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Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

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Re: Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

#111

Post by smileysteve »

tptacek wrote: post #34

I'm a little confused here; 15MM over 20 years doesn't sound like a huge amount of money, and if the data center is being built on the grounds of a coal power facility that is being decommissioned, it's not clear how Sherburne County was going to see that money anyways. Becker is a very small town 45 minutes away from MSP; what negotiating leverage do they have? Even with the tax package, how is this a net negative f…

> 15MM over 20 years doesn't sound like a huge amount of money

It does when you consider it for 50 people.

Like this, "Give 50 lucky citizens $300,000"

Alternatively, since this is HN, 15mm, could be a healthy Series A for 3-4 companies. If this money is invested in already existing space, do those 4 companies hire more than 50 people over 17 years?

Re: Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

#112

Post by tptacek »

smileysteve wrote: post #111
tptacek wrote: post #34

I'm a little confused here; 15MM over 20 years doesn't sound like a huge amount of money, and if the data center is being built on the grounds of a coal power facility that is being decommissioned, it's not clear how Sherburne County was going to see that money anyways. Becker is a very small town 45 minutes away from MSP; what negotiating leverage do they have? Even with the tax package, how is this a net negative f…

> 15MM over 20 years doesn't sound like a huge amount of money It does when you consider it for 50 people. Like this, "Give 50 lucky citizens $300,000" Alternatively, since this is HN, 15mm, could be a healthy Series A for 3-4 companies. If this money is invested in already existing space, do those 4 companies hire more than 50 people over 17 years?

No, this isn't money they had that they've giving to Google, or money they would be getting if Google didn't move there because someone else would move in and give it to them instead. This is an empty field in the middle of nowhere.

Re: Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

#113

Post by tptacek »

nightski wrote: post #110
tptacek wrote: post #103

Earlier quoted context omitted.

Google's argument, according to a link posted upthread, is that its investment of hundreds of millions of dollars in the construction of a data center will drastically improve the value of the lot that it's building on, and it wants a 20 year abatement on the increased value it is itself generating on the land. It's not at all clear to me how or why taxes on everyone else will likely rise.

That's what happens every time they give big business an exception in my city. Fedex was the most recent. A city commissioner literally asked the Fedex rep at a commission meeting if they would still come without the tax incentive and they replied yes. The commission then still proceeded to pass the incentive. They see 20 years of tax free growth while property taxes go up for everyone else. Google has to spend the m…

How exactly is this a drain on the town? People keep saying things like this and it is not at all clear how that could be happening. The opposite seems likely: Google building a huge data center here will, in fact, be an economic boon (marginal or significant, we can debate).

This isn't money the county is paying Google, or that Google is somehow taking from the town. It's a data center built on an empty field in the middle of nowhere, connected directly to a wind farm run by an otherwise struggling power company that owns the land Google is using.

Re: Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

#114

Post by dragonwriter »

tptacek wrote: post #113
nightski wrote: post #110

Earlier quoted context omitted.

That's what happens every time they give big business an exception in my city. Fedex was the most recent. A city commissioner literally asked the Fedex rep at a commission meeting if they would still come without the tax incentive and they replied yes. The commission then still proceeded to pass the incentive. They see 20 years of tax free growth while property taxes go up for everyone else. Google has to spend the m…

How exactly is this a drain on the town? People keep saying things like this and it is not at all clear how that could be happening. The opposite seems likely: Google building a huge data center here will, in fact, be an economic boon (marginal or significant, we can debate). This isn't money the county is paying Google, or that Google is somehow taking from the town. It's a data center built on an empty field in the…

It's a drain on the people currently living in the town, because the high paid employees will mostly be imports and drive up local cost of living, more than they will drive up the income of people not employed at the facility.

It's maybe a boon for the town as a corporate entity, or as a statistical aggregate, but it's not likely a boon for the existing constituents of the town if it comes with a significant tax abatement.

Re: Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

#115

Post by tfehring »

tptacek wrote: post #79
tfehring wrote: post #64

Earlier quoted context omitted.

Of course the infrastructure investment would benefit the Becker area in general and potentially attract other employers, but it seems vanishingly unlikely that Minnesota communities other than Becker would come out ahead on this investment. It may be a net positive for the state as a whole, but it's not just a matter of deciding whether to take less of Google's money or none at all - there are winners and losers, an…

The argument against the waste pipe bond (what Reason describes as a "facelift" for "Becker Business Park", which appears to be an empty field) seems straightforward and I'm not really litigating it. Sure: the state maybe shouldn't pay for that. The argument against the property tax break is less clear to me. Like, all things being equal, I'd rather Google pay more tax than less tax. But it's not at all clear to me w…

I don't think either Becker specifically or Minnesota more broadly has a better alternative than to demand the property tax and, presumably, let Google build elsewhere. I also agree that if the property tax breaks were the only incentive that Minnesota was offering, it would be a clear net positive to offer those tax breaks. But the need for a bonding bill makes the trade-off less straightforward, since it requires Minnesota to commit funding directly, instead of just foregoing tax revenue that it "should" (but wouldn't) receive.

I live in Minneapolis and hadn't heard about the proposal until I saw this thread, so I'm inclined to think the outrage is mostly manufactured. To the extent that it's real, it's probably driven by the fact that Wisconsin seems to have gotten fleeced by Foxconn.

Re: Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

#117

Post by nightski »

tptacek wrote: post #113
nightski wrote: post #110

Earlier quoted context omitted.

That's what happens every time they give big business an exception in my city. Fedex was the most recent. A city commissioner literally asked the Fedex rep at a commission meeting if they would still come without the tax incentive and they replied yes. The commission then still proceeded to pass the incentive. They see 20 years of tax free growth while property taxes go up for everyone else. Google has to spend the m…

How exactly is this a drain on the town? People keep saying things like this and it is not at all clear how that could be happening. The opposite seems likely: Google building a huge data center here will, in fact, be an economic boon (marginal or significant, we can debate). This isn't money the county is paying Google, or that Google is somehow taking from the town. It's a data center built on an empty field in the…

The middle of nowhere? Do you even know the area at all? It's right next to the twin cities which has a metro population of 4 million people, home to many multi billion dollar companies (Cargill, Target, Best Buy, 3M, United Health Group, U. S. Bancorp, General Mills, shall I go on?).

Many things in a small city are supported solely by property taxes, to which Google would not contribute at all for at least two decades yet gain all of the benefits from. This is not fair to anyone else in the city who is paying those taxes for those benefits. It's better to just not have them exploiting the city's resources for free.

Re: Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

#118

Post by KorematsuFred »

raphaelj wrote: post #58
KorematsuFred wrote: post #49

Earlier quoted context omitted.

This is in general a good thing if all companies can negotiate such deals. This leads to different administrative areas competing for different kid of projects and also lower the tax rate. All this results into more efficient government. Note that 15M means very little for Google any ways.But those jobs can have massive impact on the local economy creating millions more for the locals and as well as state.

That is only true if it also works for smaller companies. Small corporations can't negotiate such deals, which will make them unable to efficiently compete against these larger companies.

Small corporations can't negotiate such deals because the value they could add is also significantly less, on other hand smaller corporations have the benefit of skirting most regulations that large corporations simply can not.

Re: Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

#119

Post by tw04 »

Gpetrium wrote: post #43
tw04 wrote: post #40

Earlier quoted context omitted.

1. There are already dozens of datacenters in Minnesota. They aren't prompting other businesses to pop up because they are self-contained and self-serving. Furthermore there is no "brand recognition" they are giant unmarked warehouses that could be a datacenter or could just be another nameless storage facility. 2. Why would a datacenter increase land value? This isn't a corporate headquarters, it's a datacenter. 3.…

I will bite your response with the hopes you try to keep an open mind to the response you get instead of a preconceived notion of how things work. 1. Data centers are a symbol to a much larger economic schema that impacts quality of service to the area, economic prosperity, among other areas. Minnesota can literally come to prospect business and say "Look, Google, X, Y and Z companies gave us a seal of approval that…

All of the above assumes the people Google is hiring are unemployed which is simply not going to be the case.

The current unemployment rate in Minnesota is 2.8%. The current unemployment rate among tech workers is less than 1%. This will not generate anywhere near the pie-in-the-sky numbers presented in any findings. At best it will ever-so-slightly increase the tax base by giving a small raise to a tiny handful of individuals. The workers building the actual datacenter will almost assuredly be in-state construction workers whose salaries will not change as a result of the project, this is just one more project to add to the list.

Furthermore, once again, Minnesota already has a glut of datacenters both public and private. none of the "other benefits" even apply. They aren't putting this up in the middle of nowhere Montana. While it is admittedly presumptuous of me, I'm going to assume you have absolutely no idea what the tech industry in Minnesota looks like.

Re: Google Wants $15M in Tax Breaks to Build a Data Center in Minnesota

#120

Post by throw2016 »

There is a larger issue of a level playing field. These kind of subsidies are a race to the bottom.

Instead of business growing the overall economy they shrink the economy by the amount paid out in subsides, since these businesses will be built anyway if not here somewhere else in the country that is a overall loss to the country. So you are actually subsidizing business on the national level, which is why businesses should not be allowed to cynically play off states against another.

Focusing on localized gains by the logic of 'something is better than nothing' misses the bigger picture and is misleading and disingenuous.

It's like if tax payers could be incentivized to file in different regions by competitive breaks to grow the local tax filing economy and revenue of various regions, that is a shrinking of overall tax revenue though it may be a rise for specific regions.

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