Hacker News new | past | comments | ask | show | jobs | submit login
Evaluating State and Local Business Tax Incentives [pdf] (princeton.edu)
419 points by plickdixon 15 days ago | hide | past | web | favorite | 214 comments

The submitted title ('“No evidence” that tax incentives given to companies increased economic growth') broke the site guidelines, which say: "Please use the original title, unless it is misleading or linkbait; don't editorialize."

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.

The paywall is not hard, since the paper is at https://scholar.princeton.edu/sites/default/files/zidar/file... , found by Googling "pdf Evaluating State and Local Business Tax Incentives".

Oh good. Thanks!

Edit: seems reasonable to change the URL to that. Submitted URL was https://www.nber.org/papers/w26603.

This sort of reminds me of a conversation I had with a guy with a stake in a restaurant close to a major sports arena development where I grew up. It totally changed the way I looked at economic impact reports on commercial developments, particularly sports arenas.

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.

If you don't follow the sports schedule, then you will inevitably find yourself near some stadium at a time when sports are about to happen, or have just happened.

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.

It's a similar experience on foot. One of my favorite local hangouts is in Wrigleyville. I almost never go there, because I won't go anywhere near Wrigleyville during baseball season, and in winter I'm in cocoon mode. That said, baseball season has enough game days to actually fuel a business.

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.

I actually moonlight at one of those bars in Wrigleyville, the bar closes for the fall/winter because there's literally not enough business to justify keeping it open. The only reason it's still open however is because the owners have plenty of capital from other endeavors. If anyone were to try to start a new bar there without deep pockets, they would have a hard time surviving.

For me in Uptown, the Wrigleyville traffic doesn't seem too bad as long as I don't need to be _in_ Wrigleyville itself. The worst part is the Red Line--seems like game times seem to coincide with rush hour such that everyone needs to be going North at the same time. Soldier field traffic was pretty miserable when I lived in South Loop (all that traffic going to/from 90 via Roosevelt).

Funny, I was about to make a comment about Wrigleyville and you nailed it.

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.

One of my favorite single-purpose websites: http://isthereacubsgametoday.com/

100%. Usually it's not even clear to me why traffic is so bad... I just have a mental heatmap of averaged-out traffic shittiness and I stay away from the hot spots. Nothing has gotten better in the 15 years I've lived here, and basically everything has gotten worse, so I don't have much incentive to give the worst areas a second chance.

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.

Seattle's roads were most definitely not built for the amount of traffic they see. I remember watching from my porch as cars spent an hour inching their way through the mile to the 99 when I was living in Lower Queen Anne. This was five years ago. I went back recently and things were far worse.

Because, as traffic and transportation research is starting to show, traffic is supply-side (capacity) dominated, given time to reach equilibrium in a growing region.

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.)

> starting to show

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".

That's true, but having GPS and being able to do studies that are based on actually tracking vehicles has been a game changer (instead of just point traffic counts or driver questionnaires).

I live relatively close to Patriot Stadium, and as a rule I never go down there on Sundays; I try to plan my Trader Joe's runs for Tuesday nights or some other time I'm relatively certain sportsball isn't going to make it a madhouse.

Good point, made me realize a bit of my own experience - since I moved out of downtown Toronto, the entire area has been a mental black hole to me precisely because on game nights, it can take 2-4 hours to extract yourself out of 3-4km of space, so I just don't risk it (especially since it's the kind of 2 hours that feels like 7...)

As a non-sports person, I never understood our country's obsession, preferential treatment, and worshiping of anything that has to do with NFL, NBA, NHL, and MLB, be it tax subsidies of stadium, cable bundling of sports channel, or looking down on people who are not into sports.

Just a quick, somewhat glib opinion in response to this.

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.

The NFL etc. are largely about watching sport, not participating in it. You'll find lots of countries that (i) have better publicly accessible sporting facilities than the USA and (ii) spend far less public and university money on sports teams.

Think about how a lot of fans speak about their teams.

"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.

Last year there were reports out about how watching sport might be tricking us into thinking we've participated in such a way that it increases sedentary behaviour.

Interesting. My friends that watch the most sports seem to be the most overweight. I expected this to be the opposite, but maybe this is normal. Probably just anecdotal.

It's apparently been studied:


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.

Sure, but if people can enjoy vicarious competition, they can presumably enjoy the real thing too.

Most of the big football programs make the universities money hand over fist, and keep alumni engaged.

Is it that the sort keeps alumni focussed, or that the Uni spends its effort on making alumni focus on it?

Perhaps a focus of academic achievement would be equally engaging -- I know that's what engages me wrt my alma mater.

Was going to say something similar, but I guess in the early 2000's the articles were basically saying that all but a few of the top schools were losing money hand over fist on their athletic programs. Basically most of the sports don't pay for themselves, and if your a small school unable to make bank on TV/ticket/merchandising/etc deals for the football/basketball team its a giant amount of red ink to build those stadiums and pay for the exorbitant coaching, and support staff, equipment, etc.

It's not just your country, my former city of Christchurch, NZ has a council hellbent on spending money it doesn't have for a stadium it barely needs.

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".

Civic pride....

https://www.stuff.co.nz/sport/117262170/christchurch-stadium... https://www.stuff.co.nz/sport/rugby/117978037/christchurchs-...

Ballet companies, museums and philharmonics are money losing propositions in nearly every case, and cities invest in these typically without complaint. Complaining about about a sports stadium because it's low culture rather than high is elitist and undemocratic.

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 generally don't build stadiums costing hundreds of millions so a billionaire can bring in Ballet.

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.

> We generally don't build stadiums costing hundreds of millions so a billionaire can bring in Ballet.

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 I would like to see more of is stadium deals in which the municipality gets an equity stake in the team.

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?

Politics itself has become sports, too. Red team or blue team.

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.

This describes the majority of voters which do not have a clue as to what they are voting for, or the platform that their favorite candidate stand on. The just blindly vote the party ticket because that's their team. Generally, it is the swing voters that are more informed on politics and don't necessarily vote the party ticket.

I heard this argument a lot, and perhaps the people I find myself around are abnormal, but I'm trying and failing to come up with people I know who vote along party lines simply because it's one party or the other. Just about everyone has at least one major issue that keeps them from voting the other way, and most have multiple reasons.

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.

One of my favorite things about the shitstorm that has been the last 4 years is the red and blue teams ripping eachother to pieces when Kaepernick kneeled, and then the NFL responded. Other sports drama has been fun as well. I suspect some people with a lot of power benefit a great deal by a binary division of the population, but sports throws a nice fat wrench into their Best Laid Plans.

It's crazy.

I can't imagine a "sports school" in Canada.

> looking down on people who are not into sports.

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 more often notice people who do not like watching sports vocalizing negative feelings towards people who do.

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.

"hurr durr I watch the sportsball" seems to be a pretty common view. It's silly, but I get it somewhat. I've been at a dinner/drinks thing before and literally every person was talking about football.

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.

I believe the deep interest in sports is partially genetic. Some people's brains have very strong "mirror neurons" so when their sports team does something great, they feel a portion of that success as a real thing in their head. Some people (actually a lot of people) are just hard wired to enjoy the bread and circuses:


That's not just some people, it's everyone. There are very strong survival benefits to being able to receive that chemical high for believing we belong to a particular group.

Watching sport had always made me want to go out and do it, as a kid I'd try to fit in but after 5mins I'd have to go out and play. Watching other people have fun playing football made no sense.

Why would it be "believing" we're part of a group that makes the high and not _being_ part of a group.

Because identifying as part of a group is part of the mechanism that lets humans act collectively. Same kind of thing as the need to belong to some group, organization, or clique. Humans acting collectively are safer, stronger, better fed, and in general reproduce more successfully than humans who do not.

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.

If you think we’re obsessed with sports now, try reading up on the Nika Riots in the Byzantine capital. There’s something about human nature that leads to sports fanaticism that I just don’t have, but team sports have always impacted matters of state.


I can imagine some Roman citizen saying the same thing at the local market thousands of years ago, in reference to the games.

Reminds of Juvenal's Satire X: ... Already long ago, from when we sold our vote to no man, the People have abdicated our duties; for the People who once upon a time handed out military command, high civil office, legions — everything, now restrains itself and anxiously hopes for just two things: bread and circuses

As a sports person I understand it, but am still conflicted by it. There's something unsettling about teachers and police officers getting paid a sliver of what a pro athlete does and in some way I have contributed to this. But it's also a source of joy and inspiration for many people, that has to be a good thing.

Interesting thought though. Why do NFL players get paid so much? Where's the money actually coming from? I don't know too much about this industry but it seems their NFL salaries come from ticket sales and TV licensing deals, and the TV companies can pay them because of advertisements, which they can sell because people watch football thus tv thus ads.

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?

> Why do NFL players get paid so much?

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.

Maybe teachers can scale with technology? Maybe we see some of this with online courses, MOOC's? If that were monetized in a way to give the proceeds directly to the teacher maybe that could work? Although some teaching does not lend itself well to that environment, in some cases classrooms and 1 on 1 interaction is something that cannot be substituted.

I agree for all the examples you give, there's nothing clear like there is for athletes and artists.

>Must be why NFL, NBA etc get so fuckin salty when people upload highlight reels and stuff to youtube.

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...

Yes that's right, that's what I meant by me contributing in some way, via ticket sales, merchandise, it all adds up to some athletes being mega millionaires. Although nowadays the big stars have lots of advertising deals and make big $$ outside of their regular paycheck also.

I don't know how to fix the teacher's pay. It's just unfortunate that by comparison they make pennies.

If we can pass 718B for the military then we can afford to pay teachers more.

Without even a cent in extra tax.

>There's something unsettling about teachers and police officers getting paid a sliver of what a pro athlete does

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.

Pro atheletes are part of the rare group of workers who get paid close to value of their labour.

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.

Being dangerous isn't the only qualification for a high paying job and not why I chose those 2, they are both in my opinion underpaid. Obviously for different reasons at face value, but they both provide a public service and get paid poorly historically.

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.

Is there anything that you are really into? A hobby you like to read about, talk about, and follow?

I've had this discussion before on HN, if I find an easier way to search my comment history I'll try to turn it up.

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.

I don't really think it is different.... sure, watch enthusiasts don't cheer for their favorite watch, but that is not how watch enthusiasts enjoy their hobby... cheering is how sports fans experience their hobby.

It's a civic pride thing. Even though I don't follow any sportsballs, I do take some pride in the fact that my city has professional football, baseball, basketball, and hockey teams. It's a "we matter" thing. I may not love those sports, but many of my neighbors do.

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.

Except that the sports team has absolutely nothing to do with the city in which it is physically located.

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.

Society is made of achievements we did not perform. This sort of hyper-individualist rejection of our sense of community is incredibly bleak and depressing to me.

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.

This is a straw man.

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.

Other than the fact that the games are played there, the people who live in the area watch the same teams and have conversations about the games (home or away), and it can be a sense of shared experience.

Most normal people in the US do relatively little, and 100% of the variety in their (IMO) boring lives comes from television programming, hollywood big-budget movies, and sports.

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.

I'm mostly against subsidizing sports venues with public money...

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.

One of my favourite examples of how the government moves the goalposts around to make the economy numbers go up is how they removed housing prices from the CPI in 1985.

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.

Housing prices are included in the CPI both for owners and renters. Here's how => https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...

Selling and moving to a fancier place nearby is what many people do. You free up that equity and suddenly you can afford a sizable down payment on a nicer place that you couldn’t otherwise had you been renting the whole time.

This is only because most home purchases are fueled by debt.

> 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 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.

If you build an arena and only use it for 15 games per year then the problem may be the poor design or under-utilization of the asset, not the asset in the first place. There is a huge and lucrative market for all sorts of private and corporate events, and arenas would seem to be desirable venues.

Our local NFL arena has plenty of off-season events. Football season just ended (since we didn't make the playoffs)

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

If the arena was actually a profitable/smart enterprise then the billionaires wouldn't mind paying for them.

As the old saying goes. If the project is not economically viable then you get out of the project building business and get into the selling products/service/labor to the government business. You make more money selling the products/services/labor to the government than you would ever make actually building and owning the asset outright.

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.

In Minneapolis, there's a great bbq place that is right across the street from Vikings Stadium. I'm sure it's great game days, but it's a pain to reach any other time. They're abandoning that location and moving into my residential neighborhood. I'm sure that being in walking distance will change it from a 2-3x/year treat for me to a 2-3x/month treat - and their business will be far more stable.

The whole sports economic impact mantra is pervasive.

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.

I wonder what the difference between having an NFL stadium and having a MLB stadium is. MLB plays multiple games a week during a large part of the year, which might provide a more steady bump in traffic instead of occasional tsunamis of people.

> numerous reports were published around the positive economic impact of the stadium

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!


It's funny - you're describing the city that I'm currently living in, right down to the arena and businesses around it.

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.

This was true of downtown Denver, specifically the "LoDo" neighborhood, when the Colorado Rockies baseball team moved to Coors Stadium. Baseball's a little different, there's 76 home games or something, but restaurants were overwhelmed prior to the game, scaring people away. I think Denver has adjusted to this by now. Your points stand, however. 2nd order effects, which we're not used to considering, can be very large sometimes.


specifically this one:


With that in mind, there is however a huge difference between a tax break and a govt subsidies.

It eventually boils down to the fact that the whole economy is a very complex thing that can not be planned and secondary impacts are mostly unpredictable.

I wonder how much of that "increased spending around downtown" came at the cost of decreased spending in the surrounding area(s).

> While we find some evidence of direct employment gains from attracting a firm, we do not find strong evidence that firm-specific tax incentives increase broader economic growth at the state and local level. Although these incentives are often intended to attract and retain high-spillover firms, the evidence on spillovers and productivity effects of incentives appears mixed.

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.

I do not understand. If you can't say "no evidence" when you can't find any strong evidence, then when can you? What should the article have concluded to make it OK for them to say "no evidence"?

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.

From the second half of the quote:

> 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.

Not quite, a positive result would need to be obvious to justify spending. Give away a free factory and the most useful thing to use it for does not change thus the company employees the same number of workers. It’s a function of cheap capital making infrastructure subsidies really expensive and largely worthless.

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.

Since the study compares subsidies by local and state governments, changing the location will benefit one community over another. The spillover effects of hiring 1500 people in a former mining town t will be very different from hiring 1500 in an outer suburb of NYC, for example, and I suspect this I where the mixed results data come from.

I think the issue is major cities like NYC also play the game, and they have far more money to spend. Amazon’s HQ2 ends up in the same place they would have without this fight, but the government hands out a huge subsidy.

HQ2 ended up in virginia- they added 1500 employees to an existing office in NYC but backed out of the 25,000 they had planned for a different office.

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.

But that’s just the nature of competition. Jurisdictions are in competition to attract investment as much as companies are.

The title seems to be intentionally misleading, the words "no evidence" are presented as if they are a quote from the paper, while in reality the phrase "no evidence" appears zero times in it.

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.

>"We do not find strong evidence" is not the same as "no evidence"

Yes it is? It's not literally the same, but it conveys the same meaning.

No, it doesn't. "No strong evidence" would convey 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.

This isn't a study. The only study that the paper attempted was a narrative of Volkswagen...and, tbh, I didn't really understand that (they just looked at how many workers worked in the place that got the factory, versus second place...just no logic)...with a brief quantitative study (it is there, it isn't detailed enough).

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.

"Absence of evidence is not evidence of absence."


Yes, but saying "there is no evidence of X" is not claiming evidence of absence. That would be "There is evidence of not X", which the paper does not claim.

But the headline doesn't claim "evidence of absence". It merely claims "no evidence".

Current submission headline: "“no evidence” that tax incentives given to companies increased economic growth"

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.

>Now, I'm not a fan of such locality-vs-locality targeted-incentive competition, and without broader growth, the costs may be too expensive for the narrow employment gains.

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.

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.

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.

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.

If business was only about taxes, all of silicon valley would relocate to Cleveland yesterday.

Tax incentives in the US happen (a) where an entrenched industry negotiates it using its existing jobs as leverage; and (b) where a depressed region hopes to attract new investment. In the latter case offsetting problems conspire to prevent economic growth. That tends to be labor pool mismatch, poor regulatory environment as compared to other states, and overseas competition that offers supply chain and labor advantages. In other words, tax incentives aren't enough, period.

Labor advantages are the biggest deal. The US spends a mind boggling amount of money on education and still gets out-competed by struggling poor countries.

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.

10% above the rest of the state to move to the middle of nowhere obviously wasn't enough. When a company says they can't find anyone to hire, what they really mean most of the time is "we can't find anyone to hire for the mostly arbitrary price we want to hire them at."

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.

I can't tell you how many times I've heard an org say that did a market analysis and the offered wage is "competitive" so clearly it's a labor supply issue and not possible that they are not offering enough compensation. Competitive does not mean "we're offering a little more than the minimum salary we saw on glassdoor," but often that's exactly how they determined it.

>10% above the rest of the state to move to the middle of nowhere obviously wasn't enough. When a company says they can't find anyone to hire, what they really mean most of the time is "we can't find anyone to hire for the mostly arbitrary price we want to hire them at."

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.

Yeah, and sharepoint administration totally needs butts in the seats to implement.

>The US spends a mind boggling amount of money on education and still gets out-competed by struggling poor countries.

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".

New York state started a program of "Empire Zones" in depressed areas, but pretty soon every legislator wanted one in his district and next thing you know we have an Empire Zone in every county.

The loss of revenue is real, the benefits for the community never seem to materialize.

I highly recommend this talk on corporate tax breaks and poverty in Louisiana: https://www.youtube.com/watch?v=RWTic9btP38

Mississippian here, where this sort of policy is just another day. Here's more evidence that supports this paper: https://mississippitoday.org/2017/05/02/how-much-have-tax-cu...

Profit can be gamed and there are all sorts of little write-offs here, exceptions there, and loopholes besides.

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.

Maybe we can look for a relationship between tax incentives and campaign donations?

This is probably highly variant depending on the jurisdiction, the company, the specific terms of a deal, and so on. The Wisconsin Foxconn deal was terribly structured, and it left taxpayers holding the bag with little protection. However, the NY Amazon deal was a good one, with the city's own projections showing a 27:1 ROI. That deal was comprised mostly of existing programs like Excelsior, ICAP, and REAP. These programs only provide a subsidy for prior results, rather than up-front lumpsums. IIRC only $500M of the total subsidy package for Amazon was in the form of a grant, and it was itself tied to investments Amazon would be obligated to make contractually. The aforementioned NY/NYC programs have been used for numerous companies, and presumably the city and state agencies operating these programs view them as successful, since they continue to offer them.

TFA does not say "No evidence"

I see that the abstract doesn't say "no evidence". Did anyone download the full paper to see if "no evidence" was quoted there?

>In 2014, states spent between $5 and $216 per capita... Collectively, these incentives amounted to nearly 40% of state corporate tax revenues for the typical state, but some states' incentive spending exceeded their corporate tax revenues

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.

The odds of a random HN reader eventually writing an economic paper are fairly low, while the odds of the original authors writing another paper are high. Perhaps you should tell them what you think.

Don't bother. It is basically a meta-analysis. There was nothing interesting in it (just generally, this seems like a very hard area...econometrics does very well in these areas but I doubt it would ever make sense to conclude: no incentive can be good).

Love the snarky reply you got...funny that those kind of comments are usually from people who haven't read the paper.

As a reminder: every business, everywhere, already gets a 100% tax exemption on every cent spent on hiring employees, buying new equipment, etc. ANY money invested into ANY business equipment, hiring more staff, or whatever you might do to expand the business is completely tax-free and always has been.

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.

Right but the problem with business is that it is risky. If there are no profits, why risk your capital in the first place? Might as well just buy gold bars or art.

"There is not conclusive evidence, however, to substantiate a clear relationship between the 65-year steady reduction in the top tax rates and economic growth."


"However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution."


The tax money given to companies through tax incentives means that there is not schools being built. There is not roads being paved since those taxes where never collected. If there was no tax incentives the same amount of people would be employees. States are competing with the best tax bids. Public hospitals and universities are not being funded. All that lost revenue may lead to worse development of society as a whole.

It's been a known scam for years but people still believe something trickles down. It ain't prosperity, though.

Do you think companies don't consider taxes when locating new factories and offices? I don't support tax incentives for individual companies, but I do support keeping state corporate and personal income taxes low to attract businesses.

I think you meant "companies" and not "states".

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.

Eventually the state has no recourse if the company changes its mind.

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?

If you look at what happened with Wisconson and Foxconn, you basically had a web of corruption at the highest levels of government with support from the POTUS. They deliberately negotiated a shitty deal because they are all corrupt. It's not that hard to see, unless you happen to be a Trump supporter.

You're not wrong but it becomes a race to the bottom.

This is Moloch[1] (I highly recommend reading Scott Alexander's essay, because he says a lot more than I could say and he says it a lot better.)

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.

[1] https://slatestarcodex.com/2014/07/30/meditations-on-moloch/

I don’t understand why people say this. Trickle down economics couldn’t be more honest All the money collects at the top and a few pennies “trickle” down to those below. It’s not called “waterfall economics” after all.

Why anyone would want this I don’t know. But it’s definitely not a “scam.”

Someone actually did a report on this? Its obvious what needs to be said to gain consensus vs actual benefits.

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!

Interesting conclusion from the "National Bureau of Economic Research", which is not a government agency as its name suggests, but rather a private think-tank like thing. Krugman calls it "the old-boy network of economics made flesh". That is, it's conservative in the sense of favoring the status quo, it's old and stodgy, etc etc.

This happens on both sides. Most of these "think tanks" just craft up bogus research to push some agenda. It happens on both sides of the debate.

Just finished reading Dictator Handbook.

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.

It's almost like big money in politics is a bad thing. Citizens United will finish this country as we know it, and soon. "Money equals free speech" is just such a cynical and intellectually dishonest argument. "If you want MORE free speech, maybe you should be more rich".

It seems unfair that those who have more money may have more influence--and in a sense, it is.

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.

but freedom of speech is really incidental to the core issue of the disproportionate influence of money in politics. yes, no one should be deprived of the fundamental right of speech (against the government). but that's the important bit--it's a freedom from the tyranny of a government.

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.

If I understand you correctly, you would seem to advocate for a positive right of a citizen to know how another citizen has freely spent his own money.

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.

it's a bedrock principle of our constitutional framework that we know who is exercising political power, to avoid corruption and tyranny. it's why we have 3 co-equal branches of government that must make their deliberations and decisions known to the public.

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.

> it's a bedrock principle of our constitutional framework that we know who is exercising political power, to avoid corruption and tyranny.

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.

That's not what I am saying. I can walk out and shout on the street, or buy an ad during Superbowl. Which one do you think has more power?

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.

What isn't what you're saying? I feel like you didn't read my comment, because I covered that.

Foreign money is a serious problem, indeed. It's not the same problem, though. Hammer/nail, baby/bathwater, etc.

What was wrong with the pre-Citizens United world? It was still bad, but it just took corruption of democracy and dilution of speech by regular citizens into overdrive.

That's a leading question. Instead, why don't you answer this question: Why did the majority say it decided the way it did? Show that you understand both sides of the issue and aren't simply another guy on the Internet raging against CU.

Yes, I do. Corporations are associations of people who have the same right to a voice. Corporations are people, my friend.

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.

> Except that people in a corporation are there to pay rent and NOT exercise political speech.

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!"

You did not make any argument for breaking the previous status quo. My question stands - what was wrong with it?

You've replied to me four times without addressing my original arguments, which are fundamental to the issue, regardless of the status quo.

Conversation is attained when both parties listen.

I don't know how to apply Hanlon's razor here. Are you seriously contending that affording a bullhorn on a street corner is in any way comparable to affording millions in TV and print ads?

As I said to 'papito, I feel like you didn't read my comment, because I addressed that issue, and I didn't say what you seem to think I did.

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.

Since when are political decisions evidence-based? Serious question. Tax incentives aren't there because they work, but rather because lots of people believe they work. Politics works on beliefs, not facts.

How can you even begin to counter a mistaken belief without evidence that the belief is indeed mistaken?

You substitute one belief system for another. No evidence needed. It's not hard to find people who have done just that.

Imagine you run a company that makes a million dollars a year in profit and that there is a flat 10% tax on that profit.

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.

i think this oversimplification may obfuscate the issue in a way that's a little misleading. in reality, the two choices are not only taking a tax hit or reinvesting in the business. there are a pretty wide array of tax avoidance schemes that are utilized in the united states.

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.

My example is intentionally simplified, and doesn't consider either a high or low personal tax rate. It also doesn't consider tax avoidance because, frankly, legislation that enables tax avoidance is equivalent to lowering effective taxes.

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.


If I owned a business, and suddenly paid way less in tax, I would want to just pocket that money as profit and increase my personal wealth, why would any other business do anything different? We're self-biased at the end of the day, it's survival.

Because of competition. Your competitor who lowered prices by 1% would eventually drive you out of business.

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.

Unless there are pressures to do otherwise, your competitor is likely to do the same as you. If customers accept the current price and there is no external pressure to lower it, lowering it is likely not a good idea, and unless the market is unusually competitive, sales are unlikely to increase without a substantial drop.

I think that you're not acknowledging businesses that don't compete solely on price, like house-cleaning, cigarettes, alcohol, massage, SEO, etc.

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.

State and local business tax incentives

You are supposed to post with the actual title, "Evaluating State and Local Business Tax Incentives", unless it is too long.

The same appears to be true for individual income taxes too.

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...

That’s a great idea, but the simplified data is grossly misleading.

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.

csa: Please do NOT misrepresent what I wrote! My post clearly mentions that the table is "one of many possible examples," and that I have not been able to find a relationship. (FWIW, I chose this particular table as an example mainly because much of today's political debate, e.g., in the Democratic party, is about rising marginal tax rates for the highest brackets.)

Please do not attack a straw-man!

Completely agree, was also going to point out the same thing. Comparing the top tax bracket next to GDP growth is just a very bad comparison to say the least. The tax reforms over the years distort it so much that the comparison is effectively useless.

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.

> If anything, the data seems to show higher economic growth during periods of higher taxation!

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.

These numbers are very misleading. If you at the graph of effective tax rates of the 1% going back to the 1950s, the 1% only paid slightly more in income taxes than they do now (~40% vs ~35%).


fbonetti: Please do NOT misrepresent what I wrote! My post clearly mentions that the table is "one of many possible examples," and that I have not been able to find a relationship. Please do not attack a straw-man :-)

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.

They don't, they give money to boomers. Billionaires and CEOs get some too. That is the only thing going on here: redistribution of wealth away from anyone under 40.

Don't worry, once you're over 65 you'll be off to vote for social security increases in every election.

It won't matter, demographics made boomers a permanent majority. They make my generation a permanent minority. I'll vote but may as well not.


Is this comment performance art?

> marxist paid trolls

That phrase is the funniest I have heard in a long time.

You laugh, but the US overthrew Iran by paying a few people to pretend to be Marxists and prematurely start their revolution.

So why increase spending ? Tax it.

My portfolio manager told me in Dec 2018 that our 2019 strategy would depend on if companies invested their tax returns for growth or handed them out to shareholders and execs. He followed the latter path.

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.

Why wanting to increase economic growth ? Economic growth is polluting.

Because apparently trying to increase GDP from 2.5% to 2.6% is worth more to a party of people than providing health care to everyone and not putting young people into tremendous debt #justrepublicanthings

When did ever use evidence to make economic, political, or social decisions?

Tell that to the contractors affected by AB-5

Just to clarify, the scope of the article is state and local tax incentives. The federal government has many more tax incentives (basically anything that you can get a deduction or credit for), and these definitely shape behavior because the rate is so much higher than state/local taxes.

Perhaps the title could be updated to say "state/local tax incentives".

> The federal government has many more tax incentives (basically anything that you can get a deduction or credit for),

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.

> Only credits are really business tax incentives

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.

>these definitely shape behavior because the rate is so much higher than state/local taxes.

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.

Well, I worked as a corporate tax lawyer for the better part of a decade, and I could see how companies did or did not react to tax incentives. The higher the rate is, the more companies are willing to bend behavior to qualify for it. I can't cite specifics due to confidentiality, but it is universally accepted among tax practitioners and scholars that deductions are move valuable when rates are higher. Credits don't scale this way because they're a dollar-for-dollar tax reduction (although they're still limited to the total amount of tax that would be paid).

From what I've seen, federal tax is around 1/3rd of the total taxation done,, so I don't see why federal cuts would gain this importance. And it has almost universally been accepted that local and state breaks cause growth, there just isn't evidence that this happens.

What about stock market gains for 2019? S&P was up 30% last year which was fantastic. Before y'all reply that the stock market only benefits the wealthy, that's patently false. Weather it's your parents retirement account, pensions, your company stock options, your own trading account, nearly everybody has money in the market and beneifts from gains.

It's nice that you have such a great perspective on who "everyone" is. It's self-reported and thus probably well underestimated, but only 55% of Americans say they own stock[0]. And 84% of the total stock belongs to 10% of the people[1].

[0] https://www.financialsamurai.com/what-percent-of-americans-o... [1] https://www.nytimes.com/2018/02/08/business/economy/stocks-e...

Looks like “owning stock” in your data doesn’t include thing like pensions (public or private).

A lot of people own stock indirectly.

Agreed, that's why I said it was "probably well underestimated"; but even then if 20% of Americans don't have $500 in savings[0], it feels like "everyone" is at best something between 50-80%.

[0] https://www.marketwatch.com/story/half-of-americans-are-just...

I upvoted this comment to counter apparent downvotes, specifically because it is short and cited actual data and had references.

Come on, hackernews. We can do better than downvoting informative comments.

2018 was the worst year in a decade for the S&P, and now it's about where it would have been had average trends from the years before continued. Much of the gains in 2019 have been driven by stock buybacks, the Fed pumping cash into the economy, and lowering interest rates. Companies maybe have more money on the books due to taxes but what are they spending it on (or are they spending it at all)? Seems to be buying back shares more so than R&D, employee benefits, or physical growth. GDP growth is right around 2%, where it was prior to the corporate tax cuts of 2017.

My investment accounts look good this year, but they were pretty red at the start of last year.

"Nearly everybody"?

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.

1) the S&P500 is a measure of expected future growth for a very small percentage of companies out there. The S&P500 has been going up like crazy for years, and the S&P500 started off down quite a bit in early 2019 after taking a 7% loss in 2018. The two year average return is only ~12%pa and the five year average return was about 10%pa.

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.

That only works so long as it doesn't collapse like a house of cards due to being overvalued beyond all justifiable reason.

Asserting that the US economy as a whole is worth 50% more than it was 3 years ago is delusional.

Before calling millions of highly educated people who work in the stock market delusional, might it be worth considering what exactly a 50% increase in the stock market represents, which is a 50% increase in perceived future value of the market?

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.

A recession that costs 2% of GDP can drop the stock market 40%. That doesn't make mathematical sense, but it's been happening all through the history of equity markets because there isn't a strong mechanism to fight an irrational change in sentiment.

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.

The stock market always trends up. The only time it trends down is during recessions, which have always recovered and added gains on top of the losses after the recession ends.

It would be incredibly difficult to point to one specific economic policy that was responsible for how many decades of stock market gains.

If you are a younger individual in the early stages of retirement savings, this is a bad thing, because you expect to buy a lot more stock in the future. Stocks are now 30% more expensive than one year ago.

They say stock prices are up! I say stock prices are inflated.

> What about stock market gains for 2019?

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.

More than that. A full 45% of Americans hold no stock whatsoever, including indirectly through IRAs and 401k [1].

1: https://news.gallup.com/poll/266807/percentage-americans-own...

In any case the stock market is just a model. You could make the claim higher valuation more accurately reflects reality, or that it "benefits everyone", or that the higher confidence is indicative of future higher growth.

You cannot possibly claim it in itself is actual growth.

Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | Legal | Apply to YC | Contact