Amazon: The Thread | 5,000 Jobs | 1M SQFT in Nashville Yards

[SoundScan]

2 hours ago, nashville_bound said:

Business is much more mobile than in the past generations and the unwise suggestion of banning incentives will just force more companies to consider more international moves. Plus, many incentives are for international companies to open offices or manufacturing facilities in the states. 

Also, I think you are making a false equivalency.... is Genesco growing? Creating hundreds of news jobs? If so, they would be fools Not to approach Metro/TN and negotiate an incentive deal to keep those jobs local a' la Bridgestone.  As for the 'mom and pop' analogy, I would offer the argument the double taxation hoisted on owners of Corporate stock is an unfair burden which non-incorporated entities do not suffer. They key is are you creating large scale jobs HERE, not nationally and not overseas. If you are, then incentives can be a great deal for the city and corporation. 

It's quite surprising to see you defending this practice as more than an unfortunate yet necessary evil. It is by definition corporate welfare. It is a slippery slope that may eventually become a cliff. The fact is that these jobs would be created somewhere no matter what, so the net effect is a burden to taxpayers to the benefit of a non-public, for-profit entity. You keep increasing the bounds of your argument (international, galactic, the universe) to support what is essentially the extortion of you, the taxpayer, to the benefit of shareholders.

[Guest]

Actually, quite simply....did the corporation receive more in incentive value (infrastructure, property tax  tax abatement, $$ per worker) than additional tax generation (property tax appreciation in area of location, sales tax increase workers increase in economic activity). And there is the additional economic activity generated by business who colocate or open due to the corporation receiving the incentive. Additionally, the tax abatements are normally for a period like 10 to 20 years so there is measurable value in the present and in the future. Finally, there is the most obvious argument for incentives....they work. 

Bridgestone moved downtown, built a tower and relocated additional business groups from across the nation to Nashville...come on that is too easy.

Asurion moved here from California and has grown gangbusters. So fast in fact that they want to consolidate workers and add workers. My understanding is they received TIF for building a new building and $$$ per new worker added. Lifepoint seems to be the biggest question, but I am sure that was a poke in the eye to Williamson Country for poaching other companies from Metro.
 

7 minutes ago, samsonh said:

How would you quantify "net losers"? My assertion that incentives are a race to the bottom is definitely not wildly speculative. I am not sure why you are taking this point of view.  

 

http://theweek.com/articles/754007/are-corporate-tax-incentives-worth

 

Bridgestone, Asurion, Lifepoint, and HCA come to mind as companies that relocated within Middle TN and got millions each. How is this a positive thing? The money has to come from somewhere so it falls more on the invdividual taxpayer as opposed to the corporation. Lifepoint relocated literally down Old Hickory Blvd. Does that make sense to you as a small government conservative?

 

[Guest]

I defend it because it is necessary and even and advantageous toll for economic development. To call it corporate welfare is a false equivalence.... not to use the Orwellian language for taxes, but if done correctly, these deals are investments. 

[SoundScan]

Quote

Definition of corporate welfare

chiefly US

: money or aid given by the government to help a large company

False equivalence? It's incredible that you put so much faith in the government to make investments for you when you so often appear to have little faith in its competence overall.

[Hey_Hey]

14 minutes ago, nashville_bound said:

Additionally, the tax abatements are normally for a period like 10 to 20 years so there is measurable value in the present and in the future. Finally, there is the most obvious argument for incentives....they work. 

Bridgestone moved downtown, built a tower and relocated additional business groups from across the nation to Nashville...come on that is too easy.

You're right, they do work to attract companies to Nashville in the current environment. My contention, though, is that those jobs would have been created somewhere  in the US whether or not we abated the Bridgestone property taxes for 10 years (or whatever the time).  I can't think of a company that would choose to relocate their headquarters to another country over the lack of property tax abatement (they may be using federal taxes as motivation however). 

Let states and localities compete on their tax and regulatory environment, their infrastructure, and their populace instead of who can write the biggest check. We don't need to address federal tax inequalities between big corporations and small businesses by abating property tax.  

Edited June 27, 2018 by Hey_Hey

[samsonh]

24 minutes ago, nashville_bound said:

Actually, quite simply....did the corporation receive more in incentive value (infrastructure, property tax  tax abatement, $$ per worker) than additional tax generation (property tax appreciation in area of location, sales tax increase workers increase in economic activity). And there is the additional economic activity generated by business who colocate or open due to the corporation receiving the incentive. Additionally, the tax abatements are normally for a period like 10 to 20 years so there is measurable value in the present and in the future. Finally, there is the most obvious argument for incentives....they work. 

Bridgestone moved downtown, built a tower and relocated additional business groups from across the nation to Nashville...come on that is too easy.

Asurion moved here from California and has grown gangbusters. So fast in fact that they want to consolidate workers and add workers. My understanding is they received TIF for building a new building and $$$ per new worker added. Lifepoint seems to be the biggest question, but I am sure that was a poke in the eye to Williamson Country for poaching other companies from Metro.
 

 

So where are the numbers again? 

[Guest]

So the problem is there are many, many, more incentives than just local or state tax abatement etc...
Think TVA developed Supersites, University programs started to supply workers in demand and a hundred others incentives. Let the relevant government committees/politicians do what it takes to compete...the voters have the ultimate say if they disagree.

 

22 minutes ago, Hey_Hey said:

You're right, they do work to attract companies to Nashville in the current environment. My contention, though, is that those jobs would have been created somewhere  in the US whether or not we abated the Bridgestone property taxes for 10 years (or whatever the time).  I can't think of a company that would choose to relocate their headquarters to another country over the lack of property tax abatement (they may be using federal taxes as motivation however). 

Let states and localities compete on their tax and regulatory environment, their infrastructure, and their populace instead of who can write the biggest check. We don't need to address federal tax inequalities between big corporations and small businesses by abating property tax.  

 

HA, where are you numbers?

I would venture between Channel 5 and the Tennessean we would have seen an expose by now if your were even in the ballpark.

 

14 minutes ago, samsonh said:

So where are the numbers again? 

 

[samsonh]

4 minutes ago, nashville_bound said:

So the problem is there are many, many, more incentives than just local or state tax abatement etc...
Think TVA developed Supersites, University programs started to supply workers in demand and a hundred others incentives. Let the relevant government committees/politicians do what it takes to compete...the voters have the ultimate say if they disagree.

 

 

HA, where are you numbers?

I would venture between Channel 5 and the Tennessean we would have seen an expose by now if your were even in the ballpark.

 

 

You need to keep your narratives straight. Either the liberal local media is terrible or they are a crack squad of investigators!

[Guest]

^^ Do not waste my time with that crap. 

[samsonh]

6 minutes ago, nashville_bound said:

^^ Do not waste my time with that crap. 

I am asking you to provide numbers that these relocations are + investments. Pointing to Asurion (which hasn't even happened) and Bridgestone (which just happened) as the successes is unconvincing to say the least. It is clearly a zero sum game.  

[Guest]

We disagree on the premise ....it is not clearly a zero sum game. ha

You are the one who is making that assertion so you prove your own theory....there are plenty of deals in the past you may research.

Nissan 1986
Nissan HQ 2008?? or thereabouts 
Asurion relo 2006??
 

6 minutes ago, samsonh said:

I am asking you to provide numbers that these relocations are + investments. Pointing to Asurion (which hasn't even happened) and Bridgestone (which just happened) as the successes is unconvincing to say the least. It is clearly a zero sum game.  

 

[nashvylle]

22 minutes ago, samsonh said:

I am asking you to provide numbers that these relocations are + investments. Pointing to Asurion (which hasn't even happened) and Bridgestone (which just happened) as the successes is unconvincing to say the least. It is clearly a zero sum game.  

Not sure I agree. Bridgestone deal = tax abatement for 20 years or a parking lot for XYZ years... (how much does the parking lot pay in taxes per year?) I don't buy the notion that if Bridgestone didn't happen, there would be anything but a vacant lot STILL there right now and for a number more years. 

PLUS the sales tax of all the employees PLUS the individual property taxes of all the employees, given that Bridgestone was either going to stay in Nashville or go to Chicago or somewhere else.

 

Edited June 27, 2018 by nashvylle

[samsonh]

6 minutes ago, nashvylle said:

Not sure I agree. Bridgestone deal = tax abatement for 20 years or a parking lot for XYZ years... (how much does the parking lot pay in taxes per year?) I don't buy the notion that if Bridgestone didn't happen, there would be anything but a vacant lot STILL there right now and for a number more years. 

PLUS the sales tax of all the employees PLUS the individual property taxes of all the employees, given that Bridgestone was either going to stay in Nashville or go to Chicago or somewhere else.

 

We also gave them $500 an employee for 7 years cash( max of 2.1 million).  This amount does not include an estimated $50 million from the state. So we give them north of $40 million in property tax abatements and the state pops in another $50 million. Does the deal still look great? 

[nashvylle]

3 minutes ago, samsonh said:

We also gave them $500 an employee for 7 years cash( max of 2.1 million).  This amount does not include an estimated $50 million from the state. So we give them north of $40 million in property tax abatements and the state pops in another $50 million. Does the deal still look great? 

I would prefer Bridgestone to pay all taxes possible, but I know that won't happen. So all things considered, Yes, I think it was a good deal. 

Edited June 27, 2018 by nashvylle

[samsonh]

30 minutes ago, nashville_bound said:

We disagree on the premise ....it is not clearly a zero sum game. ha

You are the one who is making that assertion so you prove your own theory....there are plenty of deals in the past you may research.

Nissan 1986
Nissan HQ 2008?? or thereabouts 
Asurion relo 2006??
 

 

Asurion moved jobs paying an average of $35,000 in 2003. No details on incentive package available. Nissan in 2008 was around $197 million, and over $600 million statewide since 2000.. Sooner or later you are talking real money! ha. Numbers for the 1983 plant I could not find.  Those are your tax dollars that must be made up somewhere. It is quite frankly shocking to me that you don't see how this is a race to the bottom. Eventually corporations pay no taxes and individuals pay them all. Or small businesses without bargaining power pay more.

[Armacing]

The question is not whether the incentives ultimately "pay off" a net positive in the form of more tax revenue.  That may or may not happen in any given example based on the fate of the company and market conditions as a whole.  Someone else said it but it bears repeating:  in these cases the government is acting as a venture capital investment bank, and the principle is being extracted from the public via taxes.  Or more precisely: there are (presumably) costs incurred by the city/state to service the company that are not covered by the taxes paid by that company.  When we look at it from the perspective of an investment (that's the correct way to look at it because even it's proponents claim it is an investment), here is the correct criteria to use when determining whether or not to give the incentive:

Investment Basis:  The $ value of services given to (or taxes not taken from) the company.

Return A:  Additional taxes gained from all taxable activities associated with the company's move.  Could be sales tax collected from surrounding businesses, property taxes of surrounding businesses, franchise/excise taxes of surrounding businesses, and all other taxes incurred by individuals who move to/work in the area because of the corporate relocation.  We need to total these all up.

Return B: Here is where it gets tricky boys... you need to take that same investment basis and assume it was not given to the company.  Now you may be thinking:  "That's easy, none of the dollars in Return A will be there, so the return is zero".  Wrong!  That money will still be invested by the public in whatever they typically invest their money in.  A new car?  Home improvement?  Private school?  A swimming pool?  Starting a business?  Eating out at restaurants more?  The impact on any one person will be small, but you, oh great and powerful investment banker, must still add up the cumulative effect of all their economic activities, determine the tax implications of those activities, and total them up.

Analysis:  Now we simply compare Return A to Return B and it will be obvious which is the better investment.  It should be noted that it is precisely this kind of analysis that needed to be done (but was not done) by Soviet central planners, and that failure to analyze resulted in massive mal-investment.

[Guest]

You can not make an apples to apples investment comparison between a private venture and the public sector for innumerable reasons. One of which is to factor in opportunity costs in such a manner is a lark. There is no tax rebate to the taxpayer so there is no opportunity costs to speak of, at least the way you framed it. Now there may be opportunity costs to be factored in on what the government ‘would have’ done with the money which would have been generated during the abatement/incentive period. Of course there is also the possibility...no probability... no certainty, that there is no missing opportunity costs because there currently is no corporation or expansion ... that is what you are incentivizing,

 

12 minutes ago, Armacing said:

The question is not whether the incentives ultimately "pay off" a net positive in the form of more tax revenue.  That may or may not happen in any given example based on the fate of the company and market conditions as a whole.  Someone else said it but it bears repeating:  in these cases the government is acting as a venture capital investment bank, and the principle is being extracted from the public via taxes.  Or more precisely: there are (presumably) costs incurred by the city/state to service the company that are not covered by the taxes paid by that company.  When we look at it from the perspective of an investment (that's the correct way to look at it because even it's proponents claim it is an investment), here is the correct criteria to use when determining whether or not to give the incentive:

Investment Basis:  The $ value of services given to (or taxes not taken from) the company.

Return A:  Additional taxes gained from all taxable activities associated with the company's move.  Could be sales tax collected from surrounding businesses, property taxes of surrounding businesses, franchise/excise taxes of surrounding businesses, and all other taxes incurred by individuals who move to/work in the area because of the corporate relocation.  We need to total these all up.

Return B: Here is where it gets tricky boys... you need to take that same investment basis and assume it was not given to the company.  Now you may be thinking:  "That's easy, none of the dollars in Return A will be there, so the return is zero".  Wrong!  That money will still be invested by the public in whatever they typically invest their money in.  A new car?  Home improvement?  Private school?  A swimming pool?  Starting a business?  Eating out at restaurants more?  The impact on any one person will be small, but you, oh great and powerful investment banker, must still add up the cumulative effect of all their economic activities, determine the tax implications of those activities, and total them up.

Analysis:  Now we simply compare Return A to Return B and it will be obvious which is the better investment.  It should be noted that it is precisely this kind of analysis that needed to be done (but was not done) by Soviet central planners, and that failure to analyze resulted in massive mal-investment.

 

Okay, you have 1/2 of the equation.

 

16 minutes ago, samsonh said:

Asurion moved jobs paying an average of $35,000 in 2003. No details on incentive package available. Nissan in 2008 was around $197 million, and over $600 million statewide since 2000.. Sooner or later you are talking real money! ha. Numbers for the 1983 plant I could not find.  Those are your tax dollars that must be made up somewhere. It is quite frankly shocking to me that you don't see how this is a race to the bottom. Eventually corporations pay no taxes and individuals pay them all. Or small businesses without bargaining power pay more.

 

[samsonh]

1 hour ago, nashville_bound said:

 

Okay, you have 1/2 of the equation.

 

 

I am pretty good with numbers, help me get all of the way there.

[Guest]

https://www.tnecd.com/industries/automotive/

 

 

[SoundScan]

https://www.wsj.com/articles/as-foxconn-breaks-ground-in-wisconsin-the-costs-to-taxpayers-go-up-1530091800

Over $200,000 per job in state funds for a factory to a Taiwanese corporation. Insanity. Industrial automation will replace many--if not most--of these jobs well before the most optimistic projections have the State reaching break-even on this "investment," a timeline that can only be described as generational. And the slope continues to become ever more slippery...

[Armacing]

"factoring in opportunity costs is a lark"

Interesting response, but opportunity costs are the most important piece of this puzzle.  That is the thing that separates the in-your-face flashy effect of building mega-structures with public funds from the slow, gradual accumulation of wealth by private by individuals.  The main point of all this is that the government-directed allocation of capital represents true waste (destruction of wealth) because the government-directed investment is less profitable than the private-sector investment.  That's opportunity cost, and it's very real. 

This all has to do with the fact that governments and their employees have less market information than the public at large.   The idea being that the market automatically aggregates the collective market knowledge of everyone in the market into the price of assets, and every person acts on that pricing to allocate their scarce capital in the most profitable way they know how.  In our particular case, we could accurately state that every company interested in doing business is constantly surveying their options and choosing whether or not to invest in/do business in Nashville.  If we assume there is a case where the city/state incentivized a business to move here when they otherwise would not have done so, then we can say that is a case where the government decided to invest public funds in a project that everyone else in the private sector (banks, investors, etc...) rejected as unprofitable.... Or at least not as profitable as the other options they had for investing their money.

[MLBrumby]

Amazon already having an effect on construction in the 20 finalist cities... From Gannett/USAT/Tennessean 

https://www.tennessean.com/story/tech/news/2018/06/29/amazon-second-headquarters-contest-jumpstarts-transit-education-projects/729779002/

Some of the shortlisted cities may have had their chances for Amazon hurt by recent political developments that have stalled out transit initiatives, said Slone.

For example, in May voters in the city of Nashville in Tennessee resoundingly defeated a $9 billion plan that would have built a regional transit network anchored by light rail.

Edited June 29, 2018 by MLBrumby

[Guest]

Armacing,

I agree with the economic principles you are stating. 

I was obviously not clear in my previous post. The 'lark' I referred to is the assumptive premise of your post that monies not directed towards economic growth would in some magical way be RETURNED back to the individual taxpayer. If that were a true choice, I of course would conclude it to be a more efficient use of funds than the government wooing corporations. Can we at least agree those are not the choices on the table? The reality is the government will allocate...spend... all of the received tax revenue. If this is the case, the case became the choice between economic development and another allocation.... included in those possibilities are programs who would never be satiated or vanity projects or equal.


 

On 6/28/2018 at 3:12 PM, Armacing said:

"factoring in opportunity costs is a lark"

Interesting response, but opportunity costs are the most important piece of this puzzle.  That is the thing that separates the in-your-face flashy effect of building mega-structures with public funds from the slow, gradual accumulation of wealth by private by individuals.  The main point of all this is that the government-directed allocation of capital represents true waste (destruction of wealth) because the government-directed investment is less profitable than the private-sector investment.  That's opportunity cost, and it's very real. 

This all has to do with the fact that governments and their employees have less market information than the public at large.   The idea being that the market automatically aggregates the collective market knowledge of everyone in the market into the price of assets, and every person acts on that pricing to allocate their scarce capital in the most profitable way they know how.  In our particular case, we could accurately state that every company interested in doing business is constantly surveying their options and choosing whether or not to invest in/do business in Nashville.  If we assume there is a case where the city/state incentivized a business to move here when they otherwise would not have done so, then we can say that is a case where the government decided to invest public funds in a project that everyone else in the private sector (banks, investors, etc...) rejected as unprofitable.... Or at least not as profitable as the other options they had for investing their money.

 

[Armacing]

Yes, I agree with you that if the taxes have already been collected and we have a choice on how to spend the revenue, then using the funds to attract corporations could be a more "profitable" use of the money.  It still might be difficult to prove that the city wouldn't get a greater return on investment by spending that money to hire more police or upgrade their fire department, or hire more clerks for the courthouse to speed the resolution of cases in their docket, or a mixture of all those things.

Of course, that set of facts is a very narrow view of the situation at hand.  I generally find it more worthwhile to discuss whether or not governments should be collecting taxes for the many ridiculous projects they seem so eager to involve themselves in lately, rather than discuss which project has the better "return".  The reason I put return in quotes is because we would just be comparing one dumb idea to another dumb idea to see which one is less wasteful.  It's a foregone conclusion that all of public/private schemes where the government is acting as a venture-capitalist-investment-banker for private companies are less profitable than similar projects in the private sector.  How do we know this?  Because every private investor in the market has looked at those projects/investments and determined they are not worth risking their scarce capital on, based on the projected returns on investment.

But just so you don't think I'm completely naïve, I realize that is how "business" is done these days.  Relocation incentives are everywhere for just about every industry... and not just here: that is a worldwide phenomenon.  Socialize the risks, privatize the profits - right?  What benefit would there be in Nashville following my way of thinking?  Maybe not much in terms of rapid economic expansion in the near-term.  But I could argue that taking the moral high-ground usually pays off in the long run.

[Dale]

You watch, Amazon is going to pick a city where $50,000 a year goes a long way, even if they have to reconsider cities they've previously eliminated.