No, because then it's a race to the bottom and all other companies start expecting these same deals (or even better), and eventually you do end up with a situation where the city does not get back more in tax revenue.
It's simple negotiation; you may lose some money on that one deal, but you'll gain more in the end by not decreasing the value of all subsequent deals.
Or, you'll lose out on all the businesses that won't start or expand there because the baseline level of taxation is too unfavorable for the economy (in either sense of the word) that the city offers.
It's almost like taxing easily-moveable economic activity is a bad idea.
And yet there's a huge number of businesses that do have presences in NYC because the tax revenue funds all sorts of things that make NYC attractive to businesses that can't be gotten elsewhere.
A lot of what makes NYC great (like the 24/7 public transit system, the best in the country) costs serious money to operate. You need to get that money from tax revenue.
And businesses aren't actually easily-movable, not at all.
>And yet there's a huge number of businesses that do have presences in NYC because the tax revenue funds all sorts of things that make NYC attractive to businesses that can't be gotten elsewhere.
Most of which were present there because they set up a long time ago. The current environment makes it so that you pretty much have to get a discount to make it worth starting there, per the famous reddit comment:
^ For anyone doubting this, Planet Money did an excellent podcast on how this phenomenon played out in Kansas City with corporations like Applebee's, and cost the city millions:
You could easily argue it put Kansas City on the map.
Kansas City is at least a well known name in the tech world now, when there's plenty of other midwest cities of similar size that rarely get brought up.
Millions would be a steal for the revenue becoming a tech hub would bring in. Even if it does take a more than a decade to be realized.
Cities of similar size: Albuquerque, Milwaukee, Louisville, Oklahoma City (and more).
Out of these, Kansas City comes up more often tech wise. I waste a good bit of time on sites like this discussing tech related matters, and not once have I read an article involving any of these cities.
This is why I said well known and on the map, not 'popular'.
What's the problem with governments competing? That's not a "race to the bottom" any more than competition is a "race to the bottom" in market economics. It is a forcing function on efficiency and good governance where there would otherwise be no competitive pressure.
The counter-point to race to the bottom, is this is an important aspect of pressure in a democratic capitalism to prevent government as a leviathan. The government has a natural incentive to want to raise more revenue, and increase power. A strong market that can stifle these, at times potentially inefficient taxes, can provide a natural check on this.
Obviously the truth is that there are bad aspects of a race to the bottom as well as positive attributes. Finding the balance requires nuance and grace by the leaders who navigate these uncertain waters.
I mean, clearly we haven't signed up for the money-losing deal, as the deal has been canceled because of opposition and no give-aways will ever be made to Amazon.
You're getting downvoted, but it's true. If I recall, the city/state would've broken even not that far into the future, and then everything after that would've been pure profit for them.
It's a matter of principle. NYC (or any municipality) shouldn't be bending over for massive multinationals. It's a form of corruption, one that's depressingly widespread, and it's a race to the bottom that, from a 30,000 foot view, accomplishes nothing but screwing over the taxpayers and smaller competitors lacking the leverage for these antics, and benefiting the corporations that are already enormous and powerful.
I can’t believe you have to explain to people why corporatism is a bad thing. It underlies the largest problems in this country, and we should actively be protesting it.
No. Not "new business". "A" new business. It's a sweetheart deal for one company in particular subsidized by the taxpayers. They're not reducing their citywide tax rate to attract Amazon, they're just giving a handout directly to Amazon.
What you're describing is nothing close to the reality. It's the prisoner's dilemma. Cities that participate in this scheme take turns screwing each other over in an attempt to get a minor benefit themselves, but compared to the scenario where nobody played the game to begin with, they all lose.
Yes it does. It's extremely common for businesses to be offered incentives like this. They are usually bounded in a way to ensure it's beneficial to the city. The ones I've seen are requiring a certain number of headcount be maintained over a specific duration, a certain amount in salary be paid out over a specific period of time, and certain infrastructure be installed within a certain period. If these obligations aren't met, then the company is required to pay back the incentives plus penalties.
Maybe an extreme example of a "bad deal" but these aren't always a slam dunk, and some of the math to justify (especially sports stadiums) can be a bit iffy.
