This is hardly news. Every time s company threatens to leave a location, the state, and usually the employees if there is a union, make some counter-offer. And other states and countries rush in to offer a better deal.
We all keep talking about the corrupting influence of money on politicians, as if most of them put directly in their pocket (I know dumb ones do, the the vast majority don't). But pales in comparison to the real currency of politics-jobs. Companies are the only ones with that currency and that gives them great power.
Layman question about tax breaks: Does Washington State actually write up a law into its legal code, saying, “All companies not named Boeing shall have to pay a corporate tax of _____%, but Boeing shall be exempt?” How does that not violate some equal-treatment law/constitution?
Never claimed that the optics of the deal are unimportant. But they were referred to as not being part of the economic calculation when they most certainly are.
If you can’t see or won’t admit the difference between receiving taxes and not paying out benefits vs not receiving taxes and paying out benefits, that’s on you.
Essentially, what this carrier deal is, is that the employees will be paying their taxes, but they will be paying much of their taxes to the company, rather than the state govt. This makes their company more competitive, makes all its competition disadvantaged, and costs the taxpayers the money going into carrier’s pockets rather than state coffers. Corporate welfare at its finest, CEO’s getting rich on the taxpayers dime.
Now, I run a business. In the last 3 years, I have added 13 jobs to the economy. I plan on adding more next year. How many? I don’t know, but with my growth, I am on track for 5 or more.
Why am I competing against businesses that threaten to move their production, still do move most of their production, and get massive tax breaks for it? Why don’t I get to get a " refund a “minority portion” of employee state tax withholdings"?
I am adding jobs to the economy, like many small businesses like mine, while most of the large corps are stagnant or shrinking in their workforce, and being rewarded for it.
If you want to save and create jobs, and also actually improve the economy, invest in small businesses, not in large corporations. Give us some tax incentives and subsidized/guaranteed loans, give us a discount on our payroll taxes. There are millions of businesses like mine. Create an incentive or tax break that allows us to hire one more employee each, and you have done orders of magnitude more for employment and the economy than this carrier deal. Getting one “free” (or at least discounted) employee now would make my next hires even sooner. I plan on growing. I plan on increasing my workforce. Giving me (and other businesses like mine) a tax incentive not only does economic good now, but it also contributes to future growth. Keeping the carrier jobs can at best be described as staunching the hemorrhage.
In this case, the state of Indiana is still going to be paying unemployment benefits to the former employees whose jobs did go to Mexico. However, at least part of the tax benefits Carrier will be getting credits on will be payroll taxes–do you know what payroll taxes fund? Among other things, they fund unemployment benefits.
That means that with this deal, the state of Indiana will not be receiving some taxes otherwise due into the unemployment fund, and will be paying benefits out of that fund to ex-Carrier employees. Isn’t “paying but not receiving” the situation you think is so bad?
Instead of paying X number of laid off workers unemployment, they’ll be paying X -1100 laid off workers unemployment. By staying in the state Carrier will be paying tax, whereas they would pay no tax if they completely moved to Mexico.
This isn’t hard, and I refuse to believe you’re really too obtuse to see the difference.
And I have difficulty believing you don’t understand that (1) Carrier was never going to “completely” move to Mexico in the first place, and (2) paying fewer unemployment benefits, while having less money to pay the unemployment benefits still due, isn’t necessarily a win.
The pertinent Washington State law is RCW 82.32.850, which doesn’t specifically name Boeing but instead applies to companies that fall under the definition of “significant commercial airplane manufacturing.”
This does not violate the equal protection clause* in the same way that the Child Tax Credit does not violate the equal protection even though two individuals (one childless and one a parent) are treated differently. That is to say, the WA state tax statute applies not just to Boeing, but any company that falls under the definition provided in the statute.
*there is some question on whether the equal protection clause even applies to tax laws at the state level, as the SCOTUS has not been entirely consistent on this issue.
Right away you’re demonstrating an unwillingness to think of a lot of marginal issues.
Obviously, had X works been laid off, they would not all have remained unemployed. Most would have found other jobs; the economy in Indiana is pretty good, and most people who work for a legit outfit like Carrier will have solid resumes and skills.
As k9bfriender alludes to, paying Carrier to keep jobs in the USA means companies that AREN’T being paid by the government to create jobs are, basically, facing direct competition from the United States government. Carrier does have competitors and they’re now facing an unfairly advantaged competitor. Every other manufacturer who isn’t getting government dough is now, quite rightly, pissed off and wondering where their money is.
This isn’t a new problem, of course. It’s not even big on the scale of such problems. Cities and states have been making dumber deals than this to attract professional sports franchises since before I was born, spending hundred of millions on football stadiums to “create jobs” at rates where they’d be better off dropping the money out of helicopters over the city. But if the new President doesn’t get the concept of moral hazard and opportunity cost and comparative advantage and a lot of other really basic economics concepts, it’s going to be a problem that might get a lot worse.
The are keeping 5 million in tax withholding from their employees state taxes over 10 years. For 1000 employees, that’s 500 a person a year.
Indiana state income tax is 3.3%. If an employee makes $50k, then their tax is $1650. In this deal, carrier is keeping 500 of that, or nearly a third. Throw in unemployment and worker’s comp (which shouldn’t be part of the deal, but everything’s on the bargaining table now), and you’ll get maybe 6, let’s be generous and call it 7% total withholding for the state, which still means that carrier is keeping nearly 20% of the revenue that is supposed to be going to the state.
Now, obviously the moral hazard here is that if everyone starts threatening to move, then everyone will be demanding a 20% kickback on their state tax withholding. I know I’d love to keep 20% of the payroll taxes that are due to the state. I know that I’d be pissed if one of my competitors got that deal, and I didn’t. In fact, giving that kind of government subsidy to another corporation that comes out of MY taxes is going to make me more likely to think about relocating to another place… you know, unless I can get the same kind of deal.
This is only talking about the 5 million “EDGE” deal part, there is another 2 million in the released 7 mill deal, plus whatever other promises have been made in regards to their parent company.