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[Korey]

http://www.cnbc.com/2016/05/27/financial-times-bridgewater-secures-22m-in-state-aid.html

Corporate welfare going to new heights. Now we are giving a shit ton of money to a fucking hedge fund...

The benefit to the state must > the incentives payout they're giving them though, right?

So isn't that a good thing?

 

[darkace]

A new low in the race to the bottom.

Eh, not really. Some states don't have advantages to offer businesses that places like California or NY have. It's just a way of ensuring better outcomes for the taxpayer.

Nobody wins if they leave.

 

[BladeoftheImmortal]

140 billion dollar company can't "afford" to pay its taxes?

 

[numble]

The performance of hedge funds is a red herring. States routinely give tax breaks to companies that have negative profit, such as Tesla and Amazon. The state's interest are in jobs and the local taxes that are generated from them.

 

[Piecake]

The benefit to the state must > the incentives payout they're giving them though, right?

So isn't that a good thing?

It is certainly possible, but as Old mentions the deal needs to ensure that the hedge fund can't just pump out a lot of temporary shit jobs.

I would argue that it could be a good thing for the state, but certainly isnt a good thing for the American economy. This deal isnt going to produce any new jobs. The only result will be that a hedge fund company has several more millions in their bank account.

Eh, not really. Some states don't have advantages to offer businesses that places like California or NY have. It's just a way of ensuring better outcomes for the taxpayer.

Nobody wins if they leave.

The American economy would be better off. The company moves to an area where they feel that they will be more competitive and the tax payers don't have to pay companies money for the privilege of them staying in their state. The state can then use that money to invest in local businesses, education, government jobs, etc., that will actually stay in the state. Personally, I don't think it is a good thing that companies are able to play states off each other for more money and incentives.

And states who arent California and NYC usually have the advantage of much cheaper real estate

 

[darkace]

The American economy would be better off. The company moves to an area where they feel that they will be more competitive and the tax payers don't have to pay companies money for the privilege of them staying in their state. The state can then use that money to invest in local businesses, education, government jobs, etc., that will actually stay in the state. Personally, I don't think it is a good thing that companies are able to play states off each other for more money and incentives.

And states who arent California and NYC usually have the advantage of much cheaper real estate

I understand comparative advantage and looking at these things at a national level, but we're looking at a state level here. For instance the US has seen massive gains from free trade, but not everyone has gained equally. I don't think the rust belt has seen any gains at all, for instance.

I don't think there's much the state governors can do at all, really. They're stuck doing things like this which don't really do much.

 

[Piecake]

I understand comparative advantage and looking at these things at a national level, but we're looking at a state level here. For instance the US has seen massive gains from free trade, but not everyone has gained equally. I don't think the rust belt has seen any gains at all, for instance.

I don't think there's much the state governors can do at all, really. They're stuck doing things like this which don't really do much.

Cyan, the poster who you responded to, was clearly looking at it from a national perspective though. And I don't see why we can't look at this issue from a national perspective considering that it is both a national and state issue since it involves multiple states and their interactions.

I don't see how this is good for the national economy at all, but it would be interesting to see an economic study as to whether it actually benefits the individual state when that state hands out money to corporations to entice them to move/stay.

 

[darkace]

Cyan, the poster who you responded to, was clearly looking at it from a national perspective though. And I don't see why we can't look at this issue from a national perspective considering that it is both a national and state issue since it involves multiple states and their interactions.

Eh I get that, I just have a problem with the term 'race to the bottom' specifically. It's a pejorative term without any meaning or factual basis.

 

[VendettaRed07]

Whatever justifications there are for doing this, He's a shitty governor. The economy here is tanking. All the cuts he's made here in mental health/hospitals/etc. And these guys get 20m.

And I HATE how despite how he's terrible at his job he's gotten in the good graces of Obama and Hillary due to his stance on guns alone. It's bullshit.

He shouldn't be allowed to run again, but he will and we are going to end up with a republican in 2018. He has a worse approval rating than Rick Snyder. The man who poisoned children.

 

[Cyan]

Eh I get that, I just have a problem with the term 'race to the bottom' specifically. It's a pejorative term without any meaning or factual basis.

I'm a little confused. Of course it means something. The idea is that states have to battle for businesses by cutting taxes or regulations, and companies will move to whichever state gives them the best offer. The proverbial "bottom" is the point at which the benefit of keeping the company is equal to the cost of cutting the taxes or regulations to keep them. Given the costs of picking up stakes and the potential politic damage of overpaying to keep a company, I don't really expect that the bottom will ever actually be reached. But the idea is that it's costly for states to fight each other, and on the state side it's less than zero-sum.

 

[numble]

I'm a little confused. Of course it means something. The idea is that states have to battle for businesses by cutting taxes or regulations, and companies will move to whichever state gives them the best offer. The proverbial "bottom" is the point at which the benefit of keeping the company is equal to the cost of cutting the taxes or regulations to keep them. Given the costs of picking up stakes and the potential politic damage of overpaying to keep a company, I don't really expect that the bottom will ever actually be reached. But the idea is that it's costly for states to fight each other, and on the state side it's less than zero-sum.

In this scenario, we see a loan that will become payable if the company does not meet its 50% job expansion obligations. It seems much better designed than some tax incentives we have seen in the past, such as no-obligation breaks and incentives for low wage WalMarts or Amazon distribution centers.

If states are moving toward smarter obligation-based incentives, it looks like the "race to the bottom" is not really happening. I have not done a full-blown economic analysis of this specific incentive of course, but declaring every new incentive announced to be a "race to the bottom" is not helpful unless there is actual evidence that these incentives are actually worse than ones offered in the past. Especially, as I understand, this is in connection with recent increases in the Connecticut corporate and individual income taxes.

 

[Az987]

They were talking about this on CNBC today.

They said basically states are essentially held hostage because so much of the wealth is with the 1% now that if a person who made over a billion $ last year decided to leave a state it would really hurt their tax income.

They also said it's not only to keep the hedge fund to stay but also its founder, Ray Dalio.

About a month ago David Tepper, whose also a billionaire hedge fund owner, decided to move from New Jersey to Florida because of taxes and now New Jersey's bottom line is in question.

If one tax payer leaving New Jersey could do that, think what a tax payer worth more than David Tepper left Connneticut and decided to take the biggest hedge fund in the world with him would do to their tax income.