Big corps love to brag about "adding jobs", but don't like to brag about the "tax incentives" they are getting. There are usually huge costs for the whole community.
Austin tax incentives for Apple seem to be relatively small [1], but Foxconn factory in Wisconsin is an extreme case. I highly recommend the Replay All podcast episode on this [2][3]
If one state didn't offer a tax break, then another would and win the business. There are 50 states, and most of them compete for businesses with tax incentives fairly competitively.
This is only true because there are always officials in some other state willing to take bribes (in the form of campaign or allied PAC contributions).
It is possible that the bribe-for-tax-breaks exchange actually provides benefit for the community, but that's not necessary for the transaction to take place.
> This is why the EU has laws against this kind of race to the bottom between nations
No, it doesn't.
Every country in EU sets it's own corporate, sales & income tax rates. as well as _EVERY_ other rate.
Every country in the EU can & does offer incentives & future tax payment agreements to companies who meet certain conditions. These are not inter-EU agreements nor do they need prior approval by any EU establishment.
it's weird to frame net new revenue as a "huge cost the whole community"
Taking less money from someone who is building a business in your area is not a cost. They have a choice on where to build, and tax burden is one of many factors in that choice.
I see what you're saying, but, to paraphrase the article, giving a billion dollar company an 8.6 million tax break when you're shutting down social programmes can be a tough pill to swallow.
On a parallel note, I'd like to underline just how good the tech giant has it. Since it can move anywhere, you have to give it excessive gifts for him to come to you. So the giant gets those rewards, simply because he's a giant.
Neither do costs.. The concern is that adding a huge new "customer" to the community without adding any additional revenue can be a losing proposition. The roads, sewers, power lines, schools, hospitals etc. all see increased demand and in extreme situations, the municipality sees zero extra money to pay for it. So the existing "customers" in the community see degraded service to make way for an outside organization.
That's not the choice either. How about no tax breaks for companies, we enforce existing corporate taxes on those companies, and we raise the marginal income tax rate on very high earning individuals?
At the state and local level, that just means companies will leave your state and go somewhere else. In a globalized world, the same thing is true for countries. There is a reason France has an effective 11% corporate tax rate: https://www.npr.org/2017/08/07/541797699/fact-check-does-the... (Chart 2).
If you want to pay for the safety net, do what Europe does and tax middle class people who can't just move to a lower-tax jurisdiction. E.g. in Germany, the 42% tax bracket (just shy of the top 45% bracket) kicks in at around $70,000, and there is a 20% VAT.
The U.S. and the Schengen Area each comprise regions of 300-400 million people where people are free to move internally. You would think that would create a similar pressure to reduce internal income taxes to attract residents, but it does not. People, unlike corporations, have roots in places and by and large don't want to move to chase lower tax rates.
That's not really true. You can't just decide to be an Irish company if you have no presence in Ireland. The wave of corporate inversions in the U.S. was accompanied by lots of companies moving their headquarters (and their top executives) to Switzerland, the U.K., etc.
Income from capital gains is taxed at the rate of where the person lives. Tim Cook is a great example: it was reported that one of his recent bonuses was taxed at 50%.
Not that many people, even ones who make a lot of money, can take advantage of various tax avoidance measures. (That’s why e.g. getting rid of the preferential treatment of capital gains would raise less tax money than getting rid of the mortgage interest deduction.) CEOs mostly cannot, unless they run investment companies.
My point is that Apple can take advantage of Ireland for tax purposes but Tim Cook doesn’t need to live in Ireland. The corporation enjoys benefits not conferred to people. This is why there is consternation and conflict around Apple’s repatriation of capital.
>Only about 2.4% of US-based millionaires change their state of residence in a given year. Interstate migration is actually more common among the US middle class, and almost twice as common among its poorest residents, who have an annual interstate migration rate of 4.5%.
Companies follow people, not the other way around.
>do what Europe does and tax middle class people who can't just move to a lower-tax jurisdiction
Well, that's why Europe is blanketed in riots right now.
Disenfranchised people enraged at the governing concept of "taxing middle class people who can't just move to a lower-tax jurisdiction"
Taxing the hell out of foreign goods would just mean the company now plays a two pronged game - manufacturing where the least regulation is present, and selling at the country with the highest price point who doesn't outright refuse to let you extract their nation's wealth.
It's a tricky problem but your answer to it is untenable unless you want people to riot more.
>Well, that's why Europe is blanketed in riots right now.
Can you provide a source for this claim? I know of the riots in France (a country well known for civil disobedience/riots), but haven't heard of the entire continent being "blanketed".
Tech giants can't go just anywhere. They need to locate their offices in cities which have large, highly educated, tech savvy workforces (or at least the infrastructure to relocate, satisfy and sustain those workforces).
This acts as a check on just how much of a tax break a municipality is able to give them, as public funds are needed to support that infrastructure. Austin, Seattle and Culver City seem to be striking the right balance.
The problem is that the companies get municipalities to compete to provide the best incentives package. With sufficient competition and assuming well meaning, rational government officials, the winning municipality will have to reduce their "margin" (new tax dollars - incentives) down to a very small amount. These incentives often require the government to take out large loans that they will be paying down for decades before realizing any actual new "profit."
Then factor in the fact that their will always be some municipalities with government officials who are willing to overspend (other people's money) for personal political points. When they win an RFP for a big factory, sports team/stadium, movie production, or corporate headquarters they get to have a flashy press conference touting all the jobs. This helps them in their political career which is often over well before the actual net value of the deal can be realized in 20 or 30 years.
Sure, but the city is taking on risk that the business, sports team or factory is still around generating revenue for that entire time and after.
Factories are often purpose built for whatever they will build. Retooling can be very expensive. Why would Foxconn for instance pay to retool their factory from LCD production to OLED or whatever new technology emerges in 10 years when they can just get another government to build them a new factory somewhere else?
Though usually not enough to make up the difference in incentives. If we take the Amazon NY incentives at face value, each employee needs to pay $25k in taxes to make up the difference just on the initial tax break alone. That doesn’t count extra expenditures for expanded public transportation or nearby development. That’s also if amazon hires the proposed 40k new employees on day one, which they won’t.
There’s a good argument to be made that spending that money elsewhere would provide better outcomes and on shorter timelines than giving one of the largest companies in the world a tax break.
The highest marginal tax rate in NYC is 3.65%. The effective rate on a $140,000 salary is about 2.6%. Leaving a local tax liability of about $3500.
On the same income, NY state has a marginal rate of 6.45% and an effective rate of about 4.3%, for a liability of $6,000.
So, in year one, that's a bit over $9000 in revenue from a highly compensated employee. If the $25k figure stated above it true and a one-time incentive, it takes 2.5-3 years to pay off. Employees earning less than $140k will take 3+ years to pay off. If the incentives are recurring in any way, then the payoff is pushed out even more.
But, as mentioned, the employee doesn't just have to "pay back" the initial incentive, she has to produce tax revenue to pay for increased services and infrastructure demand, pushing the timeline out even further.
Anyway, the NYC deal doesn't sound to bad. Even at a 5-8 year pay-off, if the positions are relatively long-lived, it's a long-term positive. But, when we consider the Foxconn deal in the Mid-West, ouch, that one's going to sting the local community for a long time.
The deal requires an average wage of $150,000. [1] And with the nature of variance in salaries combined with progressive taxation works out even better for the state; one $100K and one $200K employee will result in more revenue than two $150K employees.
More citizens mean more cost for the state, aka the thing taxes are supposedly collected for. Amateur here, so I might just missed it, but where did you account for those marginal cost?
I have a hard time believing original residents actually benefit that greatly from those deals as well. Yes there are benefits of getting more people and well paying jobs into the region and some competition to keep taxes reasonable seem fine. But to me this still mostly seems like a transfer of wealth and power to big cooperation, boosting societal problems we already have a hard time dealing with.
They also cost a great deal in required infrastructure, drive up competition for affordable housing, and create complications in other ways. Texas has no income tax so there's no revenue from that. The city will end up net negative from most corporate incentives.
Texas has a"Robin hood" school finance system, where districts with high property values are subject to recapture, where they send a large percentage of the property taxes collected to the state to be used for districts in less wealthy areas. If memory serves, Austin ISD sends almost half of its billion dollar budget back to the state.
How roads are funded depends on the State and locale. In some States, all highways are funded solely by use (gas and car) taxes as a constitutional requirement. Local roads, on the other hand, are funded almost arbitrarily -- it does include a gas tax in many places but in many places it does not.
>"Taking less money from someone who is building a business in your area is not a cost"
Let's look at what that someone will be expecting of your area - working roads, a fire department, a police department, public transportation, a school system, a library, a park, emergency services. How is an influx of of potentially much more people consuming those services not a cost?
That certainly is a cost. But it's not what the parent poster was saying... I'll bet the costs you speak of are covered by income taxes and the corporate tax, with a little leftover per employee (so - a large pot of extra money at the end of the day).
>" I'll bet the costs you speak of are covered by income taxes and the corporate tax, with a little leftover per employee (so - a large pot of extra money at the end of the day)."
So you believe all local governments run a budget surplus? You can't be serious. You realize there operating expenses and capital expenses right? Maintaining an existing bridge and building aa new bridge are very different budgetary consideration.
But .. What on earth does that have to do with what amounts to giving a quantity discount to large employers?
Yes, if they didn't give a discount, and somehow managed to keep the "sale" anyway, there would be more money in the register - great! However the reality is that without the discount, there is no sale, and no additional money in the register.
It may be that the discount is too great, that's entirely possible. I don't think we have the info to judge this.
>"But .. What on earth does that have to do with what amounts to giving a quantity discount to large employers?"
It's mostly certainly not a "quantity discount." These corporation aren't "buying" anything from these cities.
If Apple comes in sets up shop on 100 acre campus in your town and gets tax breaks to do so then your town forfeits the equivalent tax revenue another company would have paid for the same parcel of land. There is a huge opportunity cost involved, nothing is free.
> It's mostly certainly not a "quantity discount." These corporation aren't "buying" anything from these cities.
The city is selling its land (in quantity) and talent pool (in quantity), and is giving a tax break (a discount).
> If Apple comes in sets up shop on 100 acre campus in your town and gets tax breaks to do so then your town forfeits the equivalent tax revenue another company would have paid for the same parcel of land.
If Bestbuy sells Microsoft 1000 laptops at a 30% discount, Bestbuy has forfeited the revenue they would have made from doing 1000 single unit+no discount sales. Despite the business making far less than maximum revenue, businesses choose to do this all the time as it created greater value for them in the end. Cities are doing essentially the same thing with big companies.
You just can't look at a discount and naively equate that to a $ loss in the city bank account, just as a business can't do this when they sell a physical good.
>"The city is selling its land (in quantity) and talent pool"
No the city is not selling land. Where in that article is it stated that Austin is selling Apple land? The city isn't "selling" it's talent pool. Companies will always gravitate towards where there's a steady supply of talent.
>If Bestbuy sells Microsoft 1000 laptops at a 30% discount"
Yeah your analogy is absurd, taxes are a "recurring" revenue stream for a city. It's not at all similar to a single retail transaction.
>"You just can't look at a discount and naively equate that"
It's not a "discount", there are no goods being sold. Future recurring revenue is being forfeited. And when there's a future budgetary short fall(and there alway is) it will be made up by the individual tax payer.
Because the Goliaths bring more to the table in terms of revenue and bragging rights for politicians who can say they brought [insert high number here] jobs to their city. I'm skeptical of these deals and not sure the math works out for the average taxpayer but I'm not surprised that cities are operating this way.
From a city's perspective, why should companies of vastly different sizes, impacts, and expected lifetimes have the same leverage in terms of negotiating tax benefits today? Companies are getting the same "deal" in the sense that they will be eligible for these benefits when they bring enough to the table to make a city desperately want them.
I'm not saying it's just, but creating the "same deal" for all companies is only likely to occur if it's federally enforced - otherwise there will always be cities willing to offer these incentives.
It's never just 'not taxes' because significant businesses bring significant infrastructure needs with them. It's x-ty million dollar overpasses to allow better freeway access and new police/fire substations and running new utilities and ongoing maintenance on those. 'beautification' efforts to make real estate developers on the limn happy.
It's a huge cost to the whole community, if by the "whole community" you mean the entire US.
Let's say that Apple pays municipal tax of $X-$Y to Austin because of incentive $Y instead of $X to Denver (for example)
Then Denver loses $X while Austin gains $X-$Y and Apple gains $Y. Sure, the Denver loss is only theoretical but Apple has to build somewhere so American municipal taxpayers lose as a group. A "race to the bottom" has real costs.
The municipal governments are behaving rationally; it's the federal government who represents all municipalities as a collective; they're the ones who should be passing a law banning this type of behavior.
Actually Denver doesn’t lose anything. The loss isn’t even theoretical. It’s like saying I lost billions on Apple stock I didn’t buy. That just makes no sense. You could also, using your theoretical logic, say that Berlin lost money too. Or Marseille. Or Dubai.
Apple could have built new facilities literally anywhere they wanted. So should the international government pass a law against the US having lower taxes than France? The only people that should have a say in the tax rate of a place are the people paying the tax rate of a place.
Denver never had it in the first place. Money not earned isn’t the same as an actual cost. The people of Denver are in exactly the same shoes they were yesterday; they aren’t worse off.
And why should the federal government tell individual cities how they should tax? I’m afraid you don’t understand what federalism is, nor freedom for that matter. If a hypothetical Austin wants to give Bezos the key to the city what business is it to the people of Boise? Boise didn’t lose anything.
And many states in the US compete in the same way eg the states that have much lower state income taxes its ok for them.
Its the same in the EU where Ireland had very low CGT - that's one reason Google has a big office there - access to an educated English speaking work force is another
I believe you mean corporation tax, not captial gains tax, as CGT is well above the European average here in Ireland, while corporationtax is quite low.
Well, there's going to be tax revenue coming from those jobs even if there are less or no taxes to the business itself, before you even consider the money that those employees and potentially even the business itself will spend within the community. I don't think it's as simple as tax incentives inherently being a cost for the community.
You're being downvoted, but nobody is engaging with the sensible points that you're making.
While viewing these in the lens of a corporate handout, it is definitely a practice that deserves a close look, pretending that entire state governmental bodies in the US are acting outside of their own best interest (both fiscally and politically) deserves a conversation
Like people, states might decide to form a union to increase prosperity for their citizens by bargaining with corporations as a collective. It makes it more difficult for adversaries to overpower individual states in a union. This could consist of an obligation to uphold revenue (taxes) which is used to provide certain living standards (e.g. medical expenses, feeding grandma, etc...) through a social guarantee.
How does corporate bargaining power work? Suppose two states and one corporation operating in both states. The corporation says to each state, "I'm reducing the employee count in your state unless you reduce my taxes." The threat is credible and is in neither state's interest. Unless the two states talk to each other and both agree to not reduce the tax rate, a social guarantee is in jeopardy. A union or cooperation of the states disallows the corporation the ability to punish and reward individual states, reducing the means to manipulate each individual state's tax rate to the corporations liking.
But that would give up states rights - and it doesn't stop bullying by central government to place offices in "for the governing party" desirable areas.
Why do you think BT has a big engineering presence in all 4 parts of the UK? or why the BBC was forced to move to Manchester
When states unite and cooperate they are exercising their right to self assemble or self association. Often individual states exercise this right after chronically being picked apart by a powerful adversary and find they don't want to leave behind the benefits the union provides.
I don't know enough about specifics in the UK to answer your questions. Union members typically vote on the direction of the union or leadership positions and so these members are responsible for their decisions or leadership.
> A normal way for governments to raise revenue in the United States is with property taxes. If you build a gigantic new office tower somewhere, then you are going to owe a lot of property taxes to the local government.
> So if you’re smart and have good lobbyists, you’ll say, “Hey, we were thinking of building a huge office tower in your city, but your taxes are so high. Maybe instead of paying the 8 percent property tax rate that’s on the books, we could pay 2 percent instead for the first 20 years.”
> The city may well agree to this proposal because 2 percent of a giant office tower is still a lot more than 8 percent of a parking lot. What’s more, bringing your office tower to town is going to generate a lot of sales tax and income tax revenue while probably helping to bolster property values across the board. So while reporters are going to write, accurately, that your company got millions of dollars in tax breaks in order to build your office tower, the city still ends up with more tax revenue than it would have had if you hadn’t come to town.
> So you can’t really say things like, “Instead of handing out millions in subsidies to Jeff Bezos, we should invest in the subway.” The subway doesn’t need a tax break; the subway needs actual money. And the tax breaks don’t represent money in hand that could be spent.
> What we want is a healthy form of competition where companies try to locate in cities that provide a high quality of public services relative to their tax revenue, so that cities have an incentive to try to govern themselves well. The current dynamic not only allocates too much surplus to rich companies, it undermines that healthy form of competition. Amazon doesn’t need to care whether New York City has cost-effective government or not; it just opts out of paying the costs.
> But the very fact that mayors are inclined to hand out these subsidies should teach them a lesson about tax policy.
(The lesson being that, if giving these tax breaks out is beneficial, maybe you should have been taxing something else in the first place.)
In some cases they are. There was an episode of Planet Money where they were discussing Kansas City Kansas and Kansas City Missouri competing for the same companies and companies going back and forth across the state border to whoever would give them the best deal.
The companies were squeezing all of the benefits from having the company be there out of the city.
It took decades for some cities to wise up and realize that having a sports franchise wasn’t worth all of the incentives they give the leagues.
I guess (e.g) Las Vegas, Atlanta, and Seattle didn’t get the memo. Odd since Seattle and Atlanta recently lost franchises that they’d add new ones if it wasn’t worth it.
I'm a bit lost. What major sports franchise is Atlanta adding? Looking at [0], I see new(ish) soccer, Overwatch and arena football teams, but none of those are really among the "big money" sports in the US, nor do any of those require the sort of support from the city/state that, say, a new NFL stadium would require.
The new Atlanta soccer team, Atlanta United, actually plays in the new NFL stadium that the state spent $1.6 billion to build [1]. Average attendance was 53,000 for Atlanta United this year.
I suspect subsidies are often excessive, in part because they often arise as part of a bidding war. But that doesn't mean that localities should never provide incentives to encourage companies (and jobs) to locate in a particular location. To think otherwise more or less means that it's not the job of government to take specific actions to encourage job growth, which doesn't seem like a generally sensible opinion.
If we presume that taxes are set to the level required to provide agreed-upon levels of service (roads, safety, schools, etc) and a new company gets to pay less taxes per capita, what happens now as the citywide average tax income per head starts to decline due to sweetheart tax breaks?
Additional tax income needs to cover the additional demand for services, otherwise it's a net loss for the community's standard of living.
But they aren't especially tax on company profits. There are many big inefficient polluters who pay lower wages and little profit tax. The additional demands will be covered by taxing relatively big salaries Apple pays and sales taxes those new employees pay.
Dallas did something just as stupid for Hunt Oil several years ago. At the same time they were cutting wages for city employees. It's short sighted in the extreme.
There should be an MFN like law to these incentives. Any incentives given to a company should be given to every company. The government should not be picking and choosing.
From that perspective, one way of looking at these tax breaks is as a rebate of government time & money saved by dealing with a single entity (vs 10 or 50 for the same sized economic impact).
Often VIPs are paid by the clubs to appear, which is indirectly passed onto other punters as a marketing cost.
Here, you're essentially bringing in a whole bunch of new burden on infrastructure, but getting proportionally less back in order to support it (waiting on some inflection based on future sales tax or property taxes etc is not a guarantee, especially as campuses can be out in the sticks so drawing workers from a wider area). Either you take hits on that, or pass the extra needed cost onto other taxpayers.
I'm not sure whether or not the net is positive or negative, but the second order effects do need to be paid for somehow.
The new employees are also going to be taxpayers. Does any city heavily rely on tax revenue from businesses to maintain critical infrastructure? It should come almost entirely from individual / property tax revenue / federal grants, corporate tax usually accounts for a minor slice of total budget.
This is not about "Big Corps" but more about the voter mentality. For some unknown reason people across the political spectrum totally buy into the claims of "creating jobs" and "protecting jobs".
None of the average voter bothers to actually do the math to see the cost of the job. Trump's tariffs for example might have protected 500 jobs at the cost of $500M to American consumers. But this math is beyond most people.
Corps will surely love low tax regions and I think that is a good thing. Big Taxes only lead to bigger government than invariably leads to disasters for small people like us.
Tech employees are very cheap for the community.
They take very little government aid, their use of roads is quite moderate (and is getting lower as "working from home" picks pace), and they usually pay enough property taxes to pay for local schools.
On the other hand the benefits they bring to the community are enormous.
As a native austinite and engineer I completely disagree. The eastSide was a terrible place before. Going into pan am park was a no go at any time of the day. Comunities and infrastructure were dying in eat Austin. Also, It had extremely low home ownership rates so the lower class didn’t even own homes in these areas but made money for westside landlords.
South congress was full of crackheads and prostitutes as early as the 90’s. We had real urban decay. Now we are growing like crazy and if you’re willing to work hard any immigrant can get a construction job and make a great living for themselves.
>Also, It had extremely low home ownership rates so the lower class didn’t even own homes in these areas but made money for westside landlords.
How will increasing rents (and property values) across the city help solve this lack of ownership? Is it possible the problem gets worse by adding more "rich" workers?
>South congress was full of crackheads and prostitutes as early as the 90’s.
Isn't it likely that there were also working class people struggling to get by who appreciated low rents?
>any immigrant can get a construction job and make a great living for themselves.
And what will they do when construction slows due to recession or other factors?
You might want to re-asses this comment from the perspective of the people who actually lived in these "terrible places" that were a "no go at any time of the day". They might have a different view than you.
See parent. I was here intermittently in the late 90s and have an aunt with a midcentury house off SoCo bought in the early 90s. You may not have seen those communities as having intrinsic value but the people that live there did. And now most of them can't afford to live there anymore because "the market" has decided to make room for gentrification.
Those communities had economic problems, sure. But you're kidding yourself if you don't think the replacements for them have a different sort of economic problem. And just because they're whiter and richer now doesn't make them a better set of problems.
The chart showing the number of employees per state is comically misleading. They have tens of thousands of employees in Cupertino, but make the largest bucket represent "1000+" to make it appear employees are more evenly distributed across the country.
For every $1m an EDC gives to a fortune 500 company for relocation, $1m should be allocated to a fund for low interest small business lending.
Mom and pop shops have to pay taxes but frauds like Curt Schilling and slave drivers like Amazon get hundreds of millions of dollars (that they don't need) to create mediocre jobs with high turnaround.
Leveling the field isn't enough. Conglomerates are too big and too many. We need to lower the barriers for entry into markets where fortune 500 companies have made competition impossible.
Teddy Roosevelt's New Nationalism speech warning of the dangers of combination and attempting to reach a "fair" balance between labor and capital is as relevant today as it was at the turn of the century.
And just a damn good speech.
Skip through the intro about John Brown (he was speaking in Kansas and playing to the crowd)
Curious how much of this is “natural”, how much is forced by stupid CA policies and COL, and how much is “spread out jobs and investment to reduce government risk/gain government support at state and federal-legislative levels.”
If you compare the bubble map of new jobs with the heatmap of existing jobs it looks like they are expanding proportionally to the amount of people they are already employing in the different areas.
To me that seems like it might just be a natural expansion.
I seriously do not understand anyone in the Bay Area that’s anti development. How can you justify yourself in good conscience to be anti development when CoL is so high?
People who have vested interests in keeping it that way: NIMBYers. People who currently own homes and want to see their habitable “retirement plans” grow indefinitely. And god forbid we build apartment complexes greater than 5 stories all over the Bay Area. We wouldn’t want anyone’s glorious viewshed of the surrounding yellow hills to be blocked.
Of course, increasing housing density highlights other problems: terrible traffic and poor public transportation. We’d need to make large investments in both housing and transportation infrastructure if we’re ever going to make headway in the CoL problem.
Yes. People can be generally pro-development and also oppose development that just consists of sticking tall apartment buildings here and there while leaving public transit, auto infrastructure, and other public works as an exercise for the indefinite future.
A robust city development plan should incorporate infrastructure buildout as part of the planning sign-off process. For urban areas in particular, it's important to make sure that things like road and transit access, schools, medical facilities etc. are able to cope with increased demand. This can include requiring developers to make financial contributions towards infrastructure as part of that process.
You can't realistically expect to create substantial residential developments without appropriate infrastructure, and just kind of "fill in the gaps" later – transit infrastructure in particular has long lead times that make that impractical. In reality, planning of residential development and infrastructure changes need to be part of an integrated planning strategy ad the government level.
What you describe is ideal, but we also have to recognize that the city has limited ability to stop things from getting unbalanced. Cities like San Francisco and Seattle are adding more jobs than they are housing. Banning an increase in housing doesn't create a balanced system, it just shifts the deficit to the suburbs and the road system.
In fact, population has historically often grown up around rail and transit lines. It's one argument for light rail vs. buses; people buying and developing along along a line are far less exposed to the transit moving than in the case of a bus.
So, no. It's normally not a great idea to build a bunch of random housing and hope a total transportation mess--which already describes much of the Bay Area--will hopefully be solved someday.
Yes, population centers have historically grown up around trade routes. Population grows around transit that is already in use, in order to provide services along the route.
But a route that nobody uses doesn't have any surplus around which a population would grow.
>Of course, increasing housing density highlights other problems: terrible traffic and poor public transportation
But that in itself is a zoning problem. Mixed development that allows the places people want to go to be integrated where people live drastically reduce transportation trips.
How can you justify yourself in good conscience to be anti development when CoL is so high?
Bear in mind too that a fair number of people either can't or won't understand basic economics. I can't tell you how many times I've had or heard conversations that go like this:
Person A: We should kick out all the greedy developers who are raising the price of housing.
Person B: Housing costs are set by supply and demand; if the supply does not increase, prices will rise further.
A: That's not true! When new housing gets built, it's more expensive than existing housing.
B: That might be true of a particular unit, but that's because most people prefer new housing to old housing, and it's extremely hard to construct anything.
A: Just look at that new development: it's more expensive. We need to ban new housing. Plus, I don't want my neighborhood to look like Manhattan.
Netflix contacted me a few times about coming in for an interview, but I did the math and even at Netflix salary, I would still be taking a relative pay cut by leaving Austin for California. I know I'm not the only one coming to this conclusion.
For what it's worth, most of those sites already have Apple locations and are being expanded. Austin is Apple's second largest campus. Culver City already has something like 500-700 employees, and even Pittsburgh is where things like iWork are made. So these are all pretty natural. Also keep in mind that several of the sites were in CA, so not likely anything to do with "stupid CA policies and CoL".
As companies grow they naturally tend to distribute. As you get to this sort of scale it’s not like employees are co-located in any meaningful sense even if they’re in the same general geo. Distribute risk, get access to an additional pool of workers. Certainly COL (and general congestion) in the Bay Area will inevitably bias most companies against doing any sizable expansion there.
So glad we didn't have another public circus to select the destination cities. This is how the Amazon process should've gone. And good for Austin, it's a great city with a lot of tech talent, glad to see it grow.
Big loss for RTP area in North Carolina which was favored to land it, but got nothing. Guess they pay for the disgraceful performance of the NC General Assembly in the past several years - at least enough that TX tax policies won out.
As a resident of the Triangle, it sure doesn't feel like a big loss to me. Do we actually benefit by handing out tax breaks to a megacorp just so it can relocate a few thousand jobs to the area?
We've got our own problems related to growth already, we surely don't need to grow even faster - especially not by adding companies that effectively contribute nothing back financially to support all the needed infrastructure (after all the tax breaks).
I think so. More jobs, higher salaries, higher overall tax receipts, halo job creation... all of that makes for more money to improve infrastructure. There's a lot that I could say about this more specifically, but I will leave it at, yes, I think this would have been good for the Triangle.
So blue cities and states continue to become richer and income inequality will continue to grow. Austin, Seattle, San Diego, LA, NYC.. unbelievable
Also, kind of disappointing how low the job numbers are. 5000 in Austin over the next several years and hundreds for other areas. In contrast, Amazon announced 20K in VA and NYC. This tells me that Cupertino will continue to grow
Could it possibly it have more to do with other correlated demographic attributes of those states, such as education level or age or quality of life, rather than the "blueness" or "redness" itself?
I think you hit on a key point that is lost in the "business friendly" discussion that pervades US politics and is singularly focused on tax relief. Whereas anybody who has worked in some kind of relocation strategy knows that tax is only one lever among many to incentivize companies. The biggest lever, in a knowledge economy, is availability of high skilled talent. Simple math suggests that to hire 5000 engineers, you need to interview 50k engineers, which means you need 200-300k at the top of the funnel. Thus, it turns out that the biggest incentive to attract businesses is to make your city attractive for talent. An area with a large talent pool is the most business friendly place, period. And then you have to ask why do such talent concentrate on certain areas of the country and what those areas are doing right.
It’s anecdata so take it with a grain of salt, but a lot of red areas like my home town are also extremely resistant to new industries and the changes that they bring on top of being unwelcoming to anybody from out of state and in fact anybody differing significantly from the dominant local culture.
All of this is directly counter to what makes a good location for a new campus. I’m sure that there are red areas that aren’t like my hometown, but from what I’ve gathered a lot of them — maybe even a good majority — are.
Good point. As a long time (lived here since 1979) Austin resident I can tell you that it's a lot of fun to live here, in particular for someone in their 20's or 30's. There are a bunch of live music clubs, several large music festivals, SXSW, lakes and the Hill Country for biking, rivers to tube on, etc... On top of this the University of Texas main campus (~50K students) is located here and there are other universities in addition. This city is a magnet in Texas and surrounding states for tech talent unlike say, Waco because people want to live here.
Does anyone have any more info about the expansion in Seattle? I'm wondering if they are going to get more space in the same building or are looking to move.
I haven't been following the lead-up to this announcement, but it seems to have involved much less fanfare and public drama than Amazon's HQ2 decision did. Bezos insists on squeezing every last drop out of a negotiation (see also: Amazon de-listing hard copies of books while the ebook negotiations are ongoing), so is Apple less malevolent or do they just enjoy more inherent leverage than Amazon does?
Didn't know about the Culver City expansion, neat! There's a tremendous amount of tech talent in LA, I'm surprised they don't already have a major presence here
My guess would be that the office is from the Beats acquisition. A quick job search on their website seems to confirm that as there are a few audio/DSP positions.
I live in LA and I think the level of tech talent is abysmal. At the Java meetup this week, eight people showed up. EIGHT. In the Bay/SF/NYC, there would be over a hundred. I have been to tech gatherings, where I would be the only techie.
I live in Santa Monica and I think the level of tech talent is pretty great. There's simply much more to do here on a weeknight than go to a tech meetup!
I used the wrong wording in my reply. The level of talent is good, it is the tech scene in general that is weak.
I get recruiter emails constantly from companies in SF, Seattle, NYC, etc, but rarely from LA. There are simply not enough companies doing challenging work. Many small little startups trying to solve problems that do not need solving.
omitted from the title, but included in the article, is that they're also expanding in boulder colorado.
i know that location has been under construction for at least 6 months now. my business was having some construction done, and we kept getting bottom of the barrel subcontractors, because our contractor also has the apple building, and kept sending their good folks over there. :(
i got a location of the building out of the person i was talking to, and it wasn't where google is. i also know the name of the contractor, and it didn't match any of the signage i saw last time i walked past the google construction site.
Like Google (mentioned in another comment), Facebook and Amazon also have large campuses in London with similar headcount, as well as large offices in cities like Dublin.
Google's London office hosts 4000 employees and has cost 1 billion (800m million was the plot). It might not look like a campus, that's because central London simply doesn't have the space. https://www.theverge.com/2017/6/1/15723642/google-london-off...
Um, what are you talking about? It is near Jollyville which is at the North Austin city limits. Get on 35 and wait in traffic in Temple and you'll figure out how far Dallas is away.
In terms of terrain and culture, once you're in Jollyville / Round Rock, it's not really Austin any more, it's indistinguishable from generic city USA.
90,000 is not an impressively low number of jobs. It makes Apple one of the 40-50 largest employers in the US and one of the five largest US tech employers.
Back in January Apple publicly announced their plans for repatriation. While Apple doesn't give routine updates on exactly what it's doing with every dollar of cash it holds, they've stopped accumulating debt and have begun reducing it. Previously, for years, they were aggressively accumulating debt to fund their capital return programs (which require immense sums of capital in the US in one form or another). To fund that they either have to use debt in the US or have the domestic cash holdings to cover it.
"Apple Inc. said it will bring hundreds of billions of overseas dollars back to the U.S., pay about $38 billion in taxes on the money and spend tens of billions on domestic jobs, manufacturing and data centers in the coming years."
"Apple has the largest offshore cash reserves of any U.S. company, with about $252 billion at the end of September, the most recently reported fiscal quarter. The tax rate indicates that Apple is likely bringing back a majority of its overseas cash back to the U.S., leaving only a small portion for international investments like retail stores."
You didn’t mention it, but I thought I’d bring it up: the majority of those 90,000 jobs are in retail, not corporate. So they’re not necessarily “tech” jobs.
Are you sure? Wikipedia says Apple has 271 stores in the US. For your claim to be true, the average Apple store in the US would have to employ at least 45,001/271 = 166.1 people.
Austin tax incentives for Apple seem to be relatively small [1], but Foxconn factory in Wisconsin is an extreme case. I highly recommend the Replay All podcast episode on this [2][3]
[1] https://www.statesman.com/news/20120901/austin-council-oks-8...
[2] https://www.gimletmedia.com/reply-all/132-negative-mount-ple...
[3] https://www.theverge.com/2018/12/6/18128133/foxconn-deal-wis...