Author Topic: Broken Clocks  (Read 645 times)

Seriati

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Broken Clocks
« on: February 21, 2019, 02:44:39 PM »
So, I've been staying out of the Amazon-AOC debacle, largely because everything she said to explain the reasons for her position was largely nonsense (with the possible exception that having a better economy would price her constituents out of the district, which is a mixed bag at best).

But in this case she is correct about one thing.  Tax incentives to lure businesses are a bad plan, and in my view we should consider making them illegal.  Not because she was even remotely correctly about their cost, that's a flat error, there's no legitimate debate that they would have increased the tax revenue to NY after the incentives.

No, why I think her broken clock is right is because Amazon was planning a second US headquarters somewhere.  And in that place they were going to be paying taxes no matter what.  Giving these incentive deals is all about moving that headquarters from one state or locality to another.  As a country, we don't care where they sit, and as an aggregate bribing them to sit in one place versus another inside the country is nothing but a net loss overall.  When NY bribes them $3 billion to keep them from locating in DC, that's a net loss for the country as a whole (even if its a win for NY). 

When the rule becomes that every locality has to bribe companies to relocate or even to stay where they already sit then the practice becomes equivalent to a massive tax scam where local government is literally picking the winners and losers and revenues are going down every where.

It's a literal case of the "local" incentives being so large they lead to an inefficient result for the country as a whole.

TheDrake

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Re: Broken Clocks
« Reply #1 on: February 21, 2019, 03:07:22 PM »
Quote
Tax incentives to lure businesses are a bad plan, and in my view we should consider making them illegal.

Completely agree. We should end any use of public assets to distort markets and favor giant companies over smaller ones, one industry over another one, or one community over another one.

I'm not saying government can't ever offer incentives, they should just universally apply. Governments shouldn't be negotiating one-on-one with companies. When these become law, they often shroud it in crafty language because government explicitly is not supposed to pick and choose which laws to apply to individual companies.

I seem to recall that they list criteria until it could only ever apply to the one company that they targeted.  something like "online retailers with more than 20,000 local employees founded on or before some date"