States are giving Intel special tax breaks to get them to relocate into their state.
Why is this legal? We wouldn't let people get special tax hikes--why special tax breaks?! This seems unfair to all the other corporations out there...
Monday, March 07, 2005
Tax breaks for relocation
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16 comments:
What an odd post. The obvious answers to your rhetorical question are in the article itself: states want Intel to invest its money in their economies and to create/maintain jobs for their residents. This may not make much sense in the ideologically pure world of an Ayn Rand novel, but here on planet Earth it is a perfectly reasonable policy.
Except, if you think about it, it penalizes the companies that have stayed in the state for a while, an in fact encourages companies to relocate every so often.
But thanks for being insulting and derisive anyway.
I apologize for the insulting and derisive tone. I would ask, however, what you would expect states to do? There are fifty states competing for business, and they can use their tax codes to whatever ends they deem appropriate. And anyways, isn't the elimination of all kinds of taxes a good thing? I've been reading your posts for a while and find you to be insightful and interesting (even if I disagree with you on most subjects), but I don't quite understand what you're getting at here.
well--uh oh, I'm gonna anger some federalists--what about making it illegal at the federal level, as a violation of equal protection?
I agree with you that no state will be the first to outlaw this practice. so it should either be banned from a federal level. states that want to can create good business environments the traditional way: by lowering taxes for everyone.
no special rights for mobile corporations!
well, don't get me wrong. I don't have a problem with lower taxes in general. I am, after all, a libertarian.
I do, however, have a problem with a government treating its citizens differently.
I think we're forgetting the important function of taxes: to pay for the burden a corporation places on the government. it's not to "stimulate growth." Just the opposite. All taxes reduce growth. Taxes should de facto be as low as necessary.
If a government can afford to give a tax break, why should it give it preferentially to one company? Why should the other tax-paying companies share that?
Another way of thinking about it:
How would we feel if Bill Gates was lured to Illinois (which was for some reason starry-eyed by his potential spending and philanthropy in the state) by a promise that he'd not have to pay income tax?
We'd be outraged at special treatment. Why is this okay for corporations?
Those of us who really want our libertarian (not, for the record, objectivist) creds must re-assert proper fairness into the tax code. Using taxes as social engineering is extremely disconcerting, and downright dangerous.
Well. I think "social engineering" is a bit extreme. I live in lower Manhattan -- in the building directly next to Stuyvesant, oddly enough. The reason we took the apartment was that the city of New York, through the LMDC, was giving $500/month grants on rent to anyone willing to move to my area. Now that the grant is ending, we're finding a new place. Is NYC practicing social engineering? There are just so many hundreds of thousands of cases like this that they seem to be pretty deeply woven into the fabric of our society. If you were trying to construct a utopian commune from scratch, I'd be interested to see what the results of your ideologically pure policies would be. My guess, though, is that they would fail.
Well, you can think "social engineering" is extreme, but selective tax breaks are indeed a form of social engineering.
I'm not trying to create a utopian commune. Leave that to the hippies. I'm trying to create a society in which people are equal under the law, and have the maximum legal rights to exercise themselves.
I think it's inherently discriminatory to look at one corporation, and say "you get a tax break" and look at another and say "you don't" just because a bunch of people in some state house (who themselves, we all know, are likely to be bought and sold) decided that these corporations get tax breaks.
Let's go back to square one of taxes. Why do we tax? To pay for common defense. Military and police. Additionally (and sub-ideally) we pay for a number of government services. Using taxes to provide economic stimulus is inherently wrong, because it denies what should be the first principle of taxes: that money belongs inherently to the people, not the government.
In giving one corporation a tax break, you're essentially saying, it's okay for us to take more from one corporation than another. That's inherently discriminatory, and a government that has the power to do it could also favor businesses owned by a certain race (oh wait, heard of tax breaks for minority-owned businesses?). The jobs this corporation creates are no more economically contributive than the existing jobs.
We obviously have a fundamental philosophical difference of opinion, but I still wonder what you think the world would look like if states couldn't give tax incentives. There was a piece in Reason magazine a little bit back (I'm too lazy to find a link) by Nick Gillespie about how everything he knows as a libertarian would lead him to believe that Kansas's low rates of taxation and general friendliness to corporations would lead to a great economic boom. The fact, however, is that nobody (or very few people) actually want to live in Kansas. People are willing to put up with high tax rates and bureaucratic nightmares to live in NYC, SF, etc., and it's the creative and open-minded people that make the cities the places they are. If Kansas and Oregon were forbidden to use their tax codes to attract thecorporations that they (through their elected representatives) believe will be beneficial to their residents, that would be a huge shock to the system. I think it would be detrimental to the economy as a whole. In absolute terms of justice, you're probably right. In our complex world, we've developed a system over the last couple of centuries where states compete for business just like they compete for tourism and for military bases. I think this system has worked out just fine so far.
Responding to some of your other arguments:
Of course corruption is a problem. We should crack down on corruption. We shouldn't cancel representative democracy. State governments should still be able to establish state tax codes.
The Supreme Court would never even think to consider a due process challenge on this issue for the same reason that it wouldn't consider a due process challenge to my LMDC grant. Ignoring any states or municipal rights issues, it simply isn't a violation of due process. The federal government uses the tax code to attract certain corporations and states do the same thing. The Court recognizes that when it comes to economic issues, we don't live in a world of moral absolutes. The economy needs to be tweaked and finessed to create the greatest prosperity and security feasible for the people. This is not "socialism" just because you don't like it, in the same way that the torture of arbitrarily designated "enemy combattants" isn't "fascism" just because I don't like it. I do agree with you on the hippies though. I wish they'd take a damn shower and get a damn job. Their revolution is over. The bums have lost.
It's clear that we do have a fundamental difference of opinion. I just wanted to comment on the following:
"People are willing to put up with high tax rates and bureaucratic nightmares to live in NYC, SF, etc., and it's the creative and open-minded people that make the cities the places they are."
Well, I certainly agree that cities--with their high concentrations of people--do create an environment that fosters the development of subcultures. I in fact noted this earier.
But your assertion that somehow it's socialist policies that makes cities full of creative people, and that somehow cities depend on such socialist policies, is not proven by anything you've said. Furthermore, the fact that a number of people choose to live in large cities does not inherently justify their socialist policies as somehow correct, nor does it make them any more just.
In 100 years, American cities will be transformed into something resembling European cities, with the wealthy parts at the center of the city lined by the poor parts (NYC is already undergoing that transformation). I wonder if it'll be so uber-liberal then..?
"The economy needs to be tweaked and finessed to create the greatest prosperity and security feasible for the people. This is not "socialism" just because you don't like it, in the same way that the torture of arbitrarily designated "enemy combattants" isn't "fascism" just because I don't like it."
Actually, government control of the economy is exactly that, Beavis. That so-called "conservatives" continue to push for it doesn't make it any less so.
I guess now we're even on the insulting and derisive ledger. Tweaking and finessing is not control. Government uses the tools at its disposal to increase the welfare of the people. Is the Federal Reserve a socialist institution? Why is the tax code socialist? I can't find any dictionary definition of socialism that comes anywhere close to what the U.S. is today. "Socialist" is a very loaded word, and I think that you have the tendency to throw it around too freely. I make a point to try to stop myself from calling "fascist" a lot of the aspects of 2005 America that remind me of 1933 Germany.
So anyways, do you think that a federal law mandating that states can't give tax breaks would improve the state of the economy or the quality of life for Americans? Or is it just to satisfy your sense of justice?
To "Greg":
Sorry, the Beavis line was from Clueless and wasn't intended to be insulting. In any case, I don't have a problem with you labeling our current government fascist. I call my friends fascist when they insist I have a "normal" sleep schedule. And I have, in fact, written a long email to my uncle (the one who said the ultimate end of the gay rights movement is the legalization of child-adult relationships) detailing a number of parallels between the decline of the Weimar republic and the current state of affairs in the United States. So, I don't have a problem with you throwing the word "fascist" around like that.
After all, post-modernism throws around "colonialism" in a lot of new contexts. And I think this is much more closely related than many of those uses.
(Care to ID yourself, btw? Just curious who I'm sparring wtih.)
In answer to your second question, there are in fact lots of things that we could do in order to improve quality of life in America, but don't because we don't consider them to be right. I wrote my BA thesis on how a reduction in income inequality in this nation would likely result in better health and an increase in our nation's standing in the international system. But that has nothing to do with wheter it's something I agree with.
...it's fundamentally a difference between libertarianism and utilitarianism.
"Dylan":
Well, there's been an argument made that corporations shouldn't pay taxes at all, because it's just an indirect tax on consumers. I don't know how I feel about that. Accepting arguendo your claims on government spending, I think you should know that as a libertarian I'm not into government spending lots of money on a lot of things--up to and including the redistribution of income, to poor people or to special interests.
That said, I think corporations do place a burden on the government--if nothing else, truckers place a huge burden on our roads, for example--and I'd rather see the Monegasque model of taxation followed than our current one.
You don't know me, I just happened to stumble upon this blog a while back and liked what I was reading. I guess I just don't like to throw around words labels without heavy qualifications. As much as I'm disgusted by Bush, I see a fair amount of wiggle room between him and Hitler. Just like I see a fair amount of wiggle room between tax incentives and Stalin (or Castro, etc.) Agreed that it's a fundamental conflict, but it's as much between absolutism/relativism, extremism/moderation, ideological/pragmatical as a libertarian/utilitarian thing. I have to go home and leave my office computer, so I'll read your response and wait until the next post of yours I disagree with to make another comment ;-)
Except, Stalin wasn't socialist, he was communist/totalitarian. And so is Castro.
Who is socialist, and proud of it? Tony Blair. Labour proudly declares itself socialist on its website, as does the Parti Socialiste of France, and many other European governments. So I don't really have a problem with using that term at all.
In any case, you're right that Bush isn't Hitler. I didn't call him that. But given one of the hallmarks of fascism is an abandonment of the enlightenment in favor of religion and state-centered policy, I'm not uncomfortable making that comparison.
Now, to be intellectually honest, one must be careful not to immediately imply that simply because a similarity exists, that the moral disapproval applied to one should be applied to the other. However, in the case of the word "socialism," I really don't see why you think it's so extreme.
Agreed that Castro and Stalin weren't socialists. The economic system in which Castro believes is socialism, and the method to implement it is communism. Stalin was just a psycho. There are historical reasons that the European center-left parties are still called socialist, but if you're trying to argue that Labour wants to move towards the abolition of private property and the "collective or governmental ownership and administration of the means of production and distribution of goods," I think you might be a bit paranoid. Now, if the LCR comes to power in France, or the Socialist Workers' Party in the UK, then you might want to start worrying.
But anyways, what I'm kind of trying to get at is that libertarianism is another form of extremism -- and this is coming from a former (high school years) card-carrying member of the Libertarian Party. The Libertarian Party would have to resort to a form of totalitarianism to implement the major planks of its platform. Human societies just do not naturally organize themselves libertarianally (to coin a probably misspelled word). The attempt to force people into collectives led to tragedy, and so would the attempt to force people to be free.
So, my problem with your post wasn't that you seem to think that tax breaks for corporations are a violation of due process, etc. I might even agree with you on that. My problem is that you aren't recognizing that the system may be a necessary evil. It's important to consider what the consequences of any action would be, and the abolition of tax incentives would seriously hurt states such as Oregon and Kansas. I realize that you're partly trying to do a bit of flame-throwing and provoke some debate, so you've succeeded in that. I do have a problem, however, with people who approach problems with a set ideological system and won't consider looking outside of it. In my opinion, that's exactly what Castro and Mussolini did -- we'll leave Hitler and Stalin out of it.
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