Cherry-picking the detail you think is most important from an article is a form of editorializing. If you want to say what you think is important about an article, do not do so by cherry-picking a detail to put in the title. Instead, post it is a comment in the thread. Then your view will be on a level playing field with everyone else's.
Edit: on top of that, it looks like the article is behind a hard paywall, so no one can actually read it. That means the thread is reacting mostly to the title, and mostly to the heavily editorialized title before we changed it. That isn't nearly enough information for a substantive discussion. Please don't make submissions like that to HN.
Edit 2: scratch that last point—there's a link to the paper downthread.
Edit: seems reasonable to change the URL to that. Submitted URL was https://www.nber.org/papers/w26603.
The city put up millions in taxpayer funds to get the arena built for the local high-profile college basketball team, and numerous reports were published around the positive economic impact of the stadium, citing increased spending around downtown, etc.
However, the report failed to account for "micro" details that can have a major impact on local business, like traffic congestion, entertainment capacity, etc. On game days, his restaurant is overcrowded and turning away patrons, which negatively impacts his staff and quality of experience. But there are only 15 or so games per year, and the off-season attractions are hit-or-miss in terms of attendance. And when nothing is going on, business is even more varied.
It's relatively easy to calculate how many people come to town for a big event and how much they spend, extrapolating that out to some great figure, but a restaurant can't reasonably rely on ~15 big days per year. Quite often, economic impact reports are commissioned by folks who have business or political interests at stake, thereby overlooking the potential bottlenecks that such developments expose. And because most of the public doesn't understand finance or real estate, and yet they love the basketball team, a more nuanced conversation around the topic is harder to find.
This is a mistake that you will only make once. It sometimes takes upwards of 2 hours to drive 5 miles. Since I don't want to have to follow sports to know if it's safe to drive that route, I just never drive that route. There are good things near there, but I will never plan to do them because I don't want to have to check the arena activity to determine how good my experience will be.
Soldier Field is vaguely easier. It's still right in the middle of the city, but, being in a park, and not too far from the highway, game days don't really pose a challenge except when I've lost my mind and decided to drive to the aquarium instead of taking the train. On the other hand, I bet it's really awful for anyone whose regular routine forces them to use Lake Shore Drive or the spaghetti bowl.
We now habitually check if there's a game or concert before visiting my cousin in the neighborhood.
A few years back I lived 3 blocks away from Wrigley Field. It was cool to hear the concerts and games from our back porch. But we basically locked ourselves in on game-days, since we knew it would be a pain in the ass to get anywhere.
It means a lot of my city (Seattle) is off limits unless I'm really "going out" and not just going out for a bite or whatever.
It's a great example of a market with a fixed price (excluding some newer ppp toll schemes) and highly variable demand. (And where costs besides the direct price that end up controlling.)
I mean, it's good that it's finally hitting the mainstream, but induced demand has been a recognized phenomenon for literally decades:
The reverse of this is what justifies a lot of ped/cycle infrastructure projects even in areas where there don't currently seem to be a lot of people out walking or on foot— "build it and they will come".
Some experts believe that humans are, at best, only somewhat sentient, and only part of the time. Our mind automatically back-populates a story of thought and consideration before every decision, when in fact, our limbic system (more primitive, where our baser emotions come from) is pretty much running the show.
Many/most humans have the need to vigorously compete in groups. Again, some experts have compared this to troops of monkeys fighting over territory and/or dominance. This is still the case because while our neocortex has developed quite a bit, our emotional centers are still relatively primitive. At least, a lot more primitive than we're widely comfortable in admitting to.
I think that participation in sports is a necessary and mostly healthy outlet for these mental structures.
This can all come across as very high minded, and I don't mean to say that people who are into sports are more primitive than people who aren't.
I was never into sports, but I competed in different ways. And I've known people who were truly not competitive in any typical way, so it's complicated.
Also, the above paragraphs are loaded with simplifications and assumptions. (:
One way or another, I think organized sports are a useful and necessary thing for a large percentage of the human population. Of course, we as a society need to do it as 'well' as we can.
"How did the Bulls do last night?"
"We won, but just barely."
Part of being a fan is vicarious competition, both against the other team and the other teams' fans.
In a sentence, "Participants that watched sports every day were at higher risk of obesity [odds ratio = 1.39, 95% CI, 1.15, 1.68) after adjustment for age, sex, smoking, alcohol, physical activity, total TV time, disability, and self-rated health."
Based on what they're controlling for, and assuming that the conclusions hold, my guess would be that watching sports on TV is also associated with increased snacking.
Perhaps a focus of academic achievement would be equally engaging -- I know that's what engages me wrt my alma mater.
The same promise of economic growth and touted fears of not being a 'real city without a stadium' applies.
> The stadium profits won't cover operating costs, so ratepayers will have to top it up to the tune of $4.2m a year ($4.1m already budgeted).
>It will bring $395.6m in economic benefits, which includes $53.9m in "civic pride".
On the other hand complaining because the benefits of a ballet company are enjoyed by the city's ballet fans, while the benefits of a sports stadium are split between the team ownership and city's sports fans is legitimate.
What I would like to see more of is stadium deals in which the municipality gets an equity stake in the team.
We might build a new theatre where Ballet can be performed, but it's also used for decades for thousands of art projects.
It's not shitting on football to expect a billionaire owner to pay for their own damn stadium. It's insane corporate welfare to give them even 1 cent.
I specifically pointed that out -- but I get it, you said 'billionaire' where I said 'team ownership'.
As your the other point, yes NYC built Lincoln Center to the benefit of generations. But they also put about $2.5 million annually into the New York City Ballet's operating budget. (Which is absolutely fine -- but don't kid yourself that they're self funding.)
What other businesses should the government get involved in? FAANG companies bring tons of tax revenue to their cities, why not have every government have a VC arm too?
From up here in Canada the weird fusion of school and sport down there is also bizarre. Yes, people play sports in our schools... but wow is it cultish down there.
I guess I have seen something like it, now that I'm thinking about it -- but it's generally a negative condition, i.e. "I'm not voting for X simply because they are part of party Y." They're not necessarily voting for their party because it's their party, but they're doing it because it's not another party, or more specifically, not a particular candidate.
I can't imagine a "sports school" in Canada.
I think it's interesting you added this. I am someone who does enjoy watching professional sports and to me it seems quite the opposite, I more often notice people who do not like watching sports vocalizing negative feelings towards people who do. But maybe I'm just noticing that because of where I stand on the liking/not-liking watching sports question.
Judging by the language you chose in your comment it is apparent you harbor some pretty negative feelings towards people who like to watch sports. Dare I say, it seems like you look down at them?
I'm on the not-liking sports side. I try to not vocalize negative feelings about it because I respect other people's choices, but I do have a lot of negative experiences around it:
* Sports, even spectator sports, remind me of my personal experience with sports. That was mostly being a very skinny unathletic kid who got picked on and bullied in PE every day. Sports fans remind me of jocks and jocks remind me of abuse. (Obviously, I understand that there is no logical connection between these groups of people. It's an irrational emotional reaction.)
* It's frustrating having to deal with entire sections of a city being sometimes off limits for events I have no interest in. I used to live in Baton Rouge and LSU games were so big there that they would turn streets one-way to get people in and out. If you were close to the stadium, you could literally find your home inaccessible by road — you could be trapped either in or out — until the game traffic was over. If you parked on allowed student parking, they'd tow your car to make room for tailgaters. When my kids' parkour class moved to close to CenturyLink Field, we just stopped going because it was too much of a nightmare dealing with traffic and parking.
* I get so tired of 80% of restaurants and bars being festooned with giant TVs blaring sports. My wife and daughter have ADHD and it's virtually impossible for them to tune out a TV if it's in their line of sight.
I have also enjoyed watching sports and playing them. I think sports are great and wish more people both participated in them. I like the community-building aspect of spectator sports. But America's spectator sport culture is generally a net negative in my life. And, like second-hand smoke, it's one I can never really escape because it is so pervasive in our culture.
I've never in my life met someone who looked down on people for not liking sports, but if I bring up sports in the wrong geek community, man I get eviscerated by holier-than-thou types who simply must explain why it's a waste of time and I'm stupid for liking it. (EDIT: I notice the other reply to you does exactly this, 'hurr durr sportsball', which is a perfect validation of my claim that this kind of attitude is very common. Unironic usage of 'handegg' is also very common -- they think it's really clever)
Is what it is, I suppose.
For those wondering why: Communication. Sports is one of the only things that truly transcends race, gender, religion, politics, etc. (EDIT: And the other reply to you describes someone who would rather fail to communicate with a dinner full of people than learn a shared topic, the exact case I worked to avoid!)
When I started waiting tables in college I needed an ice breaking subject that was far away from politics/current events and "the weather" is too boring. Sports is probably the #1 common discussion topic, even more than the most popular TV show of the time. For every "Game of Thrones" convo I could start, I could probably start 5 based on baseball, football or basketball.
Truly a great way to connect with different people that you'd otherwise not have basically anything to talk about with.
It really sucks to not be part of the in crowd, but football also sucks so I'll just zone out on my phone rather than watch it.
Why would it be "believing" we're part of a group that makes the high and not _being_ part of a group.
Being able to essentially choose a group to belong with is beneficial - it's a shortcut to most of the benefits of group membership (in ancient history, I mean) without having to be born into the group or be one of the "O.G." members. There are advantages for the rest of the group, too - they can get more people on "their side" and committed to their welfare without having to birth/raise/feed them.
Must be why NFL, NBA etc get so fuckin salty when people upload highlight reels and stuff to youtube.
I can't think of anyway to similarly monetize teaching and I really don't think anybody should go down that route, it sounds terrifying. But how do you convince a bunch of people watching football, which kinda costs them either nothing or like 90$ a month for their cable subscription, that they should also spend a % of their income on teachers?
Because their labor can be very cheaply duplicated by broadcasting the game to millions of spectators.
*> Where's the money actually coming from?
Ads, merchandising, and ticket sales, like you note.
Professional sports players are, economically, in the same category as musicians and actors. They produce media and the digital era means media can be duplicated at virtually no cost, so the value of their labor can be easily multiplied by a very large constant.
Police, doctors, and teachers provide their labor to individual humans in realspace which is much harder to scale so, unfortunately, their salaries reflect that.
I agree for all the examples you give, there's nothing clear like there is for athletes and artists.
For what it's worth NBA has actually taken the opposite stance from the other leagues in terms of highlights online. See https://www.businessinsider.com/adam-silver-nba-ok-highlight...
I don't know how to fix the teacher's pay. It's just unfortunate that by comparison they make pennies.
Without even a cent in extra tax.
Price has to do with supply and demand curves. If there's tons of demand for people hand sewn clothes for hamsters, and very few people who are willing or wanting to do it, then the price will be high, even though one might think there is very little utility to society.
Similarly, there's very few people able and willing to provide the entertainment that an NFL player can, but very high demand for it, therefore, very high pay.
At the low end NFLers are underpaid if anything. They get a good salary but only for a few years and then they are in their mid 20s with a joke degree and not a whole lot of other skills.
Don't lump cops in with teachers. If you want a dangerous job pick roofer or garbageman or something else that's more dangerous than being a cop.
But you are right about athletes only having a short viable career and that helps lower the gap, I was referring more to the high end athletes making millions. Even considering their short careers they make far more than an average teacher can hope to ever in their lifetime. On average I'm not really sure, that does depend on the individual sport and athlete.
But basically, I don't think that does it - there's a difference between, say, collecting watches, reading watch blogs, browsing eBay for watches, watching videos of watchmakers etc, and screaming gleefully at the pitch/field/TV as your favorite team plays.
Someone else is saying something about mirror neurons, I wonder if that's what I'm not having in enough abundance to "miss out" on the fun I see my dad have when he watches the Packers. I'd like to participate but I feel nothing beyond interest in watching the plays play out. Whether the Packers get it done or not, eh, I don't really care, and not for lack of trying.
Likewise, I take great pride in the fact that we have two world-class museums, one focused entirely on modern art, and I hope the sports fans see the value in that, too.
This is like being personally proud of your city’s Apple Store (for cities that are not near silicon valley).
Much like nations, it is a way of making you proud of achievements that you did not perform, carried out by people whom you have never met and do not know and have no association with whatsoever.
What is the logical conclusion? How far do you take it? Should I, say, not be proud of my children's accomplishments? After all, I didn't do them, they did. I'm a musician and play in bands. Should I not be proud of things my band has accomplished? What my band does is stuff that I can't do alone, and they can't do without me.
Obsessively focusing on the individual and rejecting one's role in society is nihilistic and alienating. If you gotta do it, I suppose you do you, but please don't drag me into your sad, lonely world. I'm going to enjoy my place in my family, my town, my country, etc.
It is rather silly to conflate your immediate family or a band in which you actively participate with a bunch of athletes and business owners who have never met you and have no association with you whatsoever save for living in the same metropolitan area.
One is family or friends. The other is a bunch of rich strangers. They are not the same thing. To pretend that I was suggesting that they are equivalent is... baffling.
PS: My world is neither sad nor lonely, and I am not sure how you arrived at those conclusions.
Remove those, and it’s just the usual identical routine of work, alcohol, driving, grocery shopping, dealing with kids, and sleep. We don’t really have third places besides church.
(Instagram falls somewhere in-between, depending on whether you only follow the forty boring people you know, or choose to use it as an adjunct to mass media feeds to keep up on celebrities and bikini models.)
Sports provides a regular stream of relatively unpredictable events that someone in need of such can make emotionally relevant.
That said, you make a mostly valid point, except for one major consideration: most arenas have dozens of smaller events throughout the year: boat shows, rodeos, high school championships, concerts, etc.
If he's not drawing in appropriate sized crowds for those events, then it might just be his restaurant is viewed as a novelty or one of last resort.
Business owners love to explain how there's nothing wrong with their business model, it's the the externalities or market that's wrong.
It can be true, but often it's just self-denial.
Inflation is often used as a benchmark for economic health, but it completely ignores one of the biggest sources of inflation: the price of homes.
The utility of a house never increases (unless you make upgrades), so if the price goes up it's not really more valuable, assuming it rises at the same rate as nearby homes. It's not like you could sell and move into a fancier house nearby.
It all depends on the project. Lots of sports arenas are put near business districts that generate a lot of restaurant traffic during weekday lunch but less on the weekends and evenings.
In turn, a sporting arena can fill in those times, both with the big games and with other events.
> But there are only 15 or so games per year
I think you're talking about football, where you can expect 8 games per year at home plus some pre-season, possibly post-season, exhibition, etc. This is unusual, though-- baseball plays 81 games per year at home, basketball plays 41, hockey plays 41, soccer plays 17-- plus preseason, postseason, and exhibition.
But there will be concerts, motorcross, monster trucks, a bridal convention...
Not to mention there are a handful of high school/college football events at the stadium
Which is funny because in countries that have high levels of corruption (Russia), you see those countries building the most expensive roads, stadiums and bridges in the world. More money spent doesn't mean a better road to say the least.
I went to a college bowl game recently. They actually printed the amount of economic impact calculated ... on my ticket. And ran those numbers across the jubmotron a number of times.
I don't know who they're selling that to because I'm not local or approving anything, so I guess that's what I'm contributing to? yay? I was mildly amused.
Those are always lies.
I follow the Santa Clara City stadium fiasco ...
Try dividing $1.2 billion by 116,000 city residents. How do you like those apples? :)
To give the voters credit, they only authorized a $400 million bond, but the city council took them for a ride.
Shout-out to the York family. Hope you're enjoying your free billion-dollar stadium. I sure would!
We've gotten past that phase and now all the local businesses downtown are shutting down because the 2-ish companies that own all the real estate are raising the prices to absurd levels. Our end goal, in the likely near future, is them declaring bankruptcy so we can bail them out as a city and re-zone the retail/entertainment districts to business as originally lobbied.
specifically this one:
With that in mind, there is however a huge difference between a tax break and a govt subsidies.
So, would this mean that the study is analogous to a null result being spun to mean a negative result in the title? "We do not find strong evidence" is not the same as "no evidence".
I wonder if this is what would happen should more failure to reproduce papers were published to fix the reproducibility crisis- instead of encouraging more critical analysis, the abstracts will just get summed up into clickbait titles that continue to mislead.
Is it about the word "strong"? Because the way I understand it, the definition of "strong" in statistical analyses is "couldn't reasonably be coincidental". So then "no strong evidence" means the same as "all evidence we did find was so weak that it might've as well been a coincidence". I'm not a scientist, but it seems to me that "no evidence" conveys the right message.
I mean, the way I see it, let's I see two bees today and three bees tomorrow. This is weak evidence that the bee population is increasing. But "Weak evidence found that bee population is increasing" wouldn't be the more honest headline. It's no evidence at all, I saw some bees and that's it.
The way I see it, it's great that scientist report null findings and failures to reproduce as "no evidence found". The general public is not going to interpret "no strong evidence" the way scientists mean it.
> the evidence on spillovers and productivity effects of incentives appears mixed.
Without digging through their methodology, it seems that an interpretation of "no evidence" is unwarranted as there is a likelyhood of confounding factors that were not taken into account.
"No evidence" is a positive assertion and a misreading of what the paper indicates. This is not a critique of reporting a null result, but what appears to be a misinterpretation to make a catchier headline which is equally as bad as what we have now- uncritical acceptance of whatever gets published.
There is probably some occasional benefit here and there, but that occurs with any kind of spending. But that’s offset by the usual inefficiency associated with command driven economies.
PS: I was personally hopping for the opposite result as these subsides can spread out jobs across the US.
They claim that the decision was logistics rather than politics, but I don't know anyone who believes that the decision had anything to do with anything other than the loss of subsidies and bad publicity drummed up by local politicians.
Ignore the headline, read the abstract and if you have time the paper. It's much more interesting and accurately/fairly describes the data collected.
Yes it is? It's not literally the same, but it conveys the same meaning.
In the same way, "Yes it is" doesn't convey the same meaning as "Yes it is?", because just like the presence or lack of the word "strong" matters, the question mark matters.
If everyone is Humpty Dumpty, useful and accurate communication is not possible.
Either way, this is basically a meta-analysis. Tbh, I only skimmed the paper because it just seemed very poorly put together. I would check out the papers they reference for more detail.
Such incentives usually aren't directly premised on "increased growth", but rather "local jobs" – and the linked study's abstract reports "we find that average employment within the 3-digit industry of the deal increases by roughly 1,500 jobs".
The abstract also reports "mixed" results "on spillovers and productivity effects of incentives", and "unclear" effects on "equity".
Now, I'm not a fan of such locality-vs-locality targeted-incentive competition – which is likely zero-sum or negative-sum across all localities. And without broader growth, the costs may be too expensive for the narrow employment gains.
But the current editorialized, excerpted headline makes it sound like the thrust of this study was to find no benefits at all for such deals, and that's not the mixed story it's actually reporting.
I can't even see how you can theoretically expect growth from this because by definition in a common market like the US tax incentives of localities are zero sum. It doesn't really matter if jobs or growth are created in X or Y because the US has a federal government to even out imbalances anyway.
So to allow this regulatory race to the bottom within a country or a market makes no sense to me at all. Only if the firm would move abroad would there be a net loss.
Indeed, and even then: there's no net-loss for the world, just the arbitrary jurisdiction-of-reference. (And if it's not-OK to play net-destructive, negative-sum games against other localities within the same country, is it OK to play negative-sum games against other friendly countries?)
While I agree in the main, it's possible to contrive just-so scenarios where an incentive to shift economic to another locality might be net-beneficial. A struggling area might benefit more, from the same number of jobs or amount of economic activity, than a wealthier area. The wise creation of a synergistic cluster of related projects might create more follow-on benefits than a more dispersed set of activities.
But, local authorities in a bidding-war against other localities are unlikely to identify just those scenarios, and pay the efficient amount – as opposed to just trotting out these stories as self-serving rationales for self-aggrandizing favor-trading.
I think part of the trouble is that tax rates are very different across different states. If the US were to ban all state and local tax incentives, then that would very much hurt high-tax states, as they'd then have fewer tools left to compete with low-tax states in attracting businesses.
My company just hired two H1B's to do Sharepoint work because there was literally no one in my part of the state qualified who didn't already have a job doing something more fun, and no one else wanted to move to the middle of nowhere. And we already pay 10% above market for the state to attract people to our little backwater locale.
My guess is the company is making far more off of those employees than the labor cost, so if you didn't have access to H-1B employees you would have kept increasing the salary 20%, 30%, 50% until you found someone.
If my salary would be doubled tomorrow, there's nowhere in the continental United States I wouldn't move to. Given 100mbps+ internet of course, but that does cover anywhere that could double a software engineer's salary. If you're a software company without good internet, it might be time to move.
A 10% raise isn't worth leaving for in my opinion, if you are happy with your job. Between moving and simply leaving a work environment where you understand the expectations, 10% doesn't cut it.
I don't think that makes sense, or rather it's a massive selection bias. The foreigners who manage to get a H-1B visa are usually highly qualified, but obviously that doesn't mean that all foreigners are highly qualified, those who aren't just don't get the visa. That's actually often a problem for these countries as the highly educated leave while the low qualified workforce remains at home.
I'm sure the US produces highly qualified engineers, but you also have to care for your local, less qualified populace that you can't just export abroad and forget they exist.
As for the fact that no homegrown engineer accepts to work in your "little backwater locale" that actually means that local engineers actually outcompete foreigners and not the other way around since it's those latter ones who have to settle for "the middle of nowhere".
The loss of revenue is real, the benefits for the community never seem to materialize.
What we need is a lower rate against more receipts, and incentives only on things actually likely to spur growth. Imagine if every publicly traded company paid %2 on revenue minus payroll, employee training and healthcare, and maybe depreciation. The only way to pay less tax is to pay your workers and vendors more, but you don't need to shift things to this expense or that expense to dodge a profit tax.
Additionally, here are the slides:
And the non-technical summary:
studies that need a painfully clear understanding of statistics that start off making muddy, unclear statements like this are really hard to take seriously. What is a typical state? are you comparing california and vermont? is typical a median or mean? the tax incentive data involving faang and walmart is going to be preposterously different than single-location small businesses.
This abstract strongly incentivizes me to not read the article.
Love the snarky reply you got...funny that those kind of comments are usually from people who haven't read the paper.
Tax incentives or corporate tax breaks apply only to money retained by the owners as profits. Therefore, any tax incentives you give are encouraging the owners to keep more of the business's money as profits and to invest less in the growth of the business.
"However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution."
Problem is it becomes a bidding war that causes states to forego tax revenue with ZERO recourse if that company decides to pack up and move somewhere else. This is especially true of companies that are not bound by development costs (e.g., Amazon warehouse vs. a semiconductor fab). Several New England state economies are fucked because they gave away tons of money in tax breaks hoping increased sales tax and income tax (on workers for those companies!!!) would offset the tax giveaway. E.g., CT is fucked for this very reason.
Eventually the state has no recourse if the company changes its mind. Go look at what's happening with Foxconn's multibillion dollar scam in Wisconsin. Or Hillsboro oregon where intel gets 30 years without paying taxes. (Granted, Intel can't pack up and move easily because they invested 10's of billions in a big ugly fab that pollutes [see the "waivers" they "negotiated" to allow them to continue dumping fluorine emissions to avoid costly fab retrofits]).
One solution is to allow states to sue if a company breaches contracts. But many states are just piss poor and cannot afford to take on a trillion dollar company (Amazon, Facebook), or a company from another country (Foxconn).
Another solution is to actually tax corporations federally, since the government already redistributes blue-state wealth to red-state welfare.
Warren has a great idea: tax companies on their SEC revenue CLAIMS rather than their IRS filings, which tend to differ by billions.
Sounds like the states suck at negotiating contracts.
Why would you to give something of value, with no recourse if the other party doesn’t deliver?
We need to look at this in basic terms. Why even have businesses? Why have jobs? An economy? Ultimately, the entire reason we want any of these things is so we can make our lives better. Any policy we make with regards to corporations needs to be framed in that context.
The vast majority of large companies are well-oiled machines with one purpose: extracting wealth from somewhere and placing it into the pockets of a few people with power within those companies. In a lot of cases, that "somewhere" is "the pockets of average people". On a global scale, corporations are almost always a net negative for the basic reason we want them around in the first place.
But we're not looking at things from a global scale, we're looking at them on a local scale. And on a local scale, we know that you have to spend wealth to gain wealth, so we hope by getting companies to set up shop in our back yard, that they'll do the wealth extracting elsewhere and do the wealth spending here.
But this isn't a deal with the devil we should make blindly. It wasn't so long ago that corporations in the US were feeding us diseases, forcing us into windowless sweatshops where we would die if they caught fire, selling us exploding cars, and poisoning our drinking water. And they're still doing all of these things in other countries. And they're still happy to lie to us, dump slightly less poisonous chemicals into our drinking water, sell us counterfeits, start wars, and heat up our planet. Corporations aren't our allies, they aren't our friends, they're machines that will literally kill us if it helps with the wealth extracting, and they need to be approached with appropriate skepticism. It cannot be assumed that simply having businesses around is going to be a net positive, so steps need to be taken to be sure that it is.
One of the key ways to make sure that corporations are a net positive is to make sure they pay their fair share for the resources they consume. That's taxes. So I'm understandably very skeptical about any effort to lower taxes on corporations, because that sounds suspiciously like letting them extract more wealth than they give back. If they aren't willing to pay their fair share, then they aren't a net positive, so we don't want them around.
We have to remember, this isn't a one-sided deal where we're begging for scraps at corporations' tables and are snivelingly happy to just have them around. They need us too. Workers are worth their hire, and workers want to live in places where their communities provide services to them. We can and should demand that corporations pay taxes to support our communities. If tax breaks are really necessary to attract companies, why are so many of the places with the largest economies also some of the highest taxes?
And more importantly, going back to the basics again: the highest standards of living also occur in places with the highest taxes.
Why anyone would want this I don’t know. But it’s definitely not a “scam.”
The actual benefit was reducing the tax burden on various entities, because thats what they wanted to happen.
Gaining consensus on that means saying whatever is necessary.
Who is this report for? The governments revenues or budget constraints aren’t really affected by anything as long as it is willing to spend it all on military and obligations.
Lower taxes just for fun!
So, the catch is - it doesn’t matter for the politicians. They want to give those tax incentives to get re-elected. Whether it is proven or not is irrelevant as they will find another reason to do it.
But as it is, you have the freedom to speak, to collaborate with others to speak, and to gather more resources to speak more effectively--and the government may not restrict you from doing so.
And what is the alternative? Allow the government to decide how much speech you may have? How much speech is worth? Catalog and index everyone's speech to ensure they aren't exceeding their quota? Disallow citizens from freely collaborating and associating for the purpose of speech? That's not freedom. We know where censorship leads.
One can recognize the drawbacks of big PACs and corporate political spending, while at the same time recognizing that those are natural consequences of liberty.
As they say, freedom of speech is the worst--except for the alternatives.
the same foundational principle applies to money in politics. a money-driven influence campaign is an exercise of power, not simply of speech (against the government), and that has tyrannical implications because the moneyed interests behind the campaigns seek political power over the rest of us.
to counter that, we insist on transparency in the exercise of any kind of power, including the people ultimately behind the money (no matter how removed). the danger of citizens united, as i understand it, is not that it sanctioned money in power, but that it did not required full and absolute transparency all the way down the line.
And not only citizens, but the government would know as well, for "full and absolute transparency" would not prevent the government from seeing and using such information. As we have already seen, the Executive can misuse federal agencies to impede the financial efforts of his political opponents, so granting that right would not seem wise.
For the same reason that we vote by secret ballot, not allowing citizens to spend their money secretly for political advocacy would also lead to a form of social tyranny. Consider Brendan Eich.
and scale matters. PACs with millions of dollars can exercise political power in a way that regular individuals cannot. the public needs to know who is exercising power (that it's in the form of spending money is incidental).
no one can (or should) protect you from all repercussions, and social pressure is better than (destabilizing) violence.
A statement so vague could justify anything.
> it's why we have 3 co-equal branches of government that must make their deliberations and decisions known to the public.
In fact, they aren't so required.
> and scale matters. PACs with millions of dollars can exercise political power in a way that regular individuals cannot. the public needs to know who is exercising power (that it's in the form of spending money is incidental).
You've ignored every point I've made and have repeated yourself.
> no one can (or should) protect you from all repercussions
An argument I did not make.
> and social pressure is better than (destabilizing) violence.
The former tends to cause the latter.
If you just want to speak without listening, you could write a blog.
And now, it's pretty easy for a foreign power to funnel dark money too, running ads on TV, while the rest of us losers are outside, shouting.
Foreign money is a serious problem, indeed. It's not the same problem, though. Hammer/nail, baby/bathwater, etc.
Because the Constitution starts with "We, the incorporated legal entities", not "We, the people".
Except that people in a corporation are there to pay rent and NOT exercise political speech. In fact, the political views in corporation's ownership can and often are the complete opposite of the "associated" persons, or employees. So why would a corporation be able to voice its opinion on behalf of the people in the said corporation?
What was the last time you specified your party affiliation during a hiring process? You didn't, because it's illegal in the first place. I know for a fact, that a major investor in the company I work for does not share my political views.
If I may use a colloquialism: wat.
You seem to have a very narrow view of what qualifies as a corporation.
I wish you would address the principled arguments I made regarding liberty instead of simply reasserting, "Corporations aren't people!"
Conversation is attained when both parties listen.
This is why I hardly bother having such discussions online anymore. No matter how reasonably and concisely I write, if I'm lucky, people will read the first and last lines before strawmanning and accusing me of being stupid, evil, or both.
If I may, I would suggest removing Hanlon's Razor from your interlocutory toolbox for a while.
Run the thought experiment of what you'd do if that taxes doubled or halved.
I don't know about you, but in the case of taxes doubling I'd reduce my profit margin by investing in the business to increase top-line revenue and profit in the future rather than pay more taxes now.
If taxes halved, well, then I just take home more money now! Simple.
Granted, this is a massive over-simplification, but the basic principle holds: taxes on profit literally force businesses to decide between reinvestment and cashing out.
if my corporate tax rate is low, but personal tax rate is high, as in your example. i may choose to invest in a SEP, or a deferred compensation plan, kicking the taxes down the road. potentially, because of the estate tax laws, my heirs may inherit these investments with no tax penalty due to step up basis rules.
if you were making a million dollars a year in profit, you probably wouldn't need ordinary income anyway. there are so many different types of credit vehicles you could leverage at a lower interest rate than the tax rate. though i suppose, arguably this is a type of economic growth. it grows profit in the financial services industry.
Statutory vs Effective tax rates are what actually count in terms of the long term choices companies make and the outcomes for the rest of us. In my example, imagine that there are absolutely no tax dodges whatsoever. The statutory rate is the effective rate.
If it were impossible to pay accountants to dodge taxes, i.e. the middle class income tax bracket, then my example holds.
Note for the casual reader: please be aware that there is a HUGE difference between statutory and effective tax rates.
Politicians and Corporations hope you don't catch on.
There is a lagging effect, but these taxes are just a reduction in cost which eventually get passed to consumers. Assuming the market is competitive of course.
Many many businesses would want to keep the extra money that tax breaks afford them. I don't understand how pointing this out is not adding to the conversation.
I've looked at the income taxes versus growth in the US... and I've been unable to find any obvious relationship. As one of many possible examples, below is a table showing the highest marginal federal income tax rate and year-over-year real GDP growth in the US since 1950.
My conclusion, so far: There's a tremendous amount of theory, and rhetoric, and posturing, and straw-man arguments... but very little or ZERO actual evidence that national economic growth is impacted one way or another. If anything, the data seems to show higher economic growth during periods of higher taxation!
Highest US Real
Year Tax Rate GDP Chg
1950: 84.4% 8.7%
1951: 91.0% 8.0%
1952: 92.0% 4.1%
1953: 92.0% 4.7%
1954: 91.0% -0.6%
1955: 91.0% 7.1%
1956: 91.0% 2.1%
1957: 91.0% 2.1%
1958: 91.0% -0.7%
1959: 91.0% 6.9%
1960: 91.0% 2.6%
1961: 91.0% 2.6%
1962: 91.0% 6.1%
1963: 91.0% 4.4%
1964: 77.0% 5.8%
1965: 70.0% 6.5%
1966: 70.0% 6.6%
1967: 70.0% 2.7%
1968: 75.3% 4.9%
1969: 77.0% 3.1%
1970: 71.8% 0.2%
1971: 70.0% 3.3%
1972: 70.0% 5.3%
1973: 70.0% 5.6%
1974: 70.0% -0.5%
1975: 70.0% -0.2%
1976: 70.0% 5.4%
1977: 70.0% 4.6%
1978: 70.0% 5.5%
1979: 70.0% 3.2%
1980: 70.0% -0.3%
1981: 69.1% 2.5%
1982: 50.0% -1.8%
1983: 50.0% 4.6%
1984: 50.0% 7.2%
1985: 50.0% 4.2%
1986: 50.0% 3.5%
1987: 38.5% 3.5%
1988: 28.0% 4.2%
1989: 28.0% 3.7%
1990: 28.0% 1.9%
1991: 31.0% -0.1%
1992: 31.0% 3.5%
1993: 39.6% 2.8%
1994: 39.6% 4.0%
1995: 39.6% 2.7%
1996: 39.6% 3.8%
1997: 39.6% 4.4%
1998: 39.6% 4.5%
1999: 39.6% 4.8%
2000: 39.6% 4.1%
2001: 39.1% 1.0%
2002: 38.6% 1.7%
2003: 35.0% 2.9%
2004: 35.0% 3.8%
2005: 35.0% 3.5%
2006: 35.0% 2.9%
2007: 35.0% 1.9%
2008: 35.0% -0.1%
2009: 35.0% -2.5%
2010: 35.0% 2.6%
2011: 35.0% 1.6%
2012: 35.0% 2.2%
2013: 39.6% 1.8%
2014: 39.6% 2.5%
2015: 39.6% 2.9%
2016: 39.6% 1.6%
2017: 39.6% 2.4%
2018: 37.0% 2.9%
Year-over-year real GDP growth: https://fred.stlouisfed.org/graph/?g=pssP
Tax rates: https://www.taxpolicycenter.org/statistics/historical-highes...
I don’t know all of the details specifically, but I know that the tax reform act of 1986 did two things: 1) closed a lot of tax loopholes/deductions, and 2) lowered the tax rates.
Pre-1986, the scope of what could be done to avoid taxes was insane. No one who made money was paying the headline rate on any amount of their income — any decent accountant would pay for themselves instantly with the savings they could produce.
If you want to use this type of data, it might be more prudent to look at different numbers — maybe effective tax rates (i.e., actual tax paid divided by actual income earned). The numbers might tell a slightly different story.
Please do not attack a straw-man!
If anything, the only thing it does show is that the people using that metric (top tax bracket vs GDP growth rate) don't really understand how the tax system has changed over the decades.
It also clearly shows why you need to have a full and complete understanding of tax reforms/laws over the decades to really be able to debate the issue effectively. Most people seem to only have an understanding from google searches or news articles. It is no surprise that politicians use this ignorance to their advantage.
More important than that is that the periods of higher taxation were the periods where arguably America's greatest assets: it's physical and educational infrastructure, were built.
Since the period of lowering of tax rates began in earnest in the 1970s, we've seen an extraordinary growth in privately held wealth among the already wealthy, while wage growth has barely kept pace with GDP growth, manifesting in growing inequality of income, wealth, and by consequence of those, opportunity. There was also a disinvestment in our national shared infrastructure, which is disproportionately relied on by working families, including public schooling and transit. Instead those were turned into factors in the larger lottery of home ownership.
This is how quality of life for average people can get worse despite the growth of GDP.
PS. FWIW, I chose this particular table as an example mainly because much of today's political debate, e.g., in the US Democratic party, is about raising marginal tax rates for the highest brackets.
That phrase is the funniest I have heard in a long time.
TL;DR: My portfolio manager adjusted my strategy because tax plan was a giveaway for the rich
EDIT: So many downvotes. Truth is truth, man. Truth is truth.
Perhaps the title could be updated to say "state/local tax incentives".
Only credits are really business tax incentives, since business expenses, as such, are generally deductible.
> and these definitely shape behavior because the rate is so much higher than state/local taxes
That doesn't follow. It would make sense that if state/local incentives did shape behavior, larger federal incentives would do more to shape behavior. But if state/local incentives have no evident effect, what amounts to more of the same could plausibly also have no effect.
Credits are definitely not the only business tax incentives. Accelerated depreciation or amortization is one easy example. Also, the decision to treat something as an immediately-deductible expense as opposed to something that has to be capitalized is itself a tax incentive.
> But if state/local incentives have no evident effect, what amounts to more of the same could plausibly also have no effect.
Sure, it could. But the paper doesn't even try to establish that. It's like saying that speeding doesn't cause traffic accidents, based on an article that only looked at bicycles that speed.
It's a bit odd to have attracted downvotes here, while at the same time the title was updated in the way that I suggested.
Evidence for this claim? Although you're right that the article is about state/local taxes, it's not obvious that federal tax breaks are different.
A lot of people own stock indirectly.
Come on, hackernews. We can do better than downvoting informative comments.
My investment accounts look good this year, but they were pretty red at the start of last year.
What the ever loving hell are you talking about?
44% of all employed people in the united states earn $18,000 or less.
This is a major problem: you live in a bubble and know little about people that don't make as much as you. Half the country is struggling to stay out of POVERTY and you're playing the Marie Antoinette card.
2) the largest companies in the S&P 500 represent a tiny slice of US GDP. 21% of the S&P 500 are IT companies, as are 4 of the top 5 companies. However, IT represents only 6% of the total US private industry GDP. Thus, the S&P500 does not represent the economy at large. It's the economic equivalent of an opinion poll containing only redheads.
3) Money paid in taxes by such firms in taxes also benefits your parents and everyone else, just in different ways.
Asserting that the US economy as a whole is worth 50% more than it was 3 years ago is delusional.
As an example, 3 years ago Starlink was little more than an FCC filing. Now it is poised to create a brand new market conceivably worth as much as Apple.
If you think Intel is overvalued compared to AMD, you can short Intel, buy AMD, and make a bundle of money if you are right, so there is a mechanism to keep relative prices in line. If you think the 2020 market is overvalued compared to the 2012 stock market though, you can't move money back in time. Valuation doesn't tell you if/when a crash is gonna happen, it just gives a vague sense that returns will be lower over the next 10-20 years. A small positive return beats nothing, so a rational actor that knows the market is overvalued will stay invested. Hence, there isn't really any reason to believe market valuations are so rational.
I tend to think the market is overvalued right now, but I'm buying stocks anyway, because I'm saving money and don't want to stuff it under my mattress.
It would be incredibly difficult to point to one specific economic policy that was responsible for how many decades of stock market gains.
Can you show a causal relationship? Or would the null-legislation result in the same (or greater) gains?
> nearly everybody has money in the market and beneifts from gains.
I think this is very much untrue. It is very likely that the bottom ~30% income in the US have no spare earnings to contribute to retirement savings via equities or any other method -- either that or they have no access to an employer-sponsored tax advantaged retirement account like 401k/403b.
You cannot possibly claim it in itself is actual growth.