[fortythirteen]

These deals are far from short sighted. What the city may lose in corporate taxes is more than regained through the increase in revenue from middle class population growth. Sales tax and automobile tax revenues skyrocket with the all the people moving in. Businesses open to support the new residents and are taxed. More homes are built and property values go up, meaning an increase in property tax.

Seriously, people who think giving a subsidy for a large tech company to move to your city is short sighted fail to understand the issue holistically. Nome a single American city that has seen it's overall revenue decrease from a large company with skilled workers moving into their area with a subsidy.

[slezakattack]

I'd imagine a lot of the rural towns across middle America offering really large subsidies to build data centers that only employ 50 people probably don't see a return on their investment. [1] The city might be able to stimulate the local construction companies with some good business but the 50 employees aren't going to make up for the $250MM subsidy.

[1] https://www.usatoday.com/story/tech/2017/08/24/apple-latest-...

[fortythirteen]

How many other businesses are going to open branches, if not headquarters, in Des Moines to be close to the Apple data center? How many other companies can they now attract with larger employee counts, as a town that was chosen by Apple?

If I lived in that town, and wasn't a ruralist, I'd be thrilled with the city's decision.

[msbarnett]

> How many other businesses are going to open branches, if not headquarters, in Des Moines to be close to the Apple data center?

Probably none? Almost everything that a Data Center needs to regularly purchase in volume is produced overseas. Micron and Seagate certainly aren't going to relocate to bumfuck Iowa.

What business are you picturing that would possibly gain anything from opening new headquarters in Des Moines to service a single data center?

[fortythirteen]

You're proving my point, in that you don't see the situation holistically. You're assuming all "business" is tech. How about all the maintenance based services? Even inside tech, do you think all issue management in a giant data center is going to be handled by those 50 employees and not a slew of outside contractors?

[kalleboo]

http://www.washingtonpost.com/business/economy/cloud-centers...

Apple’s data center is also supposed to create 250 indirect contracting jobs for maintenance and security. But many in this close-knit town of about 3,400 people — it essentially shuts down Friday nights for high school football — do not know anyone working at Apple.

https://www.techrepublic.com/article/why-data-centers-fail-t...

"People thought when Microsoft came in it would create jobs, but that's just not the case," said E.W. Gregory, the head of the local International Brotherhood of Electrical Workers union. Instead, they brought in outside technicians to do most of the work, he added. About 25 local residents got jobs, primarily as administrative assistants or janitorial staff, Gregory said.

[msbarnett]

> You're proving my point, in that you don't see the situation holistically. You're assuming all "business" is tech. How about all the maintenance based services? Even inside tech, do you think all issue management in a giant data center is going to be handled by those 50 employees and not a slew of outside contractors?

I think that 50 full time employees are sufficient to manage the hardware maintenance issues that typically arise in a large data center, yeah. That's more-or-less the only reason to even have that many people on staff in a data center.

Building and A/C maintenance -- it's only one large building, and Des Moines has existing contractors fully capable of performing that kind of routine, infrequent servicing. This might stimulate one or two new hires at one or two firms, but I sincerely doubt it will require any more than that.

Literally nothing about this data center screams "slew of outside contractors" let alone "whole companies moving to Des Moines" to me.

[cozzyd]

There are certainly businesses that will attract other business. For example, something like an Amazon HQ2 conceivably might, for some level of investment, break even in a cost-benefit analysis. A data center is not going to do that though. Not sure politicians can tell the difference.

[mikec3010]

> Businesses open to support the new residents and are taxed.

But why? Why should mom-n-pop have a higher fiscal hurdle than MegaCorp? If tax breaks are so good, why not give them to everyone?

> What the city may lose in corporate taxes is more than regained through the increase in revenue from middle class population growth

Then MegaCorp shouldn't have any qualms about entering into a binding agreement that the economic bounty will come, or else MegaCorp pays a penalty equal to that bounty. I wonder why they don't do that?

[fortythirteen]

> Why should mom-n-pop have a higher fiscal hurdle than MegaCorp?

They don't. They have normal taxation. They wouldn't even have the opportunity to make profits, and hence be taxed, if the clientele never moved into the area.

> Then MegaCorp shouldn't have any qualms about entering into a binding agreement that the economic bounty will come, or else MegaCorp pays a penalty equal to that bounty. I wonder why they don't do that?

Because they're not shitty businesspeople? Remove the incentive and there's no motivation. It's basic behavioral economics.

[mikec3010]

So only "shitty business people" fully back up their promises? Then maybe the cities should reneg on their tax deals too?