Agreeing with Alexandria Ocasio-Cortez

[Colonel_Buck]

https://www.foxnews.com/tech/ocasio-cor ... ty-outrage

I'm with her on this. But are the state tax breaks taxable as income under federal tax law?

Also, what is the financial advantage to the state when it gives away so many tax breaks?

[noblepa]

Also, what is the financial advantage to the state when it gives away so many tax breaks?

In theory, the tax breaks, such as reduced property taxes are replaced by the income taxes paid by the employees of the recipient of the breaks. While this doesn't apply to New York, when a car company, for example buys a few hundred acres of low taxed farmland and builds a multi-million dollar plant, even if they only pay half the going tax rate for industrial land, that may be a lot more than the taxes the farmers were paying on the same land.

Also, the breaks are usually limited to a specific time period, such as five or ten years. By that time, the company should be so entrenched that moving would be too expensive.

There is some controversy over whether such tax breaks actually accomplish these goals and, of course, specific examples can be found where the city fathers gave away too much and got too little in return.

[Jeffrey]

A tax cut isn’t taxable federally. Feel free to correct me if I’m wrong. Neither are rebates.

I’m probably biased living in a tax haven but the logic is that the money the company doesn’t pay is instead pay via sales taxes paid by employees, income taxes and taxes on indirect economic activity (ie some guy builds a sandwich shop to feed amazon employees, that shop now pays taxes to the state it wouldn’t otherwise receive.

It’s distasteful for some people but the reality is such companies can shop around, they have bargaining power. You’d have to federalize all taxes to eliminate this.

On the topic, I gotta say it bothers me when other liberals refer to tax cuts as an income. Amazon isn’t getting millions of dollars, they’re being allowed to keep millions of dollars they earned that in other jurisdictions they’d be taxed on.

[Burnaby49]

There is some controversy over whether such tax breaks actually accomplish these goals and, of course, specific examples can be found where the city fathers gave away too much and got too little in return.

Particularly with the stadium obsession you Americans seem to have. An owner just needs to say that a perfectly functionable stadium isn't good enough for his team any more and he's thinking about moving and suddenly government subsidies start to roll in for a new one.

An example where the city seems to have conceded too much is the massive inducements New York made to get the recent Amazon headquarter expansion. Amazon, purportedly undecided, triggered a massive bidding process from all over North America, huge government subsidies promised from city after city. But, in hindsight, it seems, for solid business reasons, that they'd already decided on the Washington area (proximity to government) and New York (very large qualified labour pool and very well located for communications and amenities). The bidding war seems to have been just a ploy, a very successful ploy, to see how much they could extract from the cities they'd already picked.

[Gregg]

Amazon also got local governments all over the country to give them, for free, demographic data that is very valuable to them.

I think there ought to be a Federal tax on local tax exemptions granted to companies that relocate operations. New plants getting breaks I'm fine with, but the "let's see who will give us a few million in tax breaks if we up sticks and move" is a problem.

FWIW, I have some deep personal experience with what local governments will give away. Its not just the breaks for a new factory, but the property tax on new equipment moved into existing facilities is sometime very substantial. Spend a hundred million or more on upgrading an existing plant to build a new product and you can coax millions, or tens of millions, from local and state governments. States tax equipment and facilities above and beyond the real estate tax most people associate with tax breaks.

[AnOwlCalledSage]

Spend a hundred million or more on upgrading an existing plant to build a new product and you can coax millions, or tens of millions, from local and state governments.

You don't even have to do that. Clad a steel frame structure with wooden panels in the shape of a boat and Kentucky will give you $43m in tax breaks if you call it the Ark Encounter.

[Arthur Rubin]

I think there ought to be a Federal tax on local tax exemptions granted to companies that relocate operations. New plants getting breaks I'm fine with, but the "let's see who will give us a few million in tax breaks if we up sticks and move" is a problem.

... and sports stadiums (stadia?). 100% sounds like a good tax rate.