But also (as an Ohio resident) there isn't really all that much in the way of incentives for a business to move here. The state has to do something. But this won't go the way of Foxconn - mark my words, because it's not nearly as complicated to set up.
Like it or not, the future state for not just the world but individual states will be competition for jobs and revenue, so they're going to have to give companies a good reason to locate to their sovereignty. Tax advantages are a tool they can use (among other things), and unlike the federal government the state governments (at least Ohio) have to actually balance their budgets and spend somewhat responsibly - so they can't just do whatever they want and have to be strategic. Not collecting taxes is fine because if Peloton wouldn't locate here without that nothing is really being lost. At least there are jobs.
There's a lot of options that aren't "give corporations a $47mm handout".
What if they put that money into better technical education facilities, or tax credits for Ohio residents paying off student loans. Increasing services so that people working remotely will want to come.
I feel like a place with a low cost of living that attracts highly talented people for a variety of reasons is a better long term investment than a treadmill factory. If I was looking to open a satellite office, I can tell you that proximity to a treadmill factory is pretty low on the list.
Tax breaks like this are tactical, state and city governments need to be strategic. While tactics like tax breaks can be part of a strategy, it doesn't seem to be a great one since it doesn't build "moats", and all it takes to be defeated is the next state over offering something slightly better. Ohio of all places should know that manufacturing facilities can be closed on short notice for reasons they have no control over.
Correct me if my understanding of how tax credits work is wrong, but if Pelton said they'll only build the factory with a $47mm tax credit, the two choices of Ohio's government are as follows:
1. Not collect the first $47mm/$??mm of taxable revenue they generate
2. Not collect any taxable revenue since they didn't build there
Not to mention that there are other ancillary benefits to choice 1 since they'll be paying for land, paying wages, paying truckers to shop things ect.
Therefore there are no other programs that $47mm in uncollected taxes could have been spent on, since the money only exists if they even choose to move there.
Are we on the same page about that or is that not how tax breaks work? (assuming the company refuses to operate at any dollar amount fewer of tax break)
> What if they put that money into better technical education facilities, or tax credits for Ohio residents paying off student loans. Increasing services so that people working remotely will want to come.
Well, a few issues. This is money that has to be collected and spent - more taxes or a change in the budget. Not collecting taxes on new construction isn't money the state has to spend, it's just money it isn't collecting. The alternative, at least in this case is that this factory just isn't built in Ohio. It wouldn't affect doing other things to attract residents. Frankly, I think we should create large-scale corporate subsidies to relocate jobs to the state. If you build your facility or office here, no corporate tax on that entity. More jobs and more money and revenue from other taxes will be enough.
> I feel like a place with a low cost of living that attracts highly talented people for a variety of reasons is a better long term investment than a treadmill factory.
Well, the cost of living isn't all that low, and where it is low no talented person without connections to the state wants to live here. Why live in Ohio when you have the exact same thing almost everywhere else in the country, from Oklahoma to Iowa, to Indiana to Michigan. There aren't many unique reasons to locate a business here, unfortunately. There are plenty of talented people here, though many leave for other locations.
> If I was looking to open a satellite office, I can tell you that proximity to a treadmill factory is pretty low on the list.
Sure, but you're also generally not opening a satellite office here unless you have a very good reason, and that reason would have nothing to do with the existence of a treadmill factory. In other words, Ohio is very low on your list, so if you have a reason for being here it's a very good one that this won't affect.
> Tax breaks like this are tactical, state and city governments need to be strategic. While tactics like tax breaks can be part of a strategy, it doesn't seem to be a great one since it doesn't build "moats", and all it takes to be defeated is the next state over offering something slightly better. Ohio of all places should know that manufacturing facilities can be closed on short notice for reasons they have no control over.
Yes. We should grow a coastline, build some mountains and ski resorts, and have great weather instead.
I agree that state and city governments need to be strategic, but you're paining a mutually exclusive picture where one doesn't exist.
Personally I think the only thing we can do is create walkable neighborhoods with mixed-use development - make Columbus, Cleveland, Cincinnati, and other towns and cities more like places in Europe where people would actually want to live. Otherwise Ohio is pretty indistinguishable from most of the country.
A company getting a tax break is not in the same league as what happened with Foxconn in Wisconsin. That was a truly special example of wild incompetence and corruption.
This is just a company that actually wants to build what they're saying they'll build (at least I believe Peloton wants to build treadmills and exercise bikes because that's what they do, I have no idea why anyone would build a "state of the art" facility for a technology that's already been largely obsoleted as was the case with Foxconn and LCD screens) and hoping for a tax break.
US$24K per job is not too much. The upper limit for cost-effectiveness for job subsidies is maybe $30K. The main problem is making sure the benefits are not paid out until the jobs have been created.[1]
It won’t happen here, but in the Foxconn case a better alternative would have been to not grant the incentives and “lose out” on Foxconn coming to Wisconsin.
Edit: it was $47 million. See you all in 6 to 12 months when this goes the way of Foxconn.