So Samsung gets $220,000,000+ in property tax rebates (Austin, Howe: health insurance, crime)
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Government shouldn't create jobs. It should provide services like fire protection, police protection, and national defense. Building roads is ok too. I suppose I'll let it run the justice system. It can also jump in where there are TRUE market failures, like in the case of environmental protection. But otherwise, it needs to let markets decides what jobs should be located where.
Of course the problem is that because other jurisdictions give tax breaks, if a city doesn't it is at a disadvantage. But that's all short term. Think about how many perks GM (eminent domain for GM plants and lots of tax breaks) got from the cities in Michigan and look where Michigan is today.
A few years back, Austin was going to give Borders a sweetheart deal to develop a big store downtown that would have been across the street from Book People. Local residents were up in arms. I am not sure how it was stopped but it was (We were just moving away at the time). So Borders didn't build there. Had it done so it may have been able to offer slightly lower prices than book people because Book People wouldn't have enjoyed the same lower tax rate. Book People could have been put out of business because of what would have amounted to an unfair competitive advantage provided by the city. Thank goodness this didn't happen because we wouldn't have book people (a wonderful locally owned business) and we likely wouldn't have a Borders there any longer either because the company is now headed for bankruptcy. Sure Borders would have created a few jobs when it opened but probably not enough to offset the jobs lost at book people. Not to mention corporate operations for Borders are out state so in addition to the book people employees losing their jobs, you'd also have book people's CPA, attorney, and other business support personnel, probably all local, lose that work.
See, government just shouldn't get involved in "creating" jobs.
In many ways I agree with this. I also don't think governments should have tax breaks for dependents, or mortgage interest, or charitable deductions. Those are all behavior modification programs that have nothing to do with delivery of services.
I think communities can't help but compete for jobs. They use what they can.
In many ways I agree with this. I also don't think governments should have tax breaks for dependents, or mortgage interest, or charitable deductions. Those are all behavior modification programs that have nothing to do with delivery of services.
I think communities can't help but compete for jobs. They use what they can.
Is this particular incentive a "behavior modification" though? I completely agree that offering personal tax breaks for dependants, or using "sin tax" on products is the government trying to regulate private lifes and morals.
However.
We are talking about the City of Austin attracting buisnesses to this city, and not some other city. They are creating a highly lucrative revenue stream where otherwise there woudln't be one. And that in turn creates an infrastructure that allows people to live their lives. Just like building roads and providing law enforcement provides infrastructure that helps people live their lives.
Couldn't one argue that this is the purpose of government? How is attracting buisnesses any different than providing school districts?
In many ways I agree with this. I also don't think governments should have tax breaks for dependents, or mortgage interest, or charitable deductions. Those are all behavior modification programs that have nothing to do with delivery of services.
I think communities can't help but compete for jobs. They use what they can.
Well, you raise some good points. Some I agree with, some I don't. But what do you think of the original topic? Samsung is not competing with any locally owned buisness, so the Borders example doesn't really apply here. And Samsung developed land that otherwise may never have been developed, thereby not just creating jobs for Samsung employees. But myriads of jobs from contstruction crews to cleanign services, etc etc.
If one of the big arguments about taxes is that it hurts buisnesses, isn't giving tax breaks to buisnesses a good thing? Not that I agree with giving exemptions at all. I am just interested in what you are advocating. I understand your philisophical point of view towards exemptions, but I don't see how it works when it moves from theory to practice.
Is Samsung not competing with Freescale, whose headquarters is Austin TX? Is Samsung a competitor of Silicon labs, also an Austin company? And yes, give all businesses equal tax breaks.
Is Samsung not competing with Freescale, whose headquarters is Austin TX? Is Samsung a competitor of Silicon labs, also an Austin company? .
Well, no. They are creating parts, at least that is what I got from the article. In your example with Borders you mentioned that Borders was competing with local buisnesses. That is true. They sale books, and can sale them cheaper than a mom and pop book store, in part because of tax incentives. But in that example Borders is selling an item to a small local population. Samsung isn't. They are creating parts and items that get shipped around the country. Their location doesn't matter, b/c regardless of location, their customers remain the same. That is not the same situation as the example you give. Samsung can't drive local buisnesses out of work because they are not competing for a local customer base.
To give an example, if Amazon.com opened a warehouse in Austin, they would not be competing with Walmart. Because although they sale similar things, people drive to Walmart to shop, they do not drive to the Amazon warehouse to get items. They order it online. So on a national level the two retailers are competing. But on a local level, it's apples and oranges. The Amazon warehouse does not have a local shop that offers items directly to the public. Neither does Samsung. And even if Samsung does have stores here and there, we are not talking about Samsung stores, we are talking about a factory.
Quote:
Originally Posted by Jennibc
And yes, give all businesses equal tax breaks.
So it's not exactly tax breaks you have a problem with? It's when they are applied to some buisnesses, and not others? It's not the tax break per se, it's the way they are doled out?
Last edited by JayBrown80; 06-12-2010 at 09:56 PM..
Samsung Electronics Co. unveiled plans today for a $3.6 billion expansion project to its Fab 2 semiconductor manufacturing plant in Northeast Austin.
The project will provide temporary construction jobs for nearly 3,000 workers and will add about 500 permanent employees to Samsung's Austin operation by late next year. The company presently employs about 1,000 people in Austin in its only chip manufacturing operation outside South Korea.
Work is expected to begin within days.
Let's see, $3,600,000,000-$220,000,000=$3,380,000,000.
Okay, I may have left off zeros but my Excel spreadsheet tells me that in exchange for a measley $220 Million dollars, Austin will receive $3.38 billion in exchange.
I will concede that a fair amount of that money will go out of the area for building materials manufactured elsewhere but I seriously doubt the good citizens of Austin will get the short end of the stick in exchange for their tax breaks.
Finally, all you have to do is look at the rest of the country to see that the business friendly policies of both the State and Local Governments in this wonderful state have saved our bacon.
I for one, cannot see any scandal or outrage here.
3500 people will find work as a result of Austin's prudent investment. That's 3000 temp jobs and 500 well paying permanent jobs. WOW!!!!!!
How can that possibly be a bad thing? Seriously, HOW CAN THAT BE A BAD THING?
Samsung Electronics Co. unveiled plans today for a $3.6 billion expansion project to its Fab 2 semiconductor manufacturing plant in Northeast Austin.
The project will provide temporary construction jobs for nearly 3,000 workers and will add about 500 permanent employees to Samsung's Austin operation by late next year. The company presently employs about 1,000 people in Austin in its only chip manufacturing operation outside South Korea.
Work is expected to begin within days.
Let's see, $3,600,000,000-$220,000,000=$3,380,000,000.
Okay, I may have left off zeros but my Excel spreadsheet tells me that in exchange for a measley $220 Million dollars, Austin will receive $3.38 billion in exchange.
I will concede that a fair amount of that money will go out of the area for building materials manufactured elsewhere but I seriously doubt the good citizens of Austin will get the short end of the stick in exchange for their tax breaks.
Finally, all you have to do is look at the rest of the country to see that the business friendly policies of both the State and Local Governments in this wonderful state have saved our bacon.
I for one, cannot see any scandal or outrage here.
3500 people will find work as a result of Austin's prudent investment. That's 3000 temp jobs and 500 well paying permanent jobs. WOW!!!!!!
How can that possibly be a bad thing? Seriously, HOW CAN THAT BE A BAD THING?
The problem with this mentality is it is a race to the bottom. Using tax breaks to attract companies is a short term fix. It is exactly the same as companies using coupons to attract customers. Customers will not have any loyalty and will just chase the cheapest coupon. NY state just took sematech by offering more incentives. We lost the movie industry deal because we didnt offer the tax incentives they wanted. The only way to win this game is to make the city uniquely attractive, not through tax incentives but by attracting the type of workers that these companies need. Inexpensive labor is one of the biggest factors as are taxes.
Even though Im against the train in general, it is an example of something that will attract the creative class to austin by creating the lifestyle that they want. Other examples are creating a lot of green spaces for people that love the outdoors, growing our live music capacity by being friendly to live music venues etc.
The problem with this mentality is it is a race to the bottom. Using tax breaks to attract companies is a short term fix. .
I disagree. Samsung invested over 3 billion dollars in facilites and equipment in Austin. That's one hell of a big "coupon". I don't see a situation in the future that would make it cost effective for them to abandon Austin and move facilities. Even if another city attempted to lure Samsung away from Austin, and Samsung having no loyalties (according to your example) were willing to do that, that city would have to offer a pretty significant incentive to get them to abandon 3 billion in investments.
Some of the posts against tax incentives keep on speaking on a philisophical level about this issue. But none of the examples provided actually are comprable to the situation raised by the OP. Samsung is not competing with local buisnesses, it is not taking money from Austinites, and it is not a fly by night operation that will be gone in three years if the Austin City Council doesn't continue to "bribe" them to stay in Austin.
You can be philisophically against tax incentives, but I would like to know what is "bad" about this situation. Every angle I view it from seems like a big win for Austin. There's philosophy, and then there's reality. The reality of this seems like a really good thing. And the only thing I have heard in argument against it is either non comparable analogies, or a philisophical argument on why ALL tax incentives are bad. And isn't calling ALL tax incentives bad a generalization? And what do we often say about generalizations?
I agree. It is a short term fix. I've seen it. There is a very large population that is desperate and they go where the work is. I've heard the term "displaced workers". They're about to lose everything. They take the job and don't complain because the mantra of the workplace is, "well, we can always ship this job overseas at any given moment." The company assures the workers they will stay...and ultimately they do not.
It's a crime to want a living wage any longer. Then, when they do ship the job overseas it's with the gossip that the "American worker is just lazy." (more propaganda that many people believe)
Big companies will offer lower wages because they can. They get big tax breaks because they can. It's no more than a bribe.
It's a short term fix and they'll say, "buh, bye" when they don't get their tax breaks any longer. The people that took the jobs will then be back on the roller coaster. There is no job security, no way to keep the kids in the same school, no way to put down roots any longer for a very, very large population of people.
There is also a very large population that wants their cake and eat it too...the "cheap labor" gang. They scream, "but hey look at all the money we save." There is no thought to the large group of people that barely survive on what they want to pay them. (modern day slaves) THEN, when that family has to get food stamps to supplement the slave wages the same group of people cry, "moochers". Of course there can be no discussion of raising their wage because it turns into a hate fest of the "union". "It's the unions fault" for the collapse of the country. More propaganda that the union worker is just another moocher. All part of the grander scheme to lower wages. When did we start thinking laborers should not make a decent wage when it is the laborers that most often put their lives on the line every single day in environments most of us would never want to be?
Yes, I will agree there are bad eggs everywhere but it is NOT the majority. The majority of workers in this country are honest, hard-working folk that simply want to live a life with a home, kids, health insurance and a little free time to go watch the kids play football.
I suppose it could be worse. The big company could be coming here while the gettin is good and then leave a complete environmental disaster behind when they go. So, I suppose we should count our blessings.
Didn't Samsung eliminate 500 jobs last year????
I will watch and see what Samsung does in the future...the "proof will be in the puddin."
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