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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

#61

Post by logfromblammo »

moorhosj wrote: post #30
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?

Minimum wage for municipalities.

Establish a federal minimum for local taxes. No sweetheart deal in the country entice the business more than the minimum allowable by law.

Might as well go ahead and also ban cities from building stadiums at taxpayer expense, but for some sports team owner's near-exclusive benefit. It's the same kind of extortion: give us what we want, or we go to another city.

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

#63

Post by abakker »

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…

This is a very good discussion, back and forth. I think it is worth asking who should be capturing the economic benefit here. A tax break for google in this case is allowing google to capture the economic benefit it creates for the public. Not giving it a tax break allows the public to capture that economic output. While I very much agree that this project will add value to the economy, if google is given a $15m tax incentive to create this property, it means that the public doesn't get it.

Those justifications you lay out are real, but if you pay google for them in the form of a tax break it all balances out. It doesn't create value from nothing.

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

#64

Post by tfehring »

tptacek wrote: post #57
tfehring wrote: post #55

Earlier quoted context omitted.

The infrastructure improvements needed to support the data center will be paid for by $20.1 million in state bonding - that is, they'll be paid for over time by Minnesota taxpayers at large. So there's no "shortfall" for Becker or Sherburne County, but only because the rest of the state is picking up the tab.

That's the answer I'm looking for. Thanks. But that's not necessarily happening, right? And the deal might not be limited to tax breaks. 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. Is Google actually demanding that? Do…

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, and it's not trivial to see how things net out.

> The sponsor of the bill claims to be supporting it whether or not Google selects Becker.

Well yeah, why wouldn't he? He has plenty of political capital since Minnesota's recently elected governor, a Democrat, is pushing for lots of ambitious legislation. And what's not to like about spending other people's money in your own community?

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

#65

Post by throwaway2048 »

tptacek wrote: post #53
bilbo0s wrote: post #52

Earlier quoted context omitted.

The shortfall represents the money not present assuming that Google DOES move in. If Google moves in, and they maintain the current tax rates on people currently living in that municipality, then the shortfall is about 15k per Google head. If Google DOES NOT move in, there is no shortfall at all. Of course, they can just increase the taxes on people already there in residence. But again, rural area. Not a lot of mone…

Help me understand. If Google moves in and pays property taxes, the county will see an additional $15MM (over 20 years). If they move in and don't pay property taxes, the county will not see that money. If they don't move in at all , the county will still not see that money. Game-theoretically, how is the county better off if Google doesn't move in?

Google has to move in somewhere, tax breaks or no tax breaks, its a net loss for america as a nation, and a massive net gain for google.

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

#66

Post by hayd »

abakker wrote: post #63
Gpetrium wrote: post #43

Earlier quoted context omitted.

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…

This is a very good discussion, back and forth. I think it is worth asking who should be capturing the economic benefit here. A tax break for google in this case is allowing google to capture the economic benefit it creates for the public. Not giving it a tax break allows the public to capture that economic output. While I very much agree that this project will add value to the economy, if google is given a $15m tax…

Maybe, it could also mean that Google go to another state who will offer a tax incentive, and the state loses out.

Or, as AOC would say: saves $15m.

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

#67

Post by asdfasgasdgasdg »

abakker wrote: post #63
Gpetrium wrote: post #43

Earlier quoted context omitted.

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…

This is a very good discussion, back and forth. I think it is worth asking who should be capturing the economic benefit here. A tax break for google in this case is allowing google to capture the economic benefit it creates for the public. Not giving it a tax break allows the public to capture that economic output. While I very much agree that this project will add value to the economy, if google is given a $15m tax…

> Those justifications you lay out are real, but if you pay google for them in the form of a tax break it all balances out. It doesn't create value from nothing.

Only under the assumption that $15M is the exact maximum amount that the city would pay for the listed benefits (i.e. the exact break even number). Probably it is worth more than that to the city (or else they probably wouldn't do the deal), so the reality is that Google is capturing some of the surplus value, and the city is capturing some.

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

#68

Post by abakker »

asdfasgasdgasdg wrote: post #67
abakker wrote: post #63

Earlier quoted context omitted.

This is a very good discussion, back and forth. I think it is worth asking who should be capturing the economic benefit here. A tax break for google in this case is allowing google to capture the economic benefit it creates for the public. Not giving it a tax break allows the public to capture that economic output. While I very much agree that this project will add value to the economy, if google is given a $15m tax…

> Those justifications you lay out are real, but if you pay google for them in the form of a tax break it all balances out. It doesn't create value from nothing. Only under the assumption that $15M is the exact maximum amount that the city would pay for the listed benefits (i.e. the exact break even number). Probably it is worth more than that to the city (or else they probably wouldn't do the deal), so the reality i…

>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—a far shorter period than the 20 years of tax relief they're requesting. After construction wraps, with 18 remaining years of tax abatement, there will be a $270,000 tax shortfall for every full-time position created.

I read that paragraph from the article to read that after the 20 year term google is looking for this tax relief, the town will be net negative 270K for each of the 50 employees Google creates. If that is not what that paragraph means, then I agree with you, but, my interpretation is that for the state to break even, google has to generate an additional 270K of economic return to the state per each person at the google data center. I find that number to be unlikely.

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

#69

Post by kartan »

alehul wrote: post #36
moorhosj wrote: post #30

Earlier quoted context omitted.

==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?

The only way seems to be to either to completely outlaw these negotiations, or create a standard rate (i.e. if the project will bring 100 jobs, the cities have the option but not the obligation to offer $10m in various forms of tax breaks— or maybe capped at $10m). The trouble is that, at a higher level, this unwillingness to play ball may just result in the companies fleeing to other countries rather than other stat…

> this unwillingness to play ball may just result in the companies fleeing to other countries rather than other states

If they could they will do it. But it is not possible as you need data locality. If your data center is in China, it cannot compete in speed with a local data center. And this is true in different ways for a lot of businesses. That is one of the many reasons why all business are not already in India even that everything is way cheaper there.

And how a small company can compete with this kind of deals? Google is already having a scale advantage add to that tax breaks and it's impossible to compete with them. These tax breaks have a very bad impact on any capitalist economy.

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

#70

Post by awakeasleep »

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…

Can you list any data showing datacenters increase land value? Or have boosted an economy? Or are these theoretical benefits?
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