Posted on 12/01/2016 10:04:22 AM PST by CptnObvious
Did Trump Just Save Carrier Jobs Without Federal Tax Cuts?
Yup, and the unwashed can, or will, never understand this.
But you could say that about any business in the state. Why not give them all tax breaks?
The reality is if you decrease the tax rate on Carrier and don't cut spending, all you're doing is increasing the tax rate on everyone else.
“The problem with that analysis is that the state is already receiving that tax revenue ...”
Well, if Carrier is to be believed, the relevant alternative was the loss of that amount of revenue. So, the comparison was made at the margin between the benefit of not losing the revenue ($1.6 million per year) and the one-time cost of the tax incentive. And, as another poster mentioned, my back-of-the-envelope calculation ignores any “spillover” or “multiplier” effects of the retained jobs. I am skeptical of the size of such spillovers, but in any case this seems to be one of those relatively rare cases where the benefit to Indiana may exceed the cost over a reasonable time horizon.
Most such employees have deductions cutting those tax payments at least in half and often out completely.
Such tax breaks generally are insidious, because they are special favors provided by a government to some companies—at the cost of taxpayers overall.
But lots of states do them. Let’s just hope Trump doesn’t extend that approach to the federal level, as it is rank corporatism.
Duh. BTW, it’s not just Carrier. Also consider the economies of local and regional Carrier suppliers, and ancillary businesses like hotel, restaurant, shopping, etc.
“But you could say that about any business in the state. Why not give them all tax breaks?”
That is one of the many reasons why I generally oppose these kind of tax incentives. It leads to a “moral hazard” or “hold up” problem in which many other businesses threaten to leave unless they get a comparable deal.
Sure, but again, any business in the state could make that claim. Why Carrier? I'm sure there were hundreds if not thousands of Indiana businesses that failed this year, each resulting in the loss of jobs and hence tax revenue.
Why not have the taxpayers subsidize each of them like they are Carrier?
The math works exactly the same.
so unless Indiana also cuts spending by $7M all you’re doing is increasing the tax burden on the rest of the citizens.
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WRONG! They would receive NO tax revenue from those thousand workers, PLUS they would be paying workers compensation,food stamps,retraining, and other safety net costs to those thousand out of work people.On the other hand, those thousand people will be paying taxes and spending money at local businesses, paying rent or mortgages, buying food, gas, electricity, dining out, entertainment (movies, etc.) and adding to the businesses who will also be employing people! You must believe in Common Core Math!
“Such tax breaks generally are insidious, because they are special favors provided by a government to some companies—at the cost of taxpayers overall.
But lots of states do them. Let’s just hope Trump doesn’t extend that approach to the federal level, as it is rank corporatism.”
I agree. As I said in a couple of other posts, I am generally opposed to such tax breaks. Most are worse than the Carrier deal in that the loss of state revenue is much greater than any plausible return in the future of state income or sales taxes paid by the employees. The worst are the sports stadium subsidies. The vast majority of studies of these subsidies conclude that they yield a net loss to taxpayers under any plausible assumptions about multipliers, etc. Fortunately, taxpayers in some jurisdictions (like San Diego recently) are saying “no mas” to bond- or tax-financed giveaways to wealthy sports franchise owners.
Yes, the sports franchise deals have been among the worst.
My understanding is that when more typical deals don’t yield what was promised it is because the employers have been able to under-deliver on the promised jobs without any recourse or clawbacks for the states/taxpayers.
This deal was surely made easier by the fact that Indiana has good job growth.
Yep..how is Trump going to keep score in this game?..well it not how much money he puts in his back account..he won that game along time ago on his own.
So how he going to keep score for tha win?..one is going to be job saved, and added and US economy grown... He wants to make Obames look like the loser obama is.. Trunp has the fire in the belly to make all his hater eat crow
What about all of the other Indiana businesses that failed or had to lay people off? The state had the same costs for those employees.
Why Carrier, and why not subsidize every business that can't operate profitably in the state?
President-elect Donald Trump just told the “rest of the story” on this, and it turned out that he never expected to be able to turn this one around. But a Carrier employee got on an evening news broadcast and said that he wasn’t worried because Donald Trump had promised to stop it. When the TV played Donald Trump’s statement, he realized that it could have been interpreted that way, so he picked up the phone the next day and made it happen!
True, that makes almost everything easier.
On the other hand it also means it would be a good time to rip the scab off while the job prospects for the laid off employees are relatively good.
Instead they've chosen a taxpayer subsidy to a company that clearly can't operate profitably (enough) in their state.
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