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While I will agree, that the $40 MIL of incentives that AMC got to move is a big number, most of these others are not really all that big, compared with what other governments in the USA, give as incentives to companies all across the country. As I previously stated, in comparison to the many ways that government throws away millions all the time in this country, this is chump change. (Solyndra, NASA, Global Warming research.)
Some of your previous statements however, do not agree with news articles posted on the internet. AMC was looking to move, as their lease in their existing building was about up. AMC also stated that their present facility was looking for a new facility, as the existing one did not meet their needs.
While I will agree, that the $40 MIL of incentives that AMC got to move is a big number, most of these others are not really all that big, compared with what other governments in the USA, give as incentives to companies all across the country. As I previously stated, in comparison to the many ways that government throws away millions all the time in this country, this is chump change. (Solyndra, NASA, Global Warming research.)
Some of your previous statements however, do not agree with news articles posted on the internet. AMC was looking to move, as their lease in their existing building was about up. AMC also stated that their present facility was looking for a new facility, as the existing one did not meet their needs.
AMC was looking to move yes, but they wanted to stay in kcmo. They were either going to build on the plaza or downtown and were not even considering Kansas because they were a long time urban core based company and that is where they wanted to be. Most of their employees actually live in MO and their CEO's actually live in central KCMO. It was not till Kansas came after them and offered so much cash that they simply could not turn it down. After they accepted the offer is when AMC began to find excuses as to why they went to Kansas to try to justify it.
Johnson County and Kansas prey on KCMO. They can't get jobs any other way so they prey on kcmo. Their PEAK incentives have triggered like 90 relocations in the past 3 years and all but one or two (and those were small) were simply poached from across state line within the same metro.
And luzianne, I have gone on record blasting a couple of retaliation moves as well. The applebees move back to KCMO from Kansas (they were originally in kcmo) for example. The only reason KCMO and MO did that was to try to send a message that KC and Missouri will do the same thing. The mayor of KCMO even came out and said that this was a only to try to get Kansas to stop and once again called for a truce because these moves benefit no one. Of course it fell on deaf ears and now Missouri is saying that they will spend $1.50 for every dollar Kansas offers a KCMO company. That is just terrible that Missouri is forced to do that. May as well just not have a state income tax and make all the office buildings free rent too.
How is this helping the metro area of KC or the states of Missouri or Kansas?
While KCMO is trying to compete with Denver and Dallas to bring new jobs to the metro Kansas is doing everything in their power to simply take companies from KCMO. I guess the main reason is nobody outside of KC has an iota of interest in moving to Kansas, no matter how much cash they hand out, so once KCMO gets them into the metro, then Kansas has a chance. Otherwise Kansas can barely land a call center every few years.
Quote:
Kansas City Mayor Sly James, who also has decried the use of incentives for cross-state moves, said that "Mutually assured destruction only works if both sides are armed"
Obviously this bothers very few people, especially people in Kansas and that's fine, whatever. I think KC and the states of MO and KS would be so much better off if they worked together as one. Seems like common sense to me. But nothing about how the KC area functions seems all that logical anymore.
And luzianne, I have gone on record blasting a couple of retaliation moves as well. The applebees move back to KCMO from Kansas (they were originally in kcmo) for example. The only reason KCMO and MO did that was to try to send a message that KC and Missouri will do the same thing. The mayor of KCMO even came out and said that this was a only to try to get Kansas to stop and once again called for a truce because these moves benefit no one. Of course it fell on deaf ears and now Missouri is saying that they will spend $1.50 for every dollar Kansas offers a KCMO company. That is just terrible that Missouri is forced to do that. May as well just not have a state income tax and make all the office buildings free rent too.
But JoCo isn't attracting new residents by relocating these businesses, because they are businesses poached from 5 to 10 miles away. All of the employees who's number one priority is the sewing-circle reputation of their public schools already live in JoCo or in Missouri-side suburbs. What JoCo is doing is taxing the citizens of the entire state of Kansas and redistributing their wealth into the coffers of a few corporations, who pull up stakes the day incentives run out, or demand more corporate entitlements, and the net result is a state government that is broke and can no longer afford basic services for its residents, because the money they have payed to maintain their society has been dolled out to a few CEO's and shareholders.
It's not a good model for growth or governance. Its a totally abnegation of the social contract, a perversion of so-called "free market" capitalism, a deeply immoral wealth redistribution scheme and a grave injustice to its citizens.
What I have not seen documented in this forum, is how this money given to these companies is a net loss for the taxpayers of Kansas. All you know is a number attached to the incentives. You don't know how much state and local tax is paid by any of these companies. You also don't know if the increase in local population population (assumed but certain over time) is figured. There is also the certainty that other local businesses will benefit, and more might even move into the area. So I'm sure the number crunchers at the state and local level have figured much of this.
Some of you critics seem to jump to the assumption that the evil government of Kansas is conspiring with the evil corporations to give them big money, and the tax payers of Kansas and KCMO is the helpless victim. Let me give you some advice from 59 years of life in this world. Evil is everywhere. If you spend your time pointing out evil, (in your eyes) all the time, you're going to lead a very unhappy life. There's evil govt. employees, evil Democrats, evil Republicans, evil in Unions and evil in corporations. The whole worlds fighting over the almighty dollar. There's better ways to spend your life.
What I have not seen documented in this forum, is how this money given to these companies is a net loss for the taxpayers of Kansas. All you know is a number attached to the incentives. You don't know how much state and local tax is paid by any of these companies. You also don't know if the increase in local population population (assumed but certain over time) is figured. There is also the certainty that other local businesses will benefit, and more might even move into the area. So I'm sure the number crunchers at the state and local level have figured much of this.
Some of you critics seem to jump to the assumption that the evil government of Kansas is conspiring with the evil corporations to give them big money, and the tax payers of Kansas and KCMO is the helpless victim. Let me give you some advice from 59 years of life in this world. Evil is everywhere. If you spend your time pointing out evil, (in your eyes) all the time, you're going to lead a very unhappy life. There's evil govt. employees, evil Democrats, evil Republicans, evil in Unions and evil in corporations. The whole worlds fighting over the almighty dollar. There's better ways to spend your life.
I think there's a lot of truth here. Kansas wouldn't be giving these mass incentives if it weren't an investment and net profit to the state. But it takes away from Missouri's taxbase and from school districts that need that income more. But I think the point is that it's selfish and doesn't improve the KC area as a whole or provide an actual increase of jobs to the area - it just moves them, including some of their down-the-food-chain/spin-off service-oriented jobs, to an area that doesn't need them as much and isn't accessible by public transit for people who need those jobs the most. It all seems unethical and even immoral. We have a big problem in this country with socio-economic segregation and separation of the haves and havenots and stuff like this just adds to it. Plus, as has been mentioned, it all seems unfair that lured companies are getting all these incentives when established and thus loyal ones are not. I'm not exactly sure how PEAK works, but I'm not sure it's fair that the company get to keep 95% of an employees state income tax withholding. Reading info from the Kansas website, I'm not sure if only new employees/added jobs are those in which the company gets to keep the state income tax withholdings or if applies to all other existing employees as well. If it's the latter, that seems insane and unfair to employees.
Reading info from the Kansas website, I'm not sure if only new employees/added jobs are those in which the company gets to keep the state income tax withholdings or if applies to all other existing employees as well. If it's the latter, that seems insane and unfair to employees.
It's the latter. It's not based on future employees.
Lets say Company X based in kcmo has 500 employees.
Kansas offers Company X 50 million in up front cash incentives to move from KCMO to Leawood six miles down the road.
Company X has 30% of their employees living in Kansas, the rest Missouri.
Those 30% pay 100% of their taxes to the state of Kansas which helps fund the schools, parks, roads, police etc. The other 70% also pay 100% taxes to Missouri which also helps funs schools, roads etc.
Fast forward a year:
Company X is now based in Kansas in a new building built with tax money that used to go to schools, roads etc.
The 30% of the Kansas employees that used to pay 100% to Kansas now pay 5%. The rest of their tax money now goes to their own Company X. The The MO side employees still pay taxes to MO because KS can't just divert MO income taxes to private companies. Thank god.
Over a period of 5 years, you might see an increase on KS side employees from 30%-35% via natural turnover and relocation. Nobody that currently lives in MO is going to move just because their job moves six miles south.
30% of 500 is 150.
Let's say they make 50grand a year and with a KS income tax of 6.45%, that would be $3225.
95% of 3225 is 3064
5% of 3225 is 161
150 employees times 3225 is $483,750. That's how much the state of KS was getting in income tax before the move for schools roads etc.
After the move the state of KS will get $24,150 a year for schools, roads etc.
For a period of ten years that's $241,000 vs near 5 million the state was getting from employee income taxes when company X was based in KCMO.
Now let's see how long it's going to take KS to recoup their initial 50 million investment based on that 5% they get to keep. Keep in mind that in ten years, Company X will probably move again or could be out of business completely. Very few of these moves end up long term (over ten years), but lets say they do stay in Leawood and stay in business or are not bought out.
It will take 207 years for Kansas to recoup the fifty million in incentives via employee income taxes at 5%.
It's highly unlikely that this company won't be back for more incentives in ten years, but lets say they stay put, have 40% KS side employees and after the 10th year, they pay 100% taxes to KS.
It would take an additional 15-20 years to pay off the 50 million plus interest. So in 25-30 years, Kansas will begin to break even on this deal. Will company X even exist in the year 2042???
Even if you add in corporate taxes, the figures don't add up and and most of these companies relocating are not exactly on stable ground. AMC for example is constantly being discussed for acquisition and they are not all that profitable. So any corporate income tax (if they even pay any) will hardly close the gap.
So now you can see why Missouri does not play the game. Chances are, Missouri would only make things worse on itself if they fronted Company X 50 million to stay in Missouri. Or even 10 million. They would be better off letting the companies move to KS and just keeping the tax money generated from the employees that commute. MO loses the prestige of the company being based in MO ,but not much else. So that's why Kansas is winning this. From a Jeff City standpoint, it make zero sense to play the game.
Who it's hurting is KCMO. This is devastating to KCMO. They lose the etax of probably 60% of the employees of Company X because all the suburban employees that worked there from both MO and KS will no longer contribute to the etax. All the sales taxes those 500 employees generate while working in the city via lunches, shopping etc. and most of all, the city is left with another empty office building and sidewalks around it which takes away the city's vibrancy and ability to compete with other major cities.
So the end result is the CITY of Kansas City,MO (with a 1 billion dollar annual budget) is competing with the STATE of Kansas (14 billion dollar budget) and the only thing the city can do is persuade Company X to stay in the city by giving back the rather paltry Etax revenue. The etax is nothing compared to state income tax yet is so much more important to the city. So the city does what it really can't afford to do and offers a tiny 5 million to Company X to stay in the city. It's not even up front. It's just a reimbursement of the etaxes paid by Company X employees every year. So just a few hundred grand. Hardly compares to a check for 50 million.
So Company X moves and instead of Company X employees paying taxes to fund schools and roads, they pay taxes to fund the building they work in and the bonuses of their CEO's for getting such a sweetheart deal for their stockholders. This is how a company that has been in KCMO for decades and would never consider moving to KS .... moves to KS.
One more bridge burnt between KCMO and Kansas and the resentment continues to build.
Meanwhile Kansas is out a net loss of like 30 million that used to fund schools and roads over the next ten years and KCMO will struggle as well with a net loss in revenue.
But they can now go to the press and say they are "winning" and doing a great job economically by landing new Company X and guess what?
Everybody buys it...
(because there is a new office building on Nall, KS has a new HQ and, well...KCMO just sucks and needs to learn to compete)
Even if Kansas was bringing a brand new company and 500 new employees to the area, you would have to really think about the justification of such huge incentives because it would take many years to recoup such an investment and you are at the mercy of said company staying for enough years to get that return, but to snag a company from across state line and change nothing but a few turns in peoples commutes? That's is not only asinine but simply irresponsible.
So again, why do Kansas tax payers put up with this?
That's an excellent illustration, KCMO - thanks. I'm glad to see that the employees who live in MO are still paying their full state income tax. I didn't think of it that way.
I think Kansans put up with it because it's complex and most won't ever fully understand what's going on or even take the time to if they can. At the surface, it seems like KS is winning, and with the KS/MO rivalry mentality, that only helps to keep the reality of it all from being acknowledged. I think the only way it's going to change is if people who have a good understanding of it, people like you, take notice and make it better known to the general public and/or when they have enough support and enough KS politicians say enough is enough and start pushing harder toward reform. If it's as bad as you allude, perhaps an impending disaster will bring it all to light. I just wonder and have no way of really knowing if this is people with political connections and corrupt politicians playing the taxpayers for fools or if the KS Republicans sincerely believe pandering to businesses in these extremes will somehow put the state on the map for a massive inflow of investment.
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