Presumably the tax breaks lead to further taxation through increased economic activity so it isn't a clear cut case of a library "loosing" $3 million a year as the article implies.
Mesa, Az gives Honeywell a property tax break and all the highly paid tech workers drive up the property values and sales tax revenue &etc.
Of course discounting political kickbacks which I'm sure are rampant because, well, politicians.
Sorry but I have to make an objection here. What I submitted is an article about several articles; its premise is that a relatively unknown regulation has made it possible to efficiently scrutinize tax breaks in virtually every jurisdiction nationwide, and that is what some reporters have taken advantage of.
The AJC article is good, but its intended audience is Atlanta region taxpayers, and those who benefit or are harmed by regional decisions. It does not focus on the regulation, or how/why reporters were able to do this story in the present age. The CJR story is more generally interesting because it reveals more about the general circumstances regarding (non-)transparency and impact of tax breaks.
This can be very misleading. Say a city gives Amazon a big tax break to encourage it to move there. So instead of paying $5 million in taxes it pays $2 million.
The city didn’t lose $3 million, it gained $2 million + ripple effects of economic growth - increased costs to administer the city resulting from that growth . So it’s almost certainly better off.
Yes it's misleading. However, the point is that before now these giveaways weren't calculated. In many cases, this has lead to governments giving away more in tax benefits than they receive. The classic example are sorts stadiums. For example take a look at the Atlanta Braves new stadium, which cost Cobb County 400 million https://www.google.com/amp/s/reason.com/blog/2017/04/15/atla...
While that example is extreme, I'd guess that many of these deals aren't with doing if you do the financial modeling out.
Describing it as a simple loss of $3 million is definitely a simplification, for the reason you mention. But saying this is "very misleading" is perhaps even more of an oversimplification. Unless you are so cynical that you think the normal tax rates are a complete sham -- i.e. that the official tax rates have no basis in reality, such that there is no impact whether a city charges $5M or $0.
But if we assume that that $5M is somewhat tied to the actual costs to the city to administer services and regulation, then offering a $3M tax break is done with understanding the potential opportunity cost, and believing that Amazon's business will more than make up for that $3M that the city might have reaped otherwise.
The point of these stories is that, in the past, there was basically no easy way for the public to evaluate these tax breaks. A situation like Amazon seems like a sure net win. But there are many, many more American jurisdictions than the city that happens to get Amazon's business.
Like I said in reply to another comment, the marginal increase to the cost of administration is probably a good deal lower than the resulting average cost.
Others pay the full tax, to support the infrastructure they receive. Amazon gets that for 1/4 the price. Meaning the rest of the city is supporting their share. No, its increased burden on the city at a bargain-basement price. No kind of 'better off', at least not the first year or two.
You’re just filling in my equation with very unlikely numbers.
When considering the cost of administration, you have to remember that the the marginal cost of administration caused by the new company is much lower than the resulting average cost.
You’re right that there might still be a moral problem though. Perhaps it is unfair that some pay full tax and others don’t. I’m inclined to agree, but the tax code is full of such inequities to begin with: deductions for tuition, mortgages, health care, children; exemptions from sales tax for certain kinds of goods; luxury and sin taxes; wealth taxes on land but not other property; progressive taxation of income; etc.
Unless we move to a flat tax applied uniformly, that won’t change.
You are mixing unfairness among theoretically equal actors (regular businesses vs Amazon) and disparities that are supported by societal values. Progressive taxation is a moral imperative to correct excessive disparity; marriage allowances promote fertility and societal stability; and so and so forth.
You are free to make the argument that targeted tax breaks can be worth the cost to the rest of society, but you cannot brush off the entirety of tax laws as morally unjust when the exact opposite is true.
Mesa, Az gives Honeywell a property tax break and all the highly paid tech workers drive up the property values and sales tax revenue &etc.
Of course discounting political kickbacks which I'm sure are rampant because, well, politicians.