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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

#211

Post by dsfyu404ed »

mrguyorama wrote: post #207
dsfyu404ed wrote: post #158

Earlier quoted context omitted.

This. Every time you see a trailer registered in Maine there's a very good chance that it was registered there to skirt high registration prices and onerous requirements in it's own state. Maine's making money because other states are such a pain to deal with that people would rather skirt the law. Google "NH state liquor store" for another good example.

I would disagree with "Maine is making money" Our state struggles to pay for road upkeep. Obviously we are not making that much money on trailer registrations. Also, IIRC, we were the first state with trailer weight limits and similar laws, meaning we couldn't possibly be THAT concerned with stealing business from other states on trailer registration. Maybe Maine's lax trailer laws come from everyone and their mother…

>Our state struggles to pay for road upkeep. Obviously we are not making that much money on trailer registrations. Also, IIRC, we were the first state with trailer weight limits and similar laws, meaning we couldn't possibly be THAT concerned with stealing business from other states on trailer registration

Well at ~$10/trailer/yr you're not making much money but it's not nothing. The point is that other states make trailer registration such a hassle that people would rather skirt the law in their own state and pay $20/yr to have some shell corp in Maine register their trailers than do it locally. As an aside this is particularly ass backwards when you consider that those states tend to be the states that would benefit most from people buying lighter vehicles for daily use and covering the edge case with a trailer instead of buying a heavier vehicle (pickup, van, etc) for daily use.

IMO the roads are in perfectly good shape for the number of mile/person or miles/tax dollar.

>Maybe Maine's lax trailer laws come from everyone and their mother owning a trailer for camping, ATV's and the like? No average Mainer wants to pay huge fees just so they can hit the trails on the weekend.

Is this the chicken or the egg?

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

#212

Post by evanwolf »

colek42 wrote: post #42
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.

Forgone income is forgone income no matter what you call it.

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

#213

Post by evanwolf »

bb88 wrote: post #103

Iowa is a very short sighted state. 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…

The telecom industry lobbies state governments hard to limit government operated internet, especially public fiber.

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

#214

Post by birken »

eridius wrote: post #201
tpxl wrote: post #163

Earlier quoted context omitted.

It does make sense if you take the expected value of the money Iowa would get, ie probability * money = money gained. So if the probability was greater than 0, the expected value of the tax gain was greater than 0, which Iowa now lost.

That would only be true if that tax gain was literally the only benefit of having Apple pick Iowa (and if that were true, nobody would ever offer the tax breaks because there'd be no point in having the company pick your state anymore).

The article quotes an economist that says there is no substantial benefit to the state from deals like these:

> “There is virtually no association between economic development incentives and any measure of economic performance,” urban economist Richard Florida concluded in 2012. A study of his found “no statistically significant association between economic development incentives per capita and average wages or incomes; none between incentives and college grads or knowledge workers; and none between incentives and the state unemployment rate.”

And look, maybe this economist is wrong. But I'm not sure why the knee-jerk reaction is that a datacenter is so good that who cares if a deal like this is made. Shouldn't the people who make this deal have to prove why it is necessarily?

And if datacenters are so good for our society, why should Apple get the tax break and not everybody else? I'm quite sure there are other datacenters in Iowa provided the exact same benefits of this Datacenter while still paying the legal tax rate. I could also argue that this form of unfairness is itself a cost Iowa is paying when they make a deal like this.

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

#215

Post by specialist »

lend000 wrote: post #127
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.

> When they bid countries or states against each other I have nothing to say specific to this case, but there is a market for governments (very distorted since options are very practically limited for most people, although corporations have an advantage here), and we should encourage competition in this market, as well as political markets. Competition results in better products. Washington already won me over [parti…

If "progressive" WA adopted "conservative" ID's tax regime, resulting in roughly ~$2.5b/yr extra revenue, WA would have much better infrastructure.

Local businesses like Boeing have been begging Olympia to invest, better maintain infrastructure (for as long as I remember). But those efforts are always rebuffed by the anti-tax jihadists.

Per Logic of Collective Action, the reason tax regimes should be normalized (local, state, national, international) is to minimize cheating (defecting).

https://en.wikipedia.org/wiki/The_Logic_of_Collective_Action

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

#216

Post by specialist »

dpatru wrote: post #197
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.

> Companies are supposed to pay taxes so we can have schools, healthcare, basic income etc. This is just government-enabled theft. Politicians promise people "free" stuff that is extracted by threat of violence from someone else. Companies provide services that their customers choose to pay for. Profitable companies provide services efficiently so that everyone involved (customers, owners, employees) are better off.…

"peaceful cooperation"

Sounds nice. Are there any real world examples I can study?

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

#217

Post by Retric »

AnthonyMouse wrote: post #206
Retric wrote: post #204

Earlier quoted context omitted.

We both agree it's a wealth transfer and intended, so why do you object to the term bail out? This is a wealth transfer to failing states to prevent complete collapse or an a massive exodus of the population.

> We both agree it's a wealth transfer and intended, so why do you object to the term bail out? Because a bail out is normally a cliff and cliffs are moral hazards. Suppose Level 10 is great, Level 5 is mediocre and Level 1 is a disaster. Now suppose that there is a federal policy that says if anybody gets down to Level 1, we shower them with money until they get up to Level 5. What incentive does this create for a s…

I disagree, but it's a fair point. Thanks.

PS: IMO, death spirals from economic shifts such as lower demand for coal miners are longer term problems, but just as much a crisis.

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

#218

Post by eridius »

birken wrote: post #214
eridius wrote: post #201

Earlier quoted context omitted.

That would only be true if that tax gain was literally the only benefit of having Apple pick Iowa (and if that were true, nobody would ever offer the tax breaks because there'd be no point in having the company pick your state anymore).

The article quotes an economist that says there is no substantial benefit to the state from deals like these: > “There is virtually no association between economic development incentives and any measure of economic performance,” urban economist Richard Florida concluded in 2012. A study of his found “no statistically significant association between economic development incentives per capita and average wages or incom…

> And look, maybe this economist is wrong.

Even if the economist is right, there's still benefits to Iowa being there beyond economic development. Besides the fact that Apple is contributing money to a local infrastructure fund (even if it's just $20M instead of $100M), Iowa is in fact still taxing Apple, just at a much lower rate than they would have without the tax breaks.

> But I'm not sure why the knee-jerk reaction is that a datacenter is so good that who cares if a deal like this is made.

I think it's because this deal doesn't actually hurt Iowa. The only thing lost here is potential tax income if Iowa hadn't offered the tax break and Apple had chosen to build there anyway. It's not like Iowa is handing out cash to Apple.

> And if datacenters are so good for our society, why should Apple get the tax break and not everybody else?

Others do get tax breaks! Note here that the tax break offered to Apple is in fact the exact same one offered to farmers. The tax break here is just taxing Apple's data center at the same rate that Iowa taxes farmland.

> I'm quite sure there are other datacenters in Iowa provided the exact same benefits of this Datacenter while still paying the legal tax rate.

That's certainly possible. It's also quite likely that they negotiated their own tax breaks before building their data centers.

> I could also argue that this form of unfairness is itself a cost Iowa is paying when they make a deal like this.

How would you go about arguing that? "unfairness" isn't really something you can measure or put a cost on.

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

#219

Post by dpatru »

specialist wrote: post #216
dpatru wrote: post #197

Earlier quoted context omitted.

> Companies are supposed to pay taxes so we can have schools, healthcare, basic income etc. This is just government-enabled theft. Politicians promise people "free" stuff that is extracted by threat of violence from someone else. Companies provide services that their customers choose to pay for. Profitable companies provide services efficiently so that everyone involved (customers, owners, employees) are better off.…

"peaceful cooperation" Sounds nice. Are there any real world examples I can study?

Real world examples of peaceful cooperation are all around you unless you're in prison. Every time someone voluntarily purchases and another sells, that is peaceful cooperation. The alternative would be for one or the other to force the transaction, as happens with taxes, conscription, or robbery.

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

#220

Post by lend000 »

cratermoon wrote: post #187
lend000 wrote: post #127

Earlier quoted context omitted.

> When they bid countries or states against each other I have nothing to say specific to this case, but there is a market for governments (very distorted since options are very practically limited for most people, although corporations have an advantage here), and we should encourage competition in this market, as well as political markets. Competition results in better products. Washington already won me over [parti…

> a market for governments This is the myth of the Free Market Fairy - https://bitworking.org/news/2008/01/The-Free-Market-Fairy And the ways that "everything is a market" distorts and destroys are covered in this long read: https://www.theguardian.com/news/2017/aug/18/neoliberalism-t...

I hope you don't truly subscribe to the ad hominem nonsense in "The Free Market Fairy." A discussion about free markets is sort of off topic anyway, so I imagine you just saw the keyword 'market' and made some assumptions.

A mathematical market doesn't need to have your political sentiment attached to it. The reality is that there are markets for pretty much everything and we can better analyze many systems by evaluating them as such (including governments), especially as it pertains to supply, demand, and incentives. Don't shut your mind out to different ideas (or try to validate your own incorrect oversimplified world view) just because you heard a teenage libertarian make an incorrect oversimplification of free markets.

But since you brought it up, it seems like you don't understand that a strong legal framework is necessary for a free market -- only the misinformed argue otherwise. In your article's example of global warming, for instance, externalities need to be captured and property rights need to be applied broadly and equally, which they are not in our current system. Most Republicans don't realize this. And most Democrats ignore all the realities and benefits of a free market economic system because the Republicans (and some libertarians) misrepresent it.

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