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requires similar infrastructure as semiconductor manufacturing ... solar companies routinely shop for sites in places such as Albany and Albuquerque — as well as Austin.
They are locating in these places so that they can draw from a pool of labor that
is already used to the kind of job duties that happen in semiconductor factories.
I'd be happy to see them locate here and build a factory, but any capitalization
of the company from the state makes me unhappy.
Quote:
Originally Posted by yukon
The company doesn't sound like a shot in the dark, on paper only start up to me - also from one of the articles:
But then, maybe I'm missing something ...
I think the issue is that if they are so well established and capitalized,
why do they need so much government assistance to get a factory going?
Why is the state of NM paying something like $200,000 per job to get them here?
In light of the failure of such payments to get/keep jobs at Tesla Motor and
Eclipse Aviation, does the state continue to make these payments?
The company is based in Austin. Why don't they just build a factory there?
Later on, they can branch out like Intel did over decades.
Answer: They are "shopping" for government aid. They will start a factory
in the place that gives them the most money.
From what I read, if the factory is or is not a success isn't really a big issue
with the venture capitalists. Once they have sucked out as much money as
they can, they'll move on to the next big thing.
I might be wrong, but since there is no one actually putting up their own
money for this as far as I can tell, the chances that I'm wrong are low.
In light of the failure of such payments to get/keep jobs at Tesla Motor and Eclipse Aviation, does the state continue to make these payments?
From what I read, if the factory is or is not a success isn't really a big issue
with the venture capitalists. Once they have sucked out as much money as
they can, they'll move on to the next big thing.
To be fair in the case of Eclipse, I believe they intended to remain in Albuq. Their business plan just didn't work out, and in the end they had to bail. Moved the operation to Russia, of all places.
A reasonable package of tax incentives to come to Albuq is not a bad idea, in terms of luring businesses. The key word being reasonable. Remember that Microsoft wanted to remain in NM, but moved to Seattle. If the state and the banks had been nicer to them, we'd all be drinking Albuquerque's Best in the high-tech & coffee capital of the USA, population 2.5 million.
... Eclipse, ... they intended to remain ... Russia ...
I still think Eclipse is a GREAT example of why the state shouldn't gamble with taxpayer money.
Quote:
Originally Posted by Tim Rankin
A reasonable package of tax incentives to come to Albuq is not a bad idea, ...
The problem is that each business situation is unique and the people making the decision to offer up the tax incentive plan are totally unqualified to make that decision. People investing their own money in a business think of a lot more ways that a business plan can fail. Polititions are only thinking of the press conference announcing the potential big hiring announcement.
I'm going to go with it's a bad idea. Every time.
Quote:
Originally Posted by Tim Rankin
Microsoft wanted to remain ... If the state ... had been nicer to them, ...
This is pretty much the same thing as "If I had just bet on horse Software-Opportunity instead of Airplane-Opportunity I'd be rolling in the dough now."
Better yet, let's bet on ALL the horses to make sure we pick the winner.
I continue to ask the question; what's wrong with just creating the best business climate possible in the state and either let them come/grow/start here --- or not?
If a business requires a bribe, let them rip off some other taxpayers in another state/town.
Their business plan just didn't work out, and in the end they had to bail. Moved the operation to Russia, of all places.
Any data to back up that to-Russia claim? My understanding is that they're moving the operation to liquidation.
Quote:
Originally Posted by mortimer
I still think Eclipse is a GREAT example of why the state shouldn't gamble with taxpayer money.
They gamble whenever they build a road to where a business might be someday, or put in a rail system that may or may not pay for itself in X years. Offering tax abatements (remember, lots of states don't even assess that kind of taxes) is a cheap way to ensure that >$15+/hr jobs show up instead of <$10/hr jobs.
Further, the state has money to invest. Public employees have money set aside for retirement. Buying T-bills with a pathetic rate of return or sitting on the cash is not a good way to invest, IMO. Over the past 100 years, company stocks have outperformed every investment, and in-state companies are no different (except an investment in in-state further adds to the tax rolls).
What would you have the state do with that money?
Quote:
Originally Posted by mortimer
the people making the decision to offer up the tax incentive plan are totally unqualified to make that decision.
What do you think makes one qualified? It's a pretty blanket incentive, available to any company that passes objective criteria.
Note that the Russian State Bank is financing the project, for a share of the enterprise. I don't know if the location of the Russian plant has been finalized yet.
They gamble whenever they build a road to where a business might be someday, ...
They do that? Roads tend to be built from a place to a place.
Quote:
Originally Posted by Zoidberg
... or put in a rail system that may or may not pay for itself in X years.
There's a rail system that pays for itself?
Building infrastructure is generally considered an actual job of the government. It can be and is, sometimes, farmed out, but generally, not.
They're rebuilding/paving I-40, San Mateo and such things. This is because people have decided that is what they want. It's never going to pay for itself. It *is* making business conditions and life more desireable here and enticing people and businesses to move here.
Quote:
Originally Posted by Zoidberg
Offering tax abatements ... is a cheap way to ensure that >$15+/hr jobs show up instead of <$10/hr jobs.
You mean those $15+/hr jobs at Eclipse? At Tesla? Oh goody.
Quote:
Originally Posted by Zoidberg
Further, the state has money to invest. Public employees have money set aside for retirement.
Giving tax abatements is not making an investment. It's giving taxpayers' money away. There's no return to the retirement fund whether the business stays or goes or is successful or not.
Quote:
Originally Posted by Zoidberg
Buying T-bills with a pathetic rate of return or sitting on the cash is not a good way to invest, IMO. ... What would you have the state do with that money?
No. It's a great way to invest retirement money. So what if you consider the ROI pathetic? At least you know it's there. Chasing better ROI via "high yield" investments is what leaves so many private and government pension funds severely underfunded today.
Governments/companies that put their money in safe ( and boring/pathetic ) investments are the one's that can afford to keep making payments to pensioners.
People think that if you can't make 20% all the time then there is no point in investing. You might as well spend it and enjoy it now. The point is that people who aggressively save are better off than those that don't - even if they make "crappy" investments like buying CD's. They're the people who can pay their mortgages month after month even after they get laid off.
Quote:
Originally Posted by Zoidberg
... Over the past 100 years, company stocks have outperformed every investment ...
I know all about that. That is why a portion of my investment funds are boring things that I know will be there later and pay "pathetic" returns and a larger portion is in equities that under my active management perform much better.
I handle my mother's funds also, but have a much larger portion of "pathetic" stuff in there. Like a pension fund manager, I have a fiduciary responsibility to make sure the money is there and cannot afford to take as many risks.
Quote:
Originally Posted by Zoidberg
What do you think makes one qualified?
Having good knowlege of building a business, running a business, and/or venture capital would be a good start. In general, people good at that don't go into government.
People that know the difference between making an investment that provides a return to the entity making the investment and throwing money "out there" hoping it comes back in some way, but calling it an "investment."
I support some tax breaks to attract new business, but I'm not a big fan of bringing in tons of manufacturing plants. It's been my experience that many of these leave for greener pastures once the tax incentives are over and the regular business taxing begins.
A good article on the original topic Austin's Solar Array Ventures plans to build $210 million solar panel plant -- in New Mexico (http://www.statesman.com/business/content/business/stories/other/04/11/0411solar.html - broken link)
Even if the state does everything perfect and everyone of it's ventures turns a profit and increases the standard of living for all, it still takes my money by force.
They do that? Roads tend to be built from a place to a place.
If that was the case, please explain the existence of roads in Rio Rancho. Or does "Tract 29, Lot 7, Unit 77B" count as a place?
Quote:
They're rebuilding/paving I-40, San Mateo and such things. This is because people have decided that is what they want. It's never going to pay for itself. It *is* making business conditions and life more desireable here and enticing people and businesses to move here.
I think "people" consider that paying for itself. If "people" decide.. wait a minute.. who is "people" again?
Quote:
You mean those $15+/hr jobs at Eclipse? At Tesla? Oh goody.
Now we're bashing jobs? Also, I think you need a better example than Tesla. The state didn't end up spending much of anything on them after they ended up settling on Kahl-ee-forn-ee-a.
Quote:
Giving tax abatements is not making an investment. It's giving taxpayers' money away. There's no return to the retirement fund whether the business stays or goes or is successful or not.
Incorrect. Aside from multiplier effects, the abatements are never long term (well, unless you're intel, and have that much weight to throw around, I guess.. but I think that's only county/city taxes they manage to avoid). Since most of these incentives are job- and pay-based, I suggest a simple binary analysis.
Choice A: No incentives. Employee A doesn't find a job and draws $X from the government. Net effect to the government: -$X.
Choice B: Incentives. Employee A finds a job and draws $3X from the company. Government forgoes <$X in avoided corporate taxes for first year. Employee A pays income tax, GRT, property tax, etc., generating an additional $X through multiplier effects. Net effect to the government: >$0.
There is no choice C. Company comes with incentives, or goes elsewhere.
This is a false choice when unemployment is low, but it's not low now.
Giving taxpayers' money away implies a net negative to the taxpayers. This is more like giving taxpayers' money back.
Quote:
No. It's a great way to invest retirement money. So what if you consider the ROI pathetic? At least you know it's there. Chasing better ROI via "high yield" investments is what leaves so many private and government pension funds severely underfunded today....Like a pension fund manager, I have a fiduciary responsibility to make sure the money is there and cannot afford to take as many risks.
I sense a chasm too large to cross here. I do think it is worth pointing out that if you look at the rate of interest even on a decent CD, and the rate of inflation, it's a net negative in terms of wealth. How is destroying wealth in a responsive government's interest?
Quote:
Having good knowlege of building a business, running a business, and/or venture capital would be a good start. In general, people good at that don't go into government.
mortimer, if I didn't know better, I'd say you don't know what you're talking about.
I've spent hours upon hours talking with many, many VC's over the past year, including, yes, some on the payroll of state government-controlled entities. The latter category doesn't get their position by being a politician's brother-in-law who needs a job. They've worked at companies, and they've controlled large blocks of funds.
The only thing that separates them from a completely private entity is the name of their employer and a degree of loyalty to a given geographical area.
I get the impression that we're straying from the main thread topic. Perhaps a "tax abatement and government incentives" thread is in order.
"Before you criticize someone, you should walk a mile in their shoes. That way when you criticize them, you are a mile away from them and you have their shoes."
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Also, I think you need a better example than Tesla. The state didn't end up spending much of anything on them after they ended up settling on Kahl-ee-forn-ee-a.
