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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

#21

Post by nugget »

mamon wrote: post #3

Do not negotiate with terrorists. They need to build this datacenter somewhere, so if no city/state yields to their demands they will build it anyway, without any tax breaks.

Isnt competition in free markets healthy? Doesn’t it tend to benefit everybody over time as products and services improve? Why would State or municipal governance, as a service, be immune from this? A US Supreme Court Justice once called American States “laboratories of democracy” and I think that’s apt. Let citizens vote with their feet, so to speak.

In practical terms, Google (or Amazon, etc.) wants tax breaks but also wants a desirable community to help recruit and retain talented employees. If a community so impoverishes itself via tax breaks that it can’t afford to remain desirable, then nobody wins. Abuse and wildly perverse incentives are of course possible, but absent those scenarios, there’s an equilibrium between private incentives and public investment that certainly exists.

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

#22

Post by rtkwe »

jonas21 wrote: post #13
tantalor wrote: post #8

Earlier quoted context omitted.

That figure is for 18 years; it's actually $15k per employee per year. Adding a tax to offset the tax abatement seems to defeat the purpose.

It's also excluding the 2300 people constructing the datacenter for 1.5 to 2 years. Overall, it sounds like they're trading $15M in tax credits for between 4350 and 5500 person-years of jobs over 20 years. So around $2700 to $3500 per person-year.

2300 seems way high even if you're counting each different person that comes through and most of those won't be working the whole time. They'll come through and do electrical/HVAC/frame construction/etc for a few months then leave. Only a few will be there the whole construction and those will mostly be management and supervisor/contractor roles.

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

#23

Post by justinmchase »

profmonocle wrote: post #5

From the linked MPR article ( https://www.mprnews.org/story/2019/02/25/wind-energy-tax-bre... ) > A Google data center often attracts other major technology-based companies to invest in the same area, Bertram said. I'm confused why this would be. What economic benefit would proximity to a Google data center bring, besides lower latency to some of Google's services? I can't imagine 15ms lower latency to a Google servi…

Its probably more about the money coming into the community and the types of people that would work there generally adding to the labor pool of the area.

As jobs appear and wages go up those people spend a great deal of their money in the area and more jobs show up and as those employees look for a new job other businesses can compete for those higher skilled employees.

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

#24

Post by keko039ndnfm »

profmonocle wrote: post #5

From the linked MPR article ( https://www.mprnews.org/story/2019/02/25/wind-energy-tax-bre... ) > A Google data center often attracts other major technology-based companies to invest in the same area, Bertram said. I'm confused why this would be. What economic benefit would proximity to a Google data center bring, besides lower latency to some of Google's services? I can't imagine 15ms lower latency to a Google servi…

A cottage service industry springs up which provides something of a foundation for other big corp players to work with?

The area can attract people capable of working at a Google DC, and a local community to support those folks.

I expect Google is taking a broader look than the few data points this forum is considering.

Google and the like do not just hire tech PhDs

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

#25

Post by kevin_thibedeau »

mruts wrote: post #18
reaperducer wrote: post #12

Earlier quoted context omitted.

I can't imagine 15ms lower latency to a Google service being the deciding factor for where to locate your company. It can be, depending on your industry. Financial firms are like this. I don't know if Minneapolis still has a commodities exchange, but if it does it would be attractive to those kinds of people. Probably others I've never thought about. But overall, I think $15M for a data center is too much. Data cente…

Why would a financial firm care about 15ms latency to a google service? It's not like they would be using the cloud in the first place.

The government has a lot of people to keep track of in Minneapolis just in case they may want to "collect" data in the future.

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

#26

Post by maxxxxx »

mruts wrote: post #18
reaperducer wrote: post #12

Earlier quoted context omitted.

I can't imagine 15ms lower latency to a Google service being the deciding factor for where to locate your company. It can be, depending on your industry. Financial firms are like this. I don't know if Minneapolis still has a commodities exchange, but if it does it would be attractive to those kinds of people. Probably others I've never thought about. But overall, I think $15M for a data center is too much. Data cente…

Why would a financial firm care about 15ms latency to a google service? It's not like they would be using the cloud in the first place.

True. They go straight to the exchange.

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

#27

Post by xvector »

nugget wrote: post #21
mamon wrote: post #3

Do not negotiate with terrorists. They need to build this datacenter somewhere, so if no city/state yields to their demands they will build it anyway, without any tax breaks.

Isnt competition in free markets healthy? Doesn’t it tend to benefit everybody over time as products and services improve? Why would State or municipal governance, as a service, be immune from this? A US Supreme Court Justice once called American States “laboratories of democracy” and I think that’s apt. Let citizens vote with their feet, so to speak. In practical terms, Google (or Amazon, etc.) wants tax breaks but…

> Isnt competition in free markets healthy? Doesn’t it tend to benefit everybody over time as products and services improve?

No? Hence the need for regulations. The free market and competition are not inherently good things. They can be very, very bad for your average citizen.

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

#28

Post by kartan »

> Google is promising to bring 50 full-time positions to the area. The company also projects that it will create 2,300 jobs during the 18–24 month construction window.

Is this a joke?

> State Sen. Andrew Mathews (R–Milaca) and state Rep. Shane Mekeland (R–Clear Lake) recently introduced a bill to provide an additional $20.1 million in state bonds to give the Becker Business Park—where the data center would be built—a facelift.

So, invest 1 million in politicians get tens of millions from the public treasury.

> Such incentives are typically justified by politicians as a crucial way to stimulate the economy.

Probably their own personal economies.

There are reasons to give corporations tax breaks. Like for example to expand green energy or to give jobs to people in risk of exclusion, or another hundred reasons. But, it looks like now it is used for everything without any real justification beyond "the company will bring business to the town". That can be covered by any kind of business willing to pay for lobbying and that does not present any social benefit. And it is a zero-sum game where another town loses the possibility for you to gain it. It is hardly a justifiable situation.

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

#29

Post by rtkwe »

nugget wrote: post #21
mamon wrote: post #3

Do not negotiate with terrorists. They need to build this datacenter somewhere, so if no city/state yields to their demands they will build it anyway, without any tax breaks.

Isnt competition in free markets healthy? Doesn’t it tend to benefit everybody over time as products and services improve? Why would State or municipal governance, as a service, be immune from this? A US Supreme Court Justice once called American States “laboratories of democracy” and I think that’s apt. Let citizens vote with their feet, so to speak. In practical terms, Google (or Amazon, etc.) wants tax breaks but…

That breaks down in a lot of ways like most markets because of the huge power imbalance both in information and raw economic power. Just look at what Foxconn did in Wisconsin, (and pretty much everywhere else it's ever made a deal) the companies can promise the moon knowing they'll never deliver on half of it but the huge promise puts a huge electoral pressure on the local politicians to make the deal and the company signs a deal with little to no teeth (again they can largely dictate the terms of the deal because there's no reason they have to go with any particular location). Then the problems caused by the huge loans or bonds issued to finance a deal exist on a longer time frame than the company usually cares about and if they get too bad they can just toss in a little more compensation or start the cycle all over again in a new city.

Google doesn't particularly care about how bad the local community gets there's enough single/childless couples in the work force to provide the minimal local employees a data center will need and when a particular employee's lifestyle changes they can just be move internally and replaced. And if it gets bad enough it's simple enough to build another datacenter.

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

#30

Post by moorhosj »

kartan wrote: post #28

> Google is promising to bring 50 full-time positions to the area. The company also projects that it will create 2,300 jobs during the 18–24 month construction window. Is this a joke? > State Sen. Andrew Mathews (R–Milaca) and state Rep. Shane Mekeland (R–Clear Lake) recently introduced a bill to provide an additional $20.1 million in state bonds to give the Becker Business Park—where the data center would be built—a…

==And it is a zero-sum game where another town loses the possibility for you to gain it. It is hardly a justifiable situation.==

This is the most critical piece. What would legislation to address this at the national level even look like?

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