It took about 30 minutes for Williamson County commissioners to unanimously approve a roughly $16 million incentive package for Apple Tuesday morning, bringing the total amount the tech giant is likely to receive in exchange for choosing Austin as the site for its newest campus to a cool $41 million. The new addition is set to be Apple’s second campus in the Austin, Texas, area – located less than a mile from the company’s existing facility, established five years ago. It comes with the promise of a $1 billion dollar investment from Apple in the area and the addition of up to 15,000 new jobs.
But the details of the incentive package Williamson County whipped up to woo Apple tell a slightly different story. In the contract approved by county officials, Apple committed to spending at least $400 million on the new campus and creating 4,000 jobs over 12 years. The contract says the jobs don’t necessarily have to be on the new campus in order for Apple to receive the promised incentives, but rather can be anywhere within Williamson County.
Shady and shoddy deals like these are only the tip of the iceberg – and don’t think this is merely an American thing. This entire past year in The Netherlands has been dominated by our newly elected government wanting to shove through an incredibly unpopular tax cut specifically designed to appease major (partly) Dutch multinationals like Shell and Unilever – a 2 billion euro tax cut while various important social services like police, education, and healthcare desperately need better pay and working conditions.
In the end, under immense public and political pressure, the tax cut was cancelled, but it goes to show that these things happen everywhere – in large, powerful nations like the US, but also in small, insignificant welfare states like The Netherlands.
https://www.theverge.com/2018/10/29/18027032/foxconn-wisconsin-plant…
Is it the tech firms simply making use of gullible politicians, or is it something more sinister (and more obvious)?
Maybe they’re hoping to do an Ireland, and retrospectively collect the tax like Ireland are being forced to by the EU?
http://europa.eu/rapid/press-release_IP-16-2923_en.htm
Forced? They were supposed to have done that without EU intervention.
We discussed also the one you link to… http://www.osnews.com/story/30847/Wisconsin_s_4_1_billion_Foxconn_b…
It’s neither. It’s just the nature of the competition among communities for companies that offer good paying jobs. In the US it’s essentially a free for all, and so communities compete for companies through tax incentives. The incentives bring companies which, in turn, bring jobs ( and hence a bunch of additional spending to the community benefiting it ) at the cost of tax dollars the communities wouldn’t get anyway without the company locating there.
Indeed, it’s smart politics. If my local politicians can bring a big company to my community that will likely increase the value of my property. It will also bring new shopping and entertainment to my area which will both benefit me and it will further increase my investment in the community ( through an increase in my property values ). This is a good thing and I would have no problems with tax incentives being given to make this happen.
( The only downside is traffic which is why we have shitty traffic anywhere that’s doing well. )
In the EU there are rules to specifically prevent this to ensure that different communities – and even different EU member states – are chosen by merit and not on the basis of how much money they can throw at the company ( which places like Ireland and the UK have done long before there even was an EU ).
It’s nothing more than a form of bribery, which is morally despicable and thus should be illegal.
And all you mention is likely to make you less happy… http://web.mit.edu/krugman/www/ratrace.html
Thom, you are misunderstanding the economics of this situation entirely.
The tax incentives these communities provide don’t reduce, or in any tangible way, impact the people in this community – that is to say the members of the community don’t have to pay for this.
In essence the county is buying jobs against income it would not receive without a company locating in that county so it’s giving nothing away.
On the other hand the additional 4000 jobs are likely to generate local taxes, sales taxes, real estate taxes and the bulk of the income of the people doing these jobs is likely to stay in the community both benefiting it’s members and generating additional tax revenue.
It’s a huge win for a county or city to win a big company like this because it has to pay nothing it to get it ( that it would have if the company didn’t locate there ) and it generates income not only for the community but also for its members. Moreover eventually the tax incentive will be consumed and the company will start paying taxes thereby further increasing the communities income.
Everyone knows how it works, it’s just that it’s despicable and should be made illegal.
A government’s revenue is tax-based, not based on products invented and sold to the market.
Government’s are generally made up of lawyers and people who studied {arts, humanities, political “science”}-type subjects with relatively very fewer technically trained people. I see this as a problem, especially when governments bail out flawed companies for the main reason of capturing citizen votes for a future election; a flawed company is one that has proven that their products do not have traction in the market, most probably due to poor quality/design (e.g. certain automobile manufacturers). If a company, through it’s own inventive-potential, has established itself as a “player” in the market then I do not have a problem with “custom” (and relatively decent) deals between the government and that company. There’s no way that a bunch of lawyers and {arts, humanities}-trained politicians/peoples in government would be able to replicate the success of a successful tech-sector company.
Outside the social services sector, the government does not create “real” jobs, and this is expected.
Once upon a time there would have been very much less problems in social services like police, education, and healthcare. History has shown that “bloated” governments are less manageable. Better lifestyle choices made by the citizenry (requiring a disciplined approach to life) would remove an immense load from healthcare system (does multinational big-pharma want this ?). Personal responsibility is a message that can be very lacking from the government side.
Education would be more relevant in society if our politicians/governments were less pro-globalisation and more pro-localisation; i.e. keep industry within the nation, acting as a source of training/intellectual development and social stabilisation for that nation. More people working would lead to less crime, less opportunity for people to be wayward in their life; “work” does give you a goal in life which you can potentially fashion in a custom manner that suits your needs.
For example, consider where the {BSDs, Linux-distros} were in the early 1990’s and where they are now. Even Microsoft has been forced to acknowledge the technical prowess of the BSDs/Linux. These open-source technologies, like other open-source cases, have a virtually zero-barrier of entry for their utilisation; it’s up to the interest of the inventor/creator/techie. One idea could be for governments to introduce subjects in the high-school curriculum that puts the student in contact with open-source tech (e.g. BSD/Linux), nurturing a potential creative-effect on the student. This idea is inspired by my personal experiences. Recently, in Australia, the government expressed the notion that a teacher with commercial experience in the subjects they were teaching would be in a better position to inspire a student towards a more creative potential. From personal experience, I have seen that this can be true.
More teenagers spending more time on coding (or techie stuff) and less time being distracted on social media platforms, would be a potential bonus for society; more chance for home-grown tech sectors.
China will not always be the $2-shop of the world and, so, local industry will also be important. Also, the attitude of the citizenry has to change in regards to their spending habits. A balance must be struck concerning price and support of the local manufacturers. If the product is good and is made locally then I would spend some extra realistic amount of money to help stabilise local jobs. In all this “free trade” talk that politicians talk about, they never focus upon the large difference in worker’s rights (insurance, medical benefits, workplace laws) for workers in nations taking part in the “free trade” deals. It’s like “free-trade” is taking advantage of an under-class of worker. Worker’s rights does add a cost to a product and the “ideal” target should be that this cost be minimal/reasonable and that the buyer of these goods be philosophically-{aware, fine} that this cost is implicit.
Flawed companies can have profitable units and can be in strategic position. Bailouts require lots of planning before the decision is made. A bailout can be a failure, but bankruptcy can do way more harm.
Edit: and bailout rarely comes free for the company.
Edited 2018-12-21 22:17 UTC