giving money". If there is a greater than 0% chance Apple would have built on that site anyways, then Iowa is directly losing that money. And it seems based on the local advantages of the Iowa location there was a non-zero (and potentially high) chance Apple would have picked the site anyways.

And even if Iowa isn't "giving money", somebody is. Maybe without the Iowa deal, Apple would have located in Kansas or Illinois and now those states are losing out on the money.

And fine, maybe you say the deal wouldn't happen at all unless some state gave this deal; the deal is a requirement for the datacenter to exist. OK then. So why would we make the deal? Aren't the point of these regulations to incentivize land use in a way that we as society want? If we as a society decide farmland is incentivized over datacenters (by having lower taxes for that land use), then so be it. Why is putting a datacenter on the land assumed to be "good" when our tax laws say the opposite?

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

#70

Post by kenjackson »

vacri wrote: post #53
vturner wrote: post #17

Just for all the inevitable comments about "the government should have just given X people Y dollars instead..." Iowa isn't "giving money." It does not have the additional revenue before Apple arrives, thus, it can't give anyone those revenues. All it can do is tell Apple you have to give us, Iowa, less than the state next door... now whether this is a good economic plan I disagree. I'd rather have a thousand small b…

So Iowa doesn't have to deal with providing services to the site? Land management services, emergency services, water, sewerage, etc?

They are paying taxes still on it. Just the same as farmland. So the question is does the data center services cost more to the state?
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