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30 April 2013


Russ Steele


I wrote about a company that left Nevada County for New York in April of 2009.

"Daystar which was working on [solar] technology came to Nevada County from Colorado and set up shop here in the early 2000s. Not sure of the exact date. They left for New York when the state promised them 11 million in subsidies. Once the subsidies were spend the Company moved it's headquarter back to California, setting up shop in San Jose, though some manufacturing capacity remained in New York. They did not come back to Nevada County."

So, once the money was spent, there was no reason to stay in New York.

Joe Koyote

It has become common practice for companies to build in a location because of tax breaks and subsidies only to move on to greener pastures as soon as a better opportunity arises. Dell computer was probably the most flagrant moving from state to state and once moved a manufacturing facility two counties over for a better property tax deal deal, only to move on once again a few years later. Obviously, not all companies are this ruthless, but many are taking advantage of local and state economies starving for jobs by playing them off against each other.

George Rebane

JoeK 709pm - Yes, the companies are gaming the tax benefit packages offered by the job hungry states. But the point you didn't address (or understandably missed?) is the liberal shibboleth of tax independent behavior. It appears that taxes make up such a significant part of a company's 'cash flow' and 'sources and uses of cash' accounting that it pays to relocate multiple times, even though every move itself costs money. Why do progressives have a tin ear (brain?) here when trying to understand what is obvious to everyone else? Can you speak for them?

Russ Steele

Some times politics influences a business move. I was the manager of an engineering laboratory in North Highlands. Our lease was up on our office and I wanted to move the lab to Johnson Ranch in Roseville, to reduce our connection to the military at McClellan AFB. We were getting more contracts with Caltrans and Air Force funding was in decline, and consolidation was on the horizon. It was time to change our marketing focus. And, there was a major black world subcontract we could capture of we had a more secure building. My staff developed a plan and we put the move in motion. However, we soon discovered that we could not move our lab to a different congressional district, when high headquarters canceled the move to Roseville. We could move, but it had to be within the current congressional district. I have avoided using any names to protect the guilty.

Joe Koyote

George-7:55 -- I can only speak for myself on this or any issue. What is there not to understand about relocating to reduce tax burdens? Given the corporate credo of profit uber alles, it is totally understandable. However, my personal feelings on the matter go to social consciousness rather than additional profit concerns. I think any commercial or other enterprise has a responsibility to the people in the areas in which they locate, and that includes paying taxes. Taxes, however high or low, are part of the cost of doing business and help support the infrastructure that allows the business to make money (they didn't build it alone). Let's be honest here, for many large corporations who play the relocation game, the net result of relocation is most often increased profit which mostly goes into the pockets of the stock holders, where ever they might reside. The local entities lose on two counts. First, their tax revenues are reduced and while local sales tax (if there is one) will increase with the additional jobs/spending, when the corporation moves on, the jobs are lost as well. I think that companies that receive such breaks should sign agreements linked to longevity. If a company pulls out early they should have to pay a penalty to reimburse the locality for the lost revenue. The people who lost their jobs and had their hopes of economic prosperity dashed by the move are pretty much screwed any way you slice it, and that is the real crime to me. The income inequality index (difference between rich and poor) of the USA is the same as Swaziland, and therein lies the problem. What I don't understand is why those who have more money than they could ever spend in twenty lifetimes don't let more of it trickle down. A person who has a thousand times more money than another person does not buy a thousand times more consumer goods (Celine Dion and her 3,000 pairs of shoes excepted). For a consumer based economy to flourish everybody needs to have money to spend not just those at the top. Why don't conservatives get this when it is obvious to everyone else.

George Rebane

JoeK 837am – I take it from the start of your dissertation that you personally do allow that taxes and tax rates impact the economic behavior of individuals and businesses. Please correct me if I misunderstand you.

And then you proceed into what can only be called a lament on the social injustice of companies moving just to increase profits so that they better benefit their owners. (Your lament does not consider that profits are also what allow a company to survive in a competitive environment, but that is a common blind spot suffered by those on the port rail.) You proceed to invoke the Gini index (q.v.), about which RR has many posts, to moralize on the just limits to wealth and income, limits that the Left always has in the back of its collective mind but never reveals publicly as one of its economic tenets (and for good reason).

In your statement you join the ranks of naïfs who believe that people of wealth keep that wealth tightly buttoned up in their mattresses, instead of in investments that enable more businesses to generate more wealth and jobs. And you don’t seem to recognize that even when some such monies are kept in mattresses, the name on the mattress reads ‘The United States Federal Reserve’. There the policy of our profligate government, in debt over its ears, attempts to reduce the velocity of the extra cash (retained earnings) in the economy that would light the fires of hyper-inflation. Meanwhile the nation’s socialists are screaming for programs to pile on more debt and further cut the rewards of risky investments. Then tongue clucking moralists like you predictably come out of the woodwork to talk about the rich not spending enough to make trickle down work better, and astoundingly conclude that if they don’t spend it, they shouldn’t have it.

I submit that your implied fondness for a command economy attacks the problem of wealth distribution and standard of living from precisely the wrong end.

Joe Koyote

George_I didn’t say if they don’t spend it they shouldn’t have it, that was your interpretation. I am just wondering why there isn’t more trickle down. If trickle down works, as conservatives claim, where is the proof? Taxes, on average, are at the lowest rates in decades, with more off shore tax dodges than ever before, yet our consumer economy is in the tank for a lack investment in jobs. At the same time, the amount of wealth that is being withheld is at near record highs. I would think that what is good for the goose is good for the gander, but that does not seem to be the case. Can you explain this beyond the standard “over regulation” talking point, that to me, holds little water when “regulations and taxes,” on the grand scale, are currently lower then the 1950’s post war boom. Yes, we have to have wheel chair ramps, but Wall Street is out of control for a lack of oversight and the economy and well being of average Americans is the price being paid.

George Rebane

JoeK 1058am - I thought I made it very clear why more money is not invested on these shores. The literature (alas not of the progressive kind) teems with articles expounding what I briefly summarized in my 943am.

And you totally misunderstand your "grand scale" argument on taxes and regulations (it appears that you may have been krugmanized). On the grand historical scale government peeled off about 18-19% of GDP, and now takes about 24%, with even higher proportions promised. This is a huge percentage increase in the confiscation of private funds from the economy, funds that are now essentially pissed away. (The Left's tired comparison of top tax rates from the 50s as impacting effective taxed amounts passes for economic history only in progressive sociology courses.)

As to your perception of the regulatory environment in the 1950s compared to now, I am speechless and can only assume that you recently came to us from another planet.


" If trickle down works, as conservatives claim, where is the proof?"

Conservative economists claim "trickle down economics" doesn't exist and is merely a caricature that the left uses in straw man arguments.


The truly huge fortunes made have all been made betting on trickle up economics. Make pennies on billions of transactions and you too can be a Heinz or Hearst.

Russ Steele


"Do the job well and you won’t have to spend a penny on publicity. If New York state became a genuine leader in business-friendly reform, headlines everywhere would blare the news out for free. Every sentient business leader in America would know that New York state was open for business again. Sadly, that’s unlikely to happen. New York’s politicians are addicted to a system of crony capitalism, sweetheart deals and a regulatory environment that hurts New York City even as it squeezes the life out of the struggling cities upstate."


Jonathan Hoenig‏@JonathanHoenig1m

"Oversee IRS enemies list, sleep through Benghazi, "video" deceit, fund anti-West Muslims, restrict 2A, socialize HC, national debt +60%..."

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