I recall (meaning, I can't substantiate this) some years ago that someone concluded that corporate welfare (this included sports stadiums) ended up being a net loss in most cases. Sure wish I knew where to even start to find that.

Stadiums:

https://www.youtube.com/watch?v=xcwJt4bcnXs

http://www.theatlantic.com/business/archive/2012/09/if-you-b...

http://agrilifecdn.tamu.edu/cromptonrpts/files/2011/06/Full-...

Stadiums are a clear loss for the local economy, but isn't it totally different from a company like this with many high payed employees paying income tax, as well as demand for local prototyping / consulting services?

> Stadiums are a clear loss for the local economy, but isn't it totally different from a company like this with many high payed employees paying income tax, as well as demand for local prototyping / consulting services?

Yes, but from my understanding, the scenario you outlined does not exist (net benefit from tax incentives).

Example: Nevada has no income tax. The only benefits it'll see from the Tesla Gigafactory is any sales tax from the purchasing of manufacturing equipment for the location, and the trickle down from the economic activity from the workers who relocate to work there.

I only used Tesla as an example because it was fresh in my mind, and you asked about income tax, which Nevada doesn't have.

MA has income tax.

But does it come out as a net benefit for MA taxpayers?

That's one way to see it. Another way to see it is MA competing with CT for an employer who would bring employment opportunities to the local economies.

It's like NV competing with CA for the gigafactory in the hopes it would jumpstart a more technology oriented economy in the area.

CT nor CA should have a monopoly on a company.

I'm not advocating that states should race to the bottom, but they should be able to attract employers, else they are not keeping their citizens interests' in mind.

The subsidy gives GE a competitive advantage over their competition on every contract they bid on, every hire they offer a salary to, every item they sell on the open market.

GE can operate below the margin a fairly competing company operates at, forcing them out of business. The government picked a winner and created losers.

That's pennies considering their annual CoGS ecpenses and revenue. It's not nothing, but its unlikely to figure into any pricing.

Convenient how they managed to get a handout so large it convinced them to move their international headquarters, yet so small it doesn't negatively affect their competition.

Long term strategy, leases, access to workforce, business climate, etc.

The money isn't nothing, but its also not a lot of money considering the size.

It's the equivalent of a sandwich shop selling $1,000,000 in yearly revenue worth of $8 sandwiches getting an $850 break on rent or taxes per year allowing half a penny in savings per sandwich served. Wow that really kills the competition.

$25m in free property tax from Boston and $120m in subsidies from the state for... (wait for it) 800 employees. I'm sure Boston/MA will be in the black on this well within our {great}^{999} grandkids' lifetimes...

It's not the 800 but the other things that those 800 bring and represent.

What do you propose to do? Forbid them from moving to MA, forbid MA from attracting employers? Maybe just allow them to move to Geneva or Dublin.

There's a third option: forbid states and municipalities from offering incentives to individual organizations like this.

If the company wants to move to a location (or stay at one) to be there, fine; but it shouldn't move (or stay) because that location gave it the best bribe.

It's an incentive, not a bribe. No one is secretly getting money illegally.

I think governments should be able to make a calculus as to whether something like this will benefit their constituency.

This is not PR or high profile loss leader or trophy white elephant or other gimmick like the olympics or new stadiums. This is a bet on the company improving the local economy attracting other employers, competitors, increasing competition for employees, etc.

If I lived in MA I'd be all for this, just like SF bet on twitter reviving mid-Markt street --which it has.

They can't afford Geneva, Dublin more likely. As for your RFP: just don't do anything. You want to move here? Welcome. You don't. No big deal.

That's $181,250 per employee in tax-benefits. I'd be interested to hear what you think those 800 people "bring and represent" other than another screwing of tax-payers for the benefit of corporations.

800 probably well paid employees, that buy houses, who pay property tax, who pay local income tax, who pay for local restaurants, entertainment, and other items, a company that will hire from the local region, that will need services and provide revenue for many other local businesses.

And this is just after 3 seconds thought. Another 3 seconds will likely reveal more.

Another 3 seconds will reveal that your thinking is similar to the justification used for spending public money on stadiums, and giving tax breaks for movie filming. Both of which have been proven to have negative effects on the local economies.

Forbid them from giving sweetheart tax deals. Which is NOT forbidding them from attracting employers.

That works out to $180k per employee. If average income per employee is $100k, at a 5% state income tax rate, it would take 36 years to make back the money.

Under the theory that Boston and MA bear zero costs. Which is certainly untrue.

There's the added costs for those additional people in terms of traffic congestion, schools, and other services. There's also the lack of a guarantee that GE will stay long enough, or that they won't demand an even bigger tax break when this one expires.

Attracting employers is at least a goal; but, states should not discriminate in order to achieve their goals.

Why does GE get special treatment (at everyone else's expense)?

I think they should discriminate. Why should MA try to attract a company in a dying industry? No, I think they should attract companies which fit into their future vision coupled with the characteristics of their present and predicted future workforce.

In other words, think ambitiously and progressively.

The tax breaks and special treatment chase states to compete with each other. It's a race to the bottom. It becomes a question of which state is willing to make its citizens sacrifice the most. It is sort like a feudal society.

"I'm not advocating that states should race to the bottom, but they should race to the bottom."

If a state is competitive, then it should be able to be competitive without giving away sweetheart tax deals.

Welfare is awesome when it brings to your state pretty much the only thing voters care about: jobs.

But that same welfare could be used other ways to create jobs. For example infrastructure jobs. Go spend $200m upgrading the state's infrastructure, that will require many jobs.

Or heck go start a startup incubator program. I bet you can get a lot of value out of that even if just to help new businesses cover the cost of a business license and to navigate employment law for their first few employees.

There's a bunch of ways to create jobs with a boat load of money, giving it to a corporation that barely pays taxes as is is not one of the better ways.

GE creates lots of middle-class jobs. Startups create very few jobs in comparison, the jobs they do create are often out of reach of ordinary people, and many startups probably destroy jobs on net by automating-away things that previously took human labor without growing the demand side of the equation.

To be fair, infrastructure jobs are almost all temporary while GE will generally provide permanent and higher quality positions. The incubator might be a better general idea, but I'm not sure Boston is the best city to take advantage of that considering that many of the region's colleges end up promoting local entrepreneurship in their own ways.

> a corporation that barely pays taxes

I'm unsure how this really matters in regards to GE HQ relocation?

They pay 100% of the taxes they are legally obligated to pay - if you're unhappy with that amount, change the laws. But lets not pretend they're an evil corporation solely on the grounds of them not paying more taxes.

It's not somehow patriotic to pay more in taxes than you legally owe.

> if you're unhappy with that amount, change the laws.

That's what they tried to do so GE left the state...

> It's not somehow patriotic to pay more in taxes than you legally owe.

But they go one step further, they actually dodge taxes they're meant to legally owe using loopholes.

If GE paid the same proportional taxes as a locally owned sandwich shop I'd be happy.

> That's what they tried to do so GE left the state

This is what happens when states and nations have ridiculous tax laws and rates. People and corporations leave. If anything, we should be advocating CT fix their corporate tax laws, because it's costing them tax revenue.

> dodge taxes they're meant to legally owe using loopholes

That's the law you are describing. These so-called "loopholes" are parts of the tax code specifically inserted to allow people (and corporations) the ability to reduce their annual tax liability. Nobody (and no corporation) does any wrong by using the law to their advantage.

Change the law (remove the loopholes) if it's upsetting. Otherwise, they're doing things the right way.

I was moved by GE's patriotism when they realized they would have to dredge the PCB pollution dumped in the Hudson River -- then promptly lobbied for a retroactive tax cut to fund it.

Well, consider regulatory capture. In such an environment your view is incorrect. I believe we are in such an environment.

> regulatory capture ... I believe we are in such an environment

I think we'll have to disagree on this. I don't see any signs or evidence that Boston politicians are cozying up with GE executives for kick-backs and what-not.

I don't either. I do see evidence of business interests ensuring that the effective tax rate on corporate profits is quite a bit lower than the nominal rate and that this fact will not change regardless of voter preferences.

I’m not defending this deal, but: I don’t think $200m buys as much infrastructure as you might think

8.2% of a Big Dig, for instance.

More like 1%... http://www.wbur.org/2012/07/12/7-things-that-cost-less-than-...

Off by a factor of 10. And I thought $2b was a significant cost for moving a freeway....

Yeah, $200m doesn't seem to go very far on infrastructure these days. Didn't the SF Bay Bridge come in around $10bn?

more like <1% of a Big Dig