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

"... because Wisconsin already waives almost all taxes on manufacturing profits in the state, these incentives represent not a lost opportunity at collecting revenue but an obligation to pay cash to Foxconn out of the state treasury for up to 15 years."

Put another way:

http://fortune.com/2017/07/31/foxconn-wisconsin-plant-tax-br...

"Although the state measures to attract Foxconn are labeled tax incentives, they largely would be paid in cash since the effective Wisconsin state tax rate is 0.4% on manufacturers."

Of course people commute (and they should)! However, for a state negotiating an incentive package they should have been aware of this basic fact, especially given the extremely close proximity to another state that (amazingly) isn't contributing to the incentive package.

On one hand they're trying to be this tech savvy state by bringing in Apple and Google data centers, on the other hand getting decent broad band is terrible in all the rural parts of the state.

So they did what any conservative state would do and relied upon the free market to get them high speed bandwidth. And that's not been real successful. So they had to subsidize it.

From this article in 2015 [1]:

"Four communications providers have received more than $53 million in federal funds to expand high-speed Internet service to nearly 90,000 rural Iowa homes and businesses."

That's roughly 3% of the population.

Okay, so one might say that's just the cost of doing business. The thing is that Iowa already has a $200 million dollar fiber optic network that connects all 99 counties with over 8000 miles of fiber called the Iowa Communications Network. So why don't they use that to extend broad band to rural areas?

From the Iowa Communications Network home page [2]:

"The ICN provides high-speed flexible broadband Internet, data, video conferencing, and voice (phone) services to authorized users, under Code of Iowa, which includes: K-12 schools, higher education, hospitals and clinics, state and federal government, National Guard armories, and libraries"

That's awesome if you're an authorized user. But the sad part is there is more than just those users that could use broadband, and it seems like Iowa decided to leave them out in the cold.

[1] http://www.thegazette.com/subject/news/business/rural-iowa-g...

[2] http://icn.iowa.gov

"State and local officials in Iowa have been working hard to rationalize their handout of more than $208 million in tax benefits to Apple"

That sentenced is aimed to make it sound like the state is giving $208 million to Apple. That is false. If Apple is going to pay $300M in taxes to Iowa, then the state is getting $100M by having Apple come, and $0 if Apple goes to another state.

"These corporate handouts might make sense if they spurred economic growth. They don’t."

First, that sounds overly confident. And then to support it the author cites two cherry-picked articles.

"Unless that expansion occurs...Apple is guaranteed to contribute only one-fifth as much as people were led to believe."

Okay, where's your spreadsheet modeling the probability of the expansion occurring? Because if it's 80% likelihood, then the $100M figure is accurate.

I don't say I disagree with the author's main claim that the system is flawed in that we have lots of government entities having to negotiate individually with bigger companies (I'd prefer a simpler tax system across the board in general), I'm just saying in this particular case the author has provided no detailed numerical justification why he is right, which leads me to believe he is in fact, likely wrong.

So long as Apple has some trendy locations people will be happy to work there and the schools won't even be a consideration for most.