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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

#71

Post by rayiner »

kartan wrote: post #43
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…

> 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 wit…

> 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.

The U.S. spends more on education per student than any OECD country besides Switzerland. Even leaving out military spending, it spends more overall per capita than Canada and still doesn't manage to provide healthcare. NYC spends 2-8 times as much as European cities to build a mile of subway. Our problem isn't that we're not taxing Apple enough.

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

#72

Post by ebbv »

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…

> Who cares?

The people in Iowa who have to subsidize this and don't have the billions sitting in the bank that Apple does?

I can't believe anyone really seriously takes this side of this argument.

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

#73

Post by Steko »

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…

> Nobody is giving anyone money,

Sure.

> it's not a horrible deal.

Less sure on this, I can see the argument that the sheer scale of the Foxconn credits could allow an end run around the normal plant operations and give them competitive advantages against other (tax paying) businesses. That would be bad and, as a precedent, it could be horrible.

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

#74

Post by taurath »

Clubber wrote: post #47
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.

Enough trees to call it a farm is expensive as hell.

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

#75

Post by colechristensen »

didgeoridoo wrote: post #58
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…

What? Being a Delaware corporation doesn't let you avoid any state taxes. This is legally illiterate.

https://www.theatlantic.com/business/archive/2016/10/dont-bl...

>... it’s important to understand how the “Delaware loophole” works: A company sets up a subsidiary in Delaware, and transfers an intangible part of its business there—say, its trademark or naming rights. Then its other locations outside of Delaware pay money to the subsidiary in order to use that trademark. Since intangible assets are not taxed in Delaware, the company doesn’t have to pay taxes on the money that was transferred to the subsidiary. The company can deduct the cost of the royalties on its state returns in other states where it operates, and thus avoid a large share of the state income taxes it would have otherwise owed. It is the laws of states other than Delaware that allow this system to work.

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

#76

Post by mikeash »

EpicEng wrote: post #60
fulafel wrote: post #59

Earlier quoted context omitted.

Companies are supposed to pay taxes so we can have schools, healthcare, basic income etc. When they bid countries or states against each other to get tax breaks and governments play the game, citizens lose. Yes, it happens in other cases too, and citizens should also protest against those other cases.

But often they chose to build in a location specifically because of the deals you're talking about. This is big money; citizens lose most (in terms of tax dollars) if apple stays out entirely.

Apple will build it somewhere. The states would be better off banding together and pledging to put a stop to this nonsense.

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

#77

Post by aninhumer »

EpicEng wrote: post #60
fulafel wrote: post #59

Earlier quoted context omitted.

Companies are supposed to pay taxes so we can have schools, healthcare, basic income etc. When they bid countries or states against each other to get tax breaks and governments play the game, citizens lose. Yes, it happens in other cases too, and citizens should also protest against those other cases.

But often they chose to build in a location specifically because of the deals you're talking about. This is big money; citizens lose most (in terms of tax dollars) if apple stays out entirely.

Sure, but that's exactly the argument this article is attempting to refute.

It says that tax incentives don't actually factor into company's decisions that much, nor do they correlate well with economic performance.

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

#78

Post by nihonde »

davis wrote: post #30
farnsworth wrote: post #9

I'm a programmer. Every time I go home to Iowa, people try to tell me that Iowa is now a booming tech hub, with Microsoft, Facebook and Apple "offices", and that I should get a job there. I try to explain why I probably won't end up there, but the point is that they are extremely proud of all of these data centers.

Yup. This is about half of the conversations I have with my family whenever I visit for the holidays.

Probably the same conversations happening in “booming” industrial cities in China. Cheap land, low cost of living...eventually the race to zero gets you and the big players move on.

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

#79

Post by Clubber »

taurath wrote: post #74
Clubber wrote: post #47

Earlier quoted context omitted.

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.

Enough trees to call it a farm is expensive as hell.

I guess it depends on the state. You can get 150 acres of pines planted for probably around $10K where I live. Regional universities will do it. I suspect it's cheaper in Iowa.

Also, depending on the state, the entire property doesn't need to be planted, just a portion that probably varies state to state.

Here's a Forbes article on it.

https://www.forbes.com/sites/ashleaebeling/2012/06/06/farm-l...

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

#80

Post by hintoftime »

cmurf wrote: post #22

Basically it's, would you like to have $0 in taxes paid by Apple (by assuming they won't come to Iowa if they aren't given a discount), or would you like $76 million in taxes and $100 million in public improvement funds that will mainly benefit Apple? But it proves the asymmetric negotiation power Apple has compared to constituents. Apple is in a position to say, take it or leave it. And the constituents can't really…

> Facebook, Google and Microsoft have cited Iowa's large inventory of available land, low energy costs, high portfolio of renewable energy and low risk of natural disasters as reasons for locating here.

I'm interested to hear how other states stack up against this and if this factors in at all.

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