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Wisconsin: Let's give Foxconn $3B
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The Final Dakar
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Aug 9, 2017, 07:17 PM
 
Is it me or is this crazy pants? It's something like $200 million a year of corporate welfare.

http://www.jsonline.com/story/news/p...ars/519687001/
To lure Foxconn Technology Group to Wisconsin, state residents will have to do more than just forgo taxes from the Taiwanese electronics giant. They will have to pay cash — writing checks for up to $200 million a year.

The subsidies for the deal would amount to nearly 50 times the previous record paid by Wisconsin taxpayers to secure a manufacturing plant in the state. Instead of getting the previous state standard of 7 cents in tax credits for every $1 in qualifying payroll checks to workers, Foxconn would get 17 cents in credits — a change that will have to be approved in special session legislation Gov. Scott Walker released Friday.

And because Wisconsin already waives almost all taxes on manufacturing profits in the state, these incentives represent not a lost opportunity at collecting revenue but an obligation to pay cash to Foxconn out of the state treasury for up to 15 years. When including a $150 million sales tax break for buying construction material, the incentive package could total up to $3 billion, according to the bill that lawmakers could vote on as soon as Tuesday.
Curious what pro-business conservatives think about this deal, because obviously lefty Dakar thinks its nuts. And that's not counting the other exemptions and bonuses they get. Does this even count as fiscally responsible, if you're into that sort of thing?

(The good news is news just came out the legislature might not pass it)
     
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Aug 9, 2017, 11:27 PM
 
Seems like the state will be paying people to work for Foxconn which is utter madness.

Our glorious conservative idiot government made a deal with Honda to keep a car factory open in Sunderland post-Brexit which was so dreadful, they haven't dared tell us the details of it. The real irony being that Honda is part owned by Renault which in turn is part owned by the French government.
Conservatives aren't always as great at business as they like to claim they are. Its usually because they are doing favours for their old school chums but sometimes its just idiocy.
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subego
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Aug 10, 2017, 02:35 AM
 
Originally Posted by The Final Dakar View Post
Is it me or is this crazy pants? It's something like $200 million a year of corporate welfare.

http://www.jsonline.com/story/news/p...ars/519687001/


Curious what pro-business conservatives think about this deal, because obviously lefty Dakar thinks its nuts. And that's not counting the other exemptions and bonuses they get. Does this even count as fiscally responsible, if you're into that sort of thing?

(The good news is news just came out the legislature might not pass it)
Is "**** American labor, cheap Chinese products for everyone" a lefty position?

I mean, I agree with the idea, but I'm a heartless bastard. What's your excuse, comrade?
     
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Aug 10, 2017, 02:59 AM
 
Originally Posted by subego View Post
Is "**** American labor, cheap Chinese products for everyone" a lefty position?

I mean, I agree with the idea, but I'm a heartless bastard. What's your excuse, comrade?
What idea do you agree with?
I mean giving a company tax breaks only makes sense if they are a net positive for the state of Wisconsin.
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subego
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Aug 10, 2017, 03:23 AM
 
I agree with the idea of "**** American labor, cheap Chinese products for everyone".

Which I wouldn't call a lefty sentiment.
     
The Final Dakar  (op)
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Aug 10, 2017, 09:37 AM
 
Originally Posted by subego View Post
Is "**** American labor, cheap Chinese products for everyone" a lefty position?

I mean, I agree with the idea, but I'm a heartless bastard. What's your excuse, comrade?
Spend the three bill on the residents instead, if you're so hung-ho to burn cash. That way we know it will benefit Wisconsins
     
Laminar
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Aug 10, 2017, 09:39 AM
 
Originally Posted by OreoCookie View Post
I mean giving a company tax breaks only makes sense if they are a net positive for the state of Wisconsin.
How do we know this wouldn't be?
     
The Final Dakar  (op)
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Aug 10, 2017, 10:17 AM
 
Originally Posted by Laminar View Post
How do we know this wouldn't be?
To answer your question directly: https://www.cnbc.com/2017/08/09/wisc...-analysis.html

To answer your question indirectly: Do we have historical data showing how these deals are good?

I'll further cop to my bias when I say this reminds me stadium deals where localities fund privately profitable ownership groups even though the return doesn't justify it.
     
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Aug 10, 2017, 11:01 AM
 
Originally Posted by Laminar View Post
How do we know this wouldn't be?
For this to be a net gain, the tax revenue that stems from the jobs and the additional economic activity has to be greater than the tax revenue that has been waived. According to the article, Wisconsin pays $200 million to attract a factory that employs up to 13,000 people — now that is about $15k per employee. Seems doubtful they can break even.
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The Final Dakar  (op)
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Aug 10, 2017, 11:07 AM
 
That number doesn't include other tax incentives either.
     
Snow-i
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Aug 10, 2017, 12:12 PM
 
Originally Posted by OreoCookie View Post
For this to be a net gain, the tax revenue that stems from the jobs and the additional economic activity has to be greater than the tax revenue that has been waived. According to the article, Wisconsin pays $200 million to attract a factory that employs up to 13,000 people — now that is about $15k per employee. Seems doubtful they can break even.
Using your numbers, that's about 195 million.
     
OreoCookie
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Aug 10, 2017, 12:17 PM
 
I think you are confusing what the $200 million / 13,000 employees = about $15,000 per employee stands for, those are the subsidies per job that Wisconsin pays, not some gain.
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Snow-i
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Aug 10, 2017, 12:33 PM
 
Originally Posted by OreoCookie View Post
I think you are confusing what the $200 million / 13,000 employees = about $15,000 per employee stands for, those are the subsidies per job that Wisconsin pays, not some gain.
Ahh - sorry. 1 cup of coffee so far this morning and it's not enough


What do we expect the tax footprint to be for those 13k people?
The corporate tax?
Payroll?
Average reduction in welfare benefits for those 15k new jobs

We would need average salary to compute, and of course only include state tax numbers. I don't think it will amount to 15k per person.
     
The Final Dakar  (op)
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Aug 10, 2017, 01:33 PM
 
So do you think it counts as corporate welfare? Are you ok with taxing the residents of Wisconsin to pay for this?
     
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Aug 10, 2017, 01:46 PM
 
Businesses are all about "The Market" but so many of them actually operate on business models that explicitly require corporate welfare in order to be profitable. In the UK the whole market gets skewed this way, however it's usually wages. Companies employ staff on 14 hour contracts so that the workers can continue to receive state benefits, thus massively lowering their wages bill.

The minute "The Market" is threatened in a way that benefits workers all hell breaks loose. The Market is whatever The Market is.
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Aug 10, 2017, 02:56 PM
 
Originally Posted by The Final Dakar View Post
So do you think it counts as corporate welfare? Are you ok with taxing the residents of Wisconsin to pay for this?
1) Looks less like corporate welfare and more like a backroom deal that only benefits the few elites doing the negotiating.

2) No.
     
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Aug 10, 2017, 05:00 PM
 
Originally Posted by The Final Dakar View Post
Spend the three bill on the residents instead, if you're so hung-ho to burn cash. That way we know it will benefit Wisconsins
Do I look like a lefty?
     
The Final Dakar  (op)
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Aug 10, 2017, 05:05 PM
 
Originally Posted by subego View Post
Do I look like a lefty?
You wanted lefty sentiment, I gave it to you.

Alternatively, they could fund education and skills training if they want to focus on jobs.
     
subego
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Aug 10, 2017, 05:10 PM
 
Much more like it. You get a gold hammer and sickle for the day.
     
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Aug 10, 2017, 05:18 PM
 
Originally Posted by Snow-i View Post
Ahh - sorry. 1 cup of coffee so far this morning and it's not enough
No worries, I've done the same mistake over the years.
Originally Posted by Snow-i View Post
We would need average salary to compute, and of course only include state tax numbers. I don't think it will amount to 15k per person.
Honestly, I don't know what the tax revenue ordinarily would be, but since Wisconsin only gets a fraction of the taxes a worker pays, that would seem very unlikely. You are right that we should account for reduction in welfare expenses (where again I don't know how large Wisconsin's contribution would be, many welfare programs are federal), but overall it doesn't seem as if the numbers add up. But you perhaps have a better idea of US tax law, do you reckon it is a net plus for Wisconsin?
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Aug 10, 2017, 05:35 PM
 
Originally Posted by OreoCookie View Post
No worries, I've done the same mistake over the years.

Honestly, I don't know what the tax revenue ordinarily would be, but since Wisconsin only gets a fraction of the taxes a worker pays, that would seem very unlikely. You are right that we should account for reduction in welfare expenses (where again I don't know how large Wisconsin's contribution would be, many welfare programs are federal), but overall it doesn't seem as if the numbers add up. But you perhaps have a better idea of US tax law, do you reckon it is a net plus for Wisconsin?
Looks like at least on an individual level, it's a net minus. That being said, there are other economic process that will be produced that could tip the scale to a net-plus.

Increased travel to the region (which generates revenue for business and government)
Increased money being spent by Foxconn in the state of wisconsin for operating expenses.
Increased taxes for fuel, transport, etc
Increase in property values
Increase in the need for shipping companies to operate nearby to ship out the factory's output
The list goes on.

What the numbers look like for those? I have no clue and couldn't know where to begin to speculate.

I would assume that the deal ends up being a net-plus for Wisconsin, otherwise why would Wisconsin do it? Logic isn't always the prevailing factor in politics though, so quite simply I need more information to make a definitive conclusion, but at first glance and without that information it looks like a bum deal for taxpayers.
     
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Aug 10, 2017, 07:24 PM
 
@Snow-i
For politicians the incentives aren't always what is financially viable, but how their actions are perceived by the voting public. Trump's attempt to save ~700 jobs at Carrier (which turned out to be just a short stay) made sense for Trump, he was seen doing something to save American jobs, even if it is questionable whether this is a good use of his time. (Creating better conditions for all businesses could have a much larger impact while negotiating with individual companies is an approach that fundamentally does not scale).
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Aug 10, 2017, 08:25 PM
 
Overall it looks like a net economic positive for Wisconsin and it gives people jobs (which contributes to an overall improvement in regional well-being). I'm not seeing the big downside, here. I get the impression people hate because it was Trump's plan, first and foremost.
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The Final Dakar  (op)
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Aug 11, 2017, 12:16 AM
 
Originally Posted by Snow-i View Post
Looks like at least on an individual level, it's a net minus. That being said, there are other economic process that will be produced that could tip the scale to a net-plus.

Increased travel to the region (which generates revenue for business and government)
Increased money being spent by Foxconn in the state of wisconsin for operating expenses.
Increased taxes for fuel, transport, etc
Increase in property values
Increase in the need for shipping companies to operate nearby to ship out the factory's output
The list goes on.

What the numbers look like for those? I have no clue and couldn't know where to begin to speculate.

I would assume that the deal ends up being a net-plus for Wisconsin, otherwise why would Wisconsin do it? Logic isn't always the prevailing factor in politics though, so quite simply I need more information to make a definitive conclusion, but at first glance and without that information it looks like a bum deal for taxpayers.
Why not let the free market decide instead?
     
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Aug 11, 2017, 04:31 AM
 
Originally Posted by The Final Dakar View Post
Why not let the free market decide instead?
Because big corporations spend huge amounts of time and money ensuring that "The Market" is whatever they need/want it to be.
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Aug 11, 2017, 05:04 AM
 
Originally Posted by The Final Dakar View Post
Why not let the free market decide instead?
Isn't that exactly what Foxconn did?
I have plenty of more important things to do, if only I could bring myself to do them....
     
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Aug 11, 2017, 10:33 AM
 
Overall it looks like a net economic negative for Wisconsin and it gives jobs to lazy people who don't already work using the tax dollars of hard working people who already have jobs. I'm not seeing the big upside, here. I get the impression people love it because it was Trump's plan, first and foremost.
     
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Aug 11, 2017, 10:43 AM
 
Originally Posted by Laminar View Post
Overall it looks like a net economic negative for Wisconsin and it gives jobs to lazy people who don't already work using the tax dollars of hard working people who already have jobs. I'm not seeing the big upside, here. I get the impression people love it because it was Trump's plan, first and foremost.
While I understand this is mere mockery, the best examples of the art actually make sense (this one doesn't). Maybe you can go back and try again?
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Aug 11, 2017, 10:47 AM
 
     
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Aug 11, 2017, 01:55 PM
 
Originally Posted by The Final Dakar View Post
Why not let the free market decide instead?
Indeed!

Not to mention, with deals like these the free market is not at play. the government has picked winners and losers, which I oppose.
     
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Aug 11, 2017, 01:58 PM
 
Originally Posted by Laminar View Post
Overall it looks like a net economic negative for Wisconsin and it gives jobs to lazy people who don't already work using the tax dollars of hard working people who already have jobs.
I don't see how you can say anything about the workers themselves here. Other than biased supposition.

I'm not seeing the big upside, here. I get the impression people love it because it was Trump's plan, first and foremost.
The big upside is for the ruling class - the politicians and the stakeholders of the business (the line between them being blurred).

People love it because people are stupid. The same way people love the ACA.
     
The Final Dakar  (op)
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Aug 11, 2017, 02:18 PM
 
Originally Posted by Snow-i View Post
Indeed!

Not to mention, with deals like these the free market is not at play. the government has picked winners and losers, which I oppose.
Perhaps I'm misreading you but you see pretty lukewarm on this, even as you point out it's probably beneficial only for those at the top. I'm somewhat surprised I was the one to invoke the free market into this when you're the one who is much more into it.

Originally Posted by Snow-i View Post
People love it because people are stupid. The same way people love the ACA.
lol

Way to get that dig in there. People are so dumb for loving having healthcare or covering more people.
     
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Aug 11, 2017, 04:20 PM
 
Originally Posted by Snow-i View Post
I don't see how you can say anything about the workers themselves here. Other than biased supposition. The big upside is for the ruling class - the politicians and the stakeholders of the business (the line between them being blurred).
I was turning around Cap'n's post, showing how it's very easy to take a partisan position on anything when you do zero research and make a bunch of dumb assumptions.

People love it because people are stupid. The same way people love the ACA.
These stupid people?
     
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Aug 11, 2017, 05:14 PM
 
Originally Posted by Laminar View Post
I was turning around Cap'n's post, showing how it's very easy to take a partisan position on anything when you do zero research and make a bunch of dumb assumptions.
Speaking of "dumb assumptions"... it's no wonder you failed so spectacularly.
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Aug 11, 2017, 05:24 PM
 
This just in! Butt of joke doesn't find joke funny!
     
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Aug 11, 2017, 05:29 PM
 
Originally Posted by The Final Dakar View Post
Perhaps I'm misreading you but you see pretty lukewarm on this, even as you point out it's probably beneficial only for those at the top. I'm somewhat surprised I was the one to invoke the free market into this when you're the one who is much more into it.
I'm super skeptical of it - there's lots of red flags and it this deal is anti-free-market.

Glad I'm rubbing off on you though.
Way to get that dig in there. People are so dumb for loving having healthcare or covering more people.
I can't fault you for getting yours in either - I opened the door.

People are so dumb because that "having healthcare and covering more people" isn't sustainable or solvent, to the point that the exchanges are dropping like flies not even a decade later.

Sure people love the filet mignon, but you can't ignore that the tab that comes with it is part of the cost/benefit analysis.
     
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Aug 11, 2017, 05:30 PM
 
Originally Posted by Laminar View Post
Yes - those stupid people, and many, many more.
     
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Aug 11, 2017, 05:33 PM
 
Originally Posted by Snow-i View Post
Yes - those stupid people, and many, many more.
And just to clarify, you believe people that appreciate the ACA because it has improved the quality of their lives and the lives of their loved ones (in some cases saving lives), are stupid for appreciating the ACA?
     
The Final Dakar  (op)
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Aug 11, 2017, 08:40 PM
 
Originally Posted by Snow-i View Post
I'm super skeptical of it - there's lots of red flags and it this deal is anti-free-market.

Glad I'm rubbing off on you though.
Sorry, I'm just perturbed when you seem to be open minded about it "It could be a net positive" when my impression of you is you should dismiss it for being a burden on taxpayers, government interference, and beneficial to the elites.

Originally Posted by Snow-i View Post
Sure people love the filet mignon, but you can't ignore that the tab that comes with it is part of the cost/benefit analysis.
This is a preposterous comparison. (I'll take it to the ACA thread so as not to derail this further)
     
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Aug 12, 2017, 01:04 AM
 
The free market is only ever going to come into these deals in favour of the employer.

Foxconn can build their factory pretty much anywhere. OK, Hawaii and Alaska might have prohibitive shipping costs and other states might lack infrastructure or have prohibitive tax policies or lack the sunshine to use solar power or whatever, but ultimately they have plenty of choices. The states and their respective governors and politicians will have varying needs to provide jobs for their populations. If one guy with the authority thinks a few thousand jobs will get him re-elected, he's going to spend the taxpayers money to get those jobs because he can get away with it. Doesn't have to be a good deal, just has to make him look good. Exactly how you ended up with Trump.
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Aug 12, 2017, 01:58 AM
 
Originally Posted by Laminar View Post
This just in! Butt of joke doesn't find joke funny!
That's definitely a personal attack. Hmm..
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Aug 14, 2017, 12:32 AM
 
Originally Posted by The Final Dakar View Post
Sorry, I'm just perturbed when you seem to be open minded about it "It could be a net positive" when my impression of you is you should dismiss it for being a burden on taxpayers, government interference, and beneficial to the elites.
I don't understand what's hard about it.

Based on the very limited data we are looking at, it seems to be a bum deal worthy of opposition.

There is likely other data we have not considered that could paint a different picture, so my mind could change if that data were to present in a way that changes my mind.

Is this an irrational stance to take?

Claiming to understand the economic impact of the deal based on our napkin math strictly looking at the total cost and very roughly ball parking the income tax per person is irrational.

You are too quick to dismiss without fully understanding what you are dismissing.
This is a preposterous comparison. (I'll take it to the ACA thread so as not to derail this further)
Ok, well the ACA is still insolvent so *shrug*
     
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Aug 14, 2017, 11:33 AM
 
Originally Posted by Snow-i View Post
I don't understand what's hard about it.

Based on the very limited data we are looking at, it seems to be a bum deal worthy of opposition.

There is likely other data we have not considered that could paint a different picture, so my mind could change if that data were to present in a way that changes my mind.

Is this an irrational stance to take?

Claiming to understand the economic impact of the deal based on our napkin math strictly looking at the total cost and very roughly ball parking the income tax per person is irrational.

You are too quick to dismiss without fully understanding what you are dismissing.
What I'm saying is I'm under the impression this deal should be a non-starter based on your purported principles but instead you're entertaining it. Perhaps I misunderstand your principles.

Perhaps government can generate more revenue than it loses up front, but my impression is we've been on a slippery slope from impartial tax cuts to tax exemptions to now just giving companies money outright. And further down we go the more companies are able to squeeze from governments desperate to look good.
     
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Aug 14, 2017, 02:47 PM
 
Originally Posted by The Final Dakar View Post
What I'm saying is I'm under the impression this deal should be a non-starter based on your purported principles but instead you're entertaining it. Perhaps I misunderstand your principles.
As a purist absolutely. World economics are not so pure however, and the practical side of me weighs a bit more on my views than the strictly ideological.

If shooting down this and similar deals send the factory to China or another place abroad, the practical constructionalist in me would prefer to keep it here, even at some cost to my in-a-vacuum preferred way to do it.

Perhaps government can generate more revenue than it loses up front, but my impression is we've been on a slippery slope from impartial tax cuts to tax exemptions to now just giving companies money outright. And further down we go the more companies are able to squeeze from governments desperate to look good.
Absolutely agreed.
     
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Aug 14, 2017, 06:22 PM
 
Originally Posted by Snow-i View Post
As a purist absolutely. World economics are not so pure however, and the practical side of me weighs a bit more on my views than the strictly ideological.

If shooting down this and similar deals send the factory to China or another place abroad, the practical constructionalist in me would prefer to keep it here, even at some cost to my in-a-vacuum preferred way to do it.
Let me put it this way: I can be talked into taking protectionist actions. But I won't abide it on the state level and likely not targeted at specific companies. I also think it's probably impossible to agree on what industries to protect.

Further, this deal, from what I've read, doesn't even include a guarantee on how many jobs are created. It's how you know its a sham.



Originally Posted by Snow-i View Post
Absolutely agreed.
Thank you.
     
Chongo
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Aug 14, 2017, 07:19 PM
 
This ad has been on the cable channels for several years. Move your business to NY and no taxes for ten years.
45/47
     
Snow-i
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Aug 14, 2017, 08:24 PM
 
Originally Posted by The Final Dakar View Post
Let me put it this way: I can be talked into taking protectionist actions. But I won't abide it on the state level and likely not targeted at specific companies. I also think it's probably impossible to agree on what industries to protect.
This is an excellent point - it should be done at the federal level if it's done at all. States competing with each other to dole out taxpayer money is not a good situation. Companies competing with each other for these handouts is even worse. A free market of bribery isn't exactly what I have in mind when I say free market solutions .

Further, this deal, from what I've read, doesn't even include a guarantee on how many jobs are created. It's how you know its a sham.
Would you mind linking to your reference materials? I'm coming up short on finding details as well, and feel like I'm having trouble articulating as firm a position as I'd like to lacking those details.
     
Snow-i
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Aug 14, 2017, 08:30 PM
 
Dakar, scratch that last request. I found what I was looking for.

I've done my research. It's a shit deal for taxpayers and needs to die.
     
The Final Dakar  (op)
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Aug 15, 2017, 09:26 AM
 
Originally Posted by Chongo View Post
This ad has been on the cable channels for several years. Move your business to NY and no taxes for ten years.
Which is garbage policy
     
The Final Dakar  (op)
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Oct 18, 2017, 06:03 PM
 
The Amazon sweepstakes have begun
     
   
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