[mikece]

I wonder how much of these "subsidies" are actually tax abatements as opposed to a handout? I am familiar with the Kansas City area: the chart shows Amazon getting $20M for their distribution center in WYCO/KCK whereas they only got $1.8M for their distribution center in Edgerton. Property taxes alone could explain such a massive difference (WYCO property tax rates are ridiculous) and the distribution center is in a commercial/freight zone whereas the one in Edgerton used to be open farmland (though close to an intermodal hub).

And yes, in an ideal world, businesses would pay for things themselves without handouts or tax breaks but pretty much every state and many localities pour millions and billions into public sector financing of private businesses in the name of bringing good jobs to the area. Can't really blame the politicians: if they didn't give these handouts on the Kansas side of the state line I'm sure Missouri would have been willing to lure Amazon over to that side. Amazon is just taking what they can get, same as every other company. The only way to reform this is to ban the practice nationwide -- buy getting politicians who pull down millions in lobbyist and corporate donations to bite the hands that are feeding them.

[kogus]

Virtually every item on the list is categorized as a "tax abatement", "tax deferral", or "tax exemption". I think it's misleading to call those 'subsidies'.

As always, the existence of such taxes gives politicians a tool to amplify their corruption and incompetence. The right answer is to take such tools out of politician's hands by ending the taxes in the first place.

It feels good to tax a corporation, but it's much more practical, efficient, and transparent to keep taxes at the personal and consumer level.

[tasty_freeze]

I'm not an economist, but not taxing corporations leads to increasing income inequality, and gives companies the wrong economic signals.

It costs money to run the government -- the court system, the armed forces, the legislatures, the police and fire departments, etc. Companies consume these resources and that cost should be factored into the cost of their products. In fact, it seems pretty obvious to me that especially large corporations use these resources far more than individuals. When was the last time you were able to lobby congress to write laws to your liking, or create trade agreements, or author a bill to advantage your financial interests?

Back in the 50s in the US, companies paid about 30-35% of total tax revenue and the gears of industry still turned fine. Now it is about 7%, and people complain that it is too much and is harming the economy and stifling progress.

If companies were taxed at a higher rate, yes, it would change things. There would be winners and losers, but a new equilibrium would be established soon enough. Dividends would be lower -- yes, so what? The economy is already too geared towards rewarding unproductive stock market games and the lopsided part of that goes to the people who are already well off. Dropping taxes to zero for companies would make things worse. Rich people wouldn't consume more and would just reinvest their increased dividends, while working people would have to make up the loss of tax revenues either through increased personal tax or loss of services.

[kogus]

  When was the last time you were able to lobby congress to write laws to your liking, or create trade agreements, or author a bill to advantage your financial interests?

That's exactly my point. Corporations have all kinds of power and leverage when negotiating with politicians regarding their tax burden. That's what leads to corruption. Corporations don't even exist as anything other than a legal framework. When you tax a corporation, you are by definition taxing the investors in it. The corporate framework gives those individual investors cover to avoid paying their taxes.

I'm suggesting that you bypass the problem by eliminating corporate taxes, and replacing them with taxes on investors, who individually would not have the leverage to avoid them. As an added bonus, you'd deprive politicians of a powerful tool that they are demonstrably incapable of wielding fairly and effectively.

[mikepurvis]

> I'm suggesting that you bypass the problem by eliminating corporate taxes...

The problem doesn't go away— there are a hundred and one ways that companies can receive favours from the government other than tax breaks: land giveaways, pollution exemptions, utility discounts, trade/tariff deals, infrastructure like highways/rail/fibre being routed in such a way that benefits their locations or supply chains, etc etc.

If your government officials are corrupt or untrustworthy, that's a problem to deal with at the source, not by trying to tie their hands by taking away some of the tools they use to set policy.

[proxyon]

You're missing the point hard. You can still tax the corporation by taxing everyone who earns income from it. You just don't tax the business entity itself.

[somethingwitty1]

You aren't taxing the corporation, you are taxing an individual. We can pretend that is somehow a tax on the corporation, but it isn't. Corporations hold vast sums of cash that isn't "income" to an individual. That money can/is used to enrich the upper-levels of those corporations, outside of becoming "income" for them. "Business" dinners. "Business" travel. "Business" retreats. You could try to create complex tax laws to make people individually liable for it, but good luck enforcing that or writing them in a way that doesn't leave loopholes open for the wealthy. You had a business lunch to try and seal a new deal? Guess what, you all now need to file that as personal income and be taxed at 25%, including the people you were treating. That team celebration for a successful launch? Each team member owes 25% of whatever was spent on you (hope someone was tallying it all correctly).

[Loughla]

>It feels good to tax a corporation, but it's much more practical, efficient, and transparent to keep taxes at the personal and consumer level.

That is a very, very bold claim. Please provide bold evidence or reasoning.

>The right answer is to take such tools out of politician's hands by ending the taxes in the first place.

So there is a corrupt system, and the only solution is to just destroy it? I don't get it.

[calpaterson]

> That is a very, very bold claim. Please provide bold evidence or reasoning.

A selection of common reasons to oppose corporation tax:

- It encourages financing via debt instead of equity (debt payments come of pre-tax profit, equity dividends do not). Debt financing is far more systemically unstable than equity financing.

- Corp tax applies to profits that will be reinvested as well as those that will be withdrawn via dividends, buybacks, etc. Taxing reinvestment (eg in equipment, premises, etc) is very undesirable.

- Companies are highly motivated and well able to avoid it, which means, eg that corp tax falls on small companies more than bigger ones, and that it's administratively complicated to collect (litigation is often required)

In short, corp tax is a tax on money that companies often invest and leads to the most phenomenal hijinks to get out of it. IMO would be better to lower it and raise other taxes instead (eg capital gains, dividend tax).

[kogus]

User jdasdf already responded with an excellent resource on the economic arguments. I can add this link as well, which you may find interesting: https://www.europeanceo.com/finance/zero-corporation-tax-the...

In short, corporate taxes are going to be passed on the shareholders or consumers. So just tax them instead.

Why is that better? For one thing, those individuals get to vote, so they can object in a legitimate way if they feel the taxes are unjust. For another, it removes a vehicle for government mismanagement and corruption.

As for your last sentence:

  So there is a corrupt system, and the only solution is to just destroy it? I don't get it. 

I'd prefer to think about systems on a spectrum of their vulnerability to corruption, and what mitigations to corruption are feasible. In the current framework of regulation and taxation, we have a situation where corporations are, on paper, liable for huge tax burdens, and politicians can choose to lighten that load at their discretion. That's a recipe for extreme favoritism and corruption, especially when you consider most of these decisions are made at a local or state level, where media scrutiny and public awareness is especially weak.

In this case, in my opinion, the best answer is to take the sharp-edged toys away from the children, by which I mean eliminate the possibility of corporate taxes (and therefore favoritism) in favor of more direct and fair taxation on the individuals who end up paying them anyway.

[jdasdf]

[Eliminating or severely reducing corporate taxation is a fairly mainstream idea in economics](https://www.econlib.org/library/Enc/CorporateTaxation.html)

[ceejayoz]

That's the website of a conservative think-tank.

[dragonwriter]

Not only that, but it offers no support at all for its claims of broad support for the idea. It is an ideological propaganda outfit offering unsupported claims that an element of its ideology is broadly popular outside of that ideology.

[hn_ta]

Why don't you argue the point and offer an alternative opinion or rebuttal instead of profiling the messenger?

[ceejayoz]

The messenger is relevant, at times, and is at least worth mentioning. I'm skeptical of "everyone agrees with me!" coming from any think tank, left or right.

https://taxfoundation.org/case-not-eliminating-corporate-inc..., for example, argues that relying on taxing shareholders instead of the corporation ignores foreign shareholders whose income isn't subject to US taxation. (For similar disclosure, they're generally considered right-leaning.)

[proxyon]

Workers at conservative think-tanks breathe oxygen. Ergo, breathing oxygen is wrong.

[ceejayoz]

Take a quick spin through their "encyclopedia" and see.

Labor unions? Bad! Climate change? Probably good, actually!

Their article on oxygen would be "oxygen is good, always" or "oxygen is bad, always". They don't leave much room for nuance in their encyclopedia, and unsourced assertions of a policies popularity in their writings can probably be treated with a grain of salt.

[CapitalistCartr]

The general principle is that corporate taxations are merely a concealed tax on the Public, as corporations merely pass all expenses, including taxes, on to their customers. Except Silicon Valley Startups, they run on VC money indefinitely, so can afford to sell at any loss.

[marcosdumay]

> So there is a corrupt system, and the only solution is to just destroy it?

There's merit to this idea. Often enough the correct fix for a broken system is to throw it away and replace it with something more resilient, even if you lose some theoretical optimality.

This is similar to the people that want to legalize all drugs to reduce crime.

[proxyon]

> That is a very, very bold claim. Please provide bold evidence or reasoning.

No it's not. This is common knowledge in the economics world. Corporations can dodge taxes in ways individuals mostly can't.

[mikece]

> It feels good to tax a corporation, but it's much more practical, efficient, and transparent to keep taxes at the personal and consumer level.

It's also worth pointing out that a business is subject to a number of taxes: property tax, income tax, various fees for operating a business, infrastructure upgrades (to support the tonnage of Amazon trucks), and more. I would like to think that the complete re-build of a highway interchange and re-placement of a normal asphalt street to a heavy-duty concrete road meant for hauling tons of freight, the installation of water and power connections, and everything else a company would need for a large installation would be paid for by them. But we all know these are seen as infrastructure investments that will (hopefully) lure more companies to the area (companies that WON'T be given all of the breaks) now that an anchor tenant is there and justifying a long-term investment.

[jdasdf]

This is exactly right. Corporate taxation is not a good thing in general, and makes everyone poorer.

[dionidium]

> I think it's misleading to call those 'subsidies'.

In ordinary language we all understand that giving someone money and asking for less of their money are not equivalent, but referring to both as subsidies in terms of tax policy is pretty standard. See, for example, the debate about the mortgage interest deduction: https://www.taxpolicycenter.org/taxvox/who-benefits-tax-subs...

[sokoloff]

I think there's a strong argument that we should permit the mortgage interest deduction in order to keep owner-occupied real estate on equal footing with commercially-owned real estate (the expenses of which are inherently deductible by profit-seeking corporations).

Otherwise, we create financial hurdles for people to buy houses that don't exist for landlords, which I think is poor policy.

[alexanderdmitri]

Why wouldn't executives just start having their personal transactions and outsized living expenses conducted w/ untaxed corporate revenue? This sounds like fixing a loophole by making the hole so big you can't call it hole anymore ...

[f6v]

Suppose someone in the EU rents a VM from AWS. How does the US government tax that?

[fallingknife]

He's probably not renting if from "AWS" but instead from "AWS Ireland" or some subsidiary like that. If the VM is located in us-west-1, AWS Ireland probably then rents the VM from AWS USA for a price designed to minimize profit in the high tax (USA) jurisdiction and maximize it in the low tax jurisdiction (Ireland). This is called transfer pricing.

[kogus]

In theory, that's income to a US Corporation, which is subject to US corporate income tax. In practice, Amazon will find a way to offset that "income" with some tax-deductible claim of loss or investment and pay little or nothing on it. I'm happy to be corrected if I've misunderstood.

[bregma]

I'm all in favour of eliminating taxes on corporate revenue. Income taxes should be paid by those earning income (the dividend recipients, the capitalists making gains). Progressive taxes on executive compensation is a good idea for keeping those ridiculously excessive C-level benefits lower.

Property taxes, on the other hand, should be paid by the landowner and recipient of municipal services. If Amazon wants to build a warehouse on its land and expects services like water and sewer, police and fire coverage, roads, snow and rain clearance, and many other things that property taxes pay for, they need to pay property taxes.

Any property tax abatement or exemption is just taxing the local residents to help pay the exorbitant salaries of the people who go from junket to junket scooping up these delicious subsidies. I do not think it is really in the best interest of regular local citizens and for that reason it should be regulated.

[AnIdiotOnTheNet]

> It feels good to tax a corporation, but it's much more practical, efficient, and transparent to keep taxes at the personal and consumer level.

Yes, lets continue to turn all responsibility into externalities for our corporate overlords.

[fastball]

I always thought having a federation of states was a great idea because you encourage competition between them which hypothetically means better outcomes.

But this example makes me feel like maybe that's not always the case. Is this a failure of federated states / competition?

[londons_explore]

It's a success of federation - competition has lowered effective tax rates.

The failure is that mom and pop grocery stores can't do the same because they can't easily move to another state, so states don't make special deals for them.

[fastball]

But is lowering effective tax rates a success if it is a race to the bottom?

[londons_explore]

If a state can still do all the functions their people expect of them with fewer taxes, I think most people would call that a win.

[fastball]

Yes but I guess what I'm worried about here is a tragedy of the commons-type situation where if a couple states do it (offer better tax incentives) than they can make up for the lost revenue in other ways but if everyone is doing it then you have, well, a tragedy of the commons.

[gruez]

>I wonder how much of these "subsidies" are actually tax abatements as opposed to a handout?

Is there a difference? Money is fungible so there's really no difference between a $1M check from the government and $1M in tax abatements.

[sokoloff]

Many of these abatements are over a period of time making the net-present-value of the abatement lower than the face value, which also provides some insurance against a project failure (whereupon you can stop the future abatements in a way that you can't as easily claw back a check that's already been cashed by a company that’s now bankrupt).