What Happens When Big Tech's Datacenters Come to Small Towns? (time.com) 76
Earlier this month Time magazine reported on what it calls "the underside of an economy dominated by big tech companies."
Few big tech companies that are building and hiring across America bring that wealth with them when they set up in new communities. Instead, they hire armies of low-paid contractors, many of whom are not guaranteed a job from one month to the next; some of the contracting companies have a history of alleged mistreatment of workers. Nor do local governments share in the companies' wealth; instead, the tech giants negotiate deals — the details protected by non-disclosure agreements — that exempt them from paying taxes that would fund schools, roads and fire departments....
Globally, by the end of 2020, there were nearly 600 "hyperscale" data centers, where a single company runs thousands of servers and rents out cloud space to customers. That's more than double the number from 2015. Amazon, Google and Microsoft account for more than half of those hyperscale centers, making data centers one more field dominated by America's richest and biggest companies... Google in March said it was "investing in America" with a plan to spend $7 billion across 19 states to build more data centers and offices. Microsoft said in April that it plans to build 50 to 100 data centers each year for the foreseeable future. Amazon recently got approval to build 1.75 million square feet of data-center space in Northern Virginia, beyond the 50 data centers it already operates there. Facebook said this year it would spend billions to expand data centers in Iowa, Georgia and Utah; in March it said it was adding an 11th building to its largest data-center facility in rural Prineville, Oregon...
Facebook has spent more than $2 billion expanding its operations in Prineville, but because of the tax incentives it negotiated with local officials, the company paid a total of just $119,403.42 in taxes to Crook County last year, according to the County Assessor's list of top taxpayers. That's less than half the taxes paid by Brasada Ranch, a local resort. And according to the Oregon Bureau of Labor and Industries, the data center has been the subject of numerous labor complaints... "I've spent way too much of my life watching city councils say, 'We need a big tech company to show that we're future-focused,'" says Sebastian Moss, the editor of Data Center Dynamics, which tracks the industry. Towns will give away tax breaks worth hundreds of millions of dollars, his reporting has found, and then express gratitude toward tech companies that have donated a few thousand computers — worth a fraction of the tax breaks — to their cash-strapped school systems. "I sometimes wonder if they're preying on desperation, going to places that are struggling."
Communities give up more than tax breaks when they welcome tech companies. Data centers use huge amounts of water to cool computer equipment, yet they're being built in the drought-stricken American West.
The article cites Bureau of Labor Statistics showing that 373,300 Americans were working in data processing, hosting, and related services in June — up 52% from 10 years ago.
Globally, by the end of 2020, there were nearly 600 "hyperscale" data centers, where a single company runs thousands of servers and rents out cloud space to customers. That's more than double the number from 2015. Amazon, Google and Microsoft account for more than half of those hyperscale centers, making data centers one more field dominated by America's richest and biggest companies... Google in March said it was "investing in America" with a plan to spend $7 billion across 19 states to build more data centers and offices. Microsoft said in April that it plans to build 50 to 100 data centers each year for the foreseeable future. Amazon recently got approval to build 1.75 million square feet of data-center space in Northern Virginia, beyond the 50 data centers it already operates there. Facebook said this year it would spend billions to expand data centers in Iowa, Georgia and Utah; in March it said it was adding an 11th building to its largest data-center facility in rural Prineville, Oregon...
Facebook has spent more than $2 billion expanding its operations in Prineville, but because of the tax incentives it negotiated with local officials, the company paid a total of just $119,403.42 in taxes to Crook County last year, according to the County Assessor's list of top taxpayers. That's less than half the taxes paid by Brasada Ranch, a local resort. And according to the Oregon Bureau of Labor and Industries, the data center has been the subject of numerous labor complaints... "I've spent way too much of my life watching city councils say, 'We need a big tech company to show that we're future-focused,'" says Sebastian Moss, the editor of Data Center Dynamics, which tracks the industry. Towns will give away tax breaks worth hundreds of millions of dollars, his reporting has found, and then express gratitude toward tech companies that have donated a few thousand computers — worth a fraction of the tax breaks — to their cash-strapped school systems. "I sometimes wonder if they're preying on desperation, going to places that are struggling."
Communities give up more than tax breaks when they welcome tech companies. Data centers use huge amounts of water to cool computer equipment, yet they're being built in the drought-stricken American West.
The article cites Bureau of Labor Statistics showing that 373,300 Americans were working in data processing, hosting, and related services in June — up 52% from 10 years ago.
What Happens? (Score:5, Insightful)
JOBS, my friend! Jobs for 6-8 people from out of town!
Who needed that 150 year old courthouse anyway?
Sanfran... Vancouver same boat, steerage class (Score:3)
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To be fair, if they really employ so few people, then why should they pay taxes to support schools for the children of their non-existent employees to not attend? Why should they pay for roads that their non-existent employees don't use to commute?
At some level, the taxes that a company pays should be proportionate to the burden they place on the community. Datacenters don't pay much, but they don't use much either.
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The burden placed by those few employees is the least of it.
Data centers require significant support infrastructure (e.g. electrical service) that in turn also has its own support needs. It's not as if the datacenter is running off an electrical extension cord they walked over and plugged into the wall in the courthouse one day.
It also seems unlikely that the company who owns the datacenter is going to be satisfied with an unmaintained gravel road serving as access to their site, regardless of how infrequen
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Data centers require significant support infrastructure (e.g. electrical service)
Electrical service is provided by private companies.
Even in the few areas where governments generate power, it is a source of revenue, not a tax sink.
The steady baseload power that datacenters demand is the easiest and most profitable for power companies.
The grid improvements and additional jobs at the electric power company are net benefits to the community.
unmaintained gravel road serving as access to their site
The data center is responsible for paving any road on its own property.
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Electrical service is provided by private companies.
Gross oversimplification.
Electrical service is a government function that is contracted out to private companies.
Even in the most privatized grid in the US, power delivery is done only by government grant.
Even in the few areas where governments generate power, it is a source of revenue, not a tax sink.
Mostly true. But ultimately, not all that relevant.
The fact that a venture is profitable does not mean it is without cost. It would take 3 seconds to demonstrate why that logic is terminally faulty.
The steady baseload power that datacenters demand is the easiest and most profitable for power companies.
This is true, but but that's less helpful to society than you think. It often results in a skewed prioriti
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Is this actually the case? Because the difference in power consumption between an idle server to fully loaded is fairly wide now - an idle quad processor server can consume around 100W idling, but draw over 500W going full tilt. And most servers aren't processing something continuously. (The ones doing constant number crunching are generally supercomputers doing weather predictions, but most datacenters
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The datacenters in Prineville run by Facebook and Apple (remember, Apple is also in Prineville) are powered by mostly hydroelectric sources.
While that's great and green, these facilities are located in the High Desert where water is scarce. I'm guessing these facilities use extremely deep (and expensive) wells to get their water and don't affect the surface water supply otherwise Prineville and Crook County wouldn't be so keen on their being built there.
The regional authorities have their hands full managin
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To be fair, if they really employ so few people, then why should they pay taxes to support schools for the children of their non-existent employees to not attend? Why should they pay for roads that their non-existent employees don't use to commute?
At some level, the taxes that a company pays should be proportionate to the burden they place on the community. Datacenters don't pay much, but they don't use much either.
Then they have absolutely no reason to be in that town. Not paying taxes, not employing people.
Because while wanting to exempt themselves from taxes, what they do is claim that their presence will bring jerbs, jerbs,jerbs!
The closest thing I can come up with is the Marcellus shale drilling in Pennsylvania. The drilling companies were going to bering in thousands of high paying jerbs, so why tax the extraction. The anti tax crowd even claimed if PA Taxed them, they'd extract the gas from other states
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Yeah, kinda this.
So, I want to set up a "datacenter". I need land, electricity, cooling, and physical and data highway access. During construction, I need people to do the construction. Good solid labor, concrete pourers, rebar benders. Electricians and plumbers. Temp jobs tho. Permitting and stuff contribute to the community coffers. Maybe the datacenter operator pays for some road improvement in/out of the community.
The operating electricity is a cost of doing business. Cheaper the better, but reliability
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They take up land that could be used for housing or a business that creates more jobs. They also take up the limited (in lots of places) water and power. That water and power is most needed by the datacentre on the same days as the community needs it such as the other day when temperatures were 39C with a community at level 4 (5's the highest) drought.
This is going to vary on location but where I am, this is all true, especially the need for more housing which is limited by land, water, sewer treatment and
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At some level, the taxes that a company pays should be proportionate to the burden they place on the community. Datacenters don't pay much, but they don't use much either.
You might have a valid point if the companies were paying taxes proportionate to the level of evironmental havoc they wreak to some level of government, and if they weren't trying to turn the workforces of entire nations into feudal serfs. But if they're not actually paying their way - and it seems they aren't - then I think it's entirely reasonable for municipal governments to tax them as heavily as possible. Such companies may not be that much of a burden directly to local communities - although I still c
Re: What Happens? (Score:1)
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Who needed that 150 year old courthouse anyway?
Honestly, no one. People may want one but no one needs one.
I live in such a town (Score:3)
There are 4 security people on 24/7 shifts to let IT people in when needed, that's about it.
So it's at most 1 less parking-space at the strip-club.
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Must be the Walmart data center. [youtu.be]
What happens? (Score:1, Insightful)
Same as always - they rape the area/people for all it’s worth, and then reward their shareholders.
Re:What happens? (Score:5, Informative)
Drive through West Virginia sometime and see the historical example of out-of-state corporations taking everything and leaving nothing.
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out-of-state corporations taking everything and leaving nothing.
What is a datacenter "taking"?
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His regret he couldn't be an employee.
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out-of-state corporations taking everything and leaving nothing.
What is a datacenter "taking"?
He might be talking about "mountaintopping". That's some first class nasty stuff there. https://en.wikipedia.org/wiki/... [wikipedia.org] Lop off the top of a mountain, throw everything but the coal in the next valley and fill it up. Run Google Earth or Bing Maps over West Virginia.
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He might be talking about "mountaintopping".
Yes, I understand that the GPP was referring to strip mining.
What I don't understand is how that is analogous to building a datacenter.
Strip mines leave behind enormous external costs. Datacenters don't.
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He might be talking about "mountaintopping".
Yes, I understand that the GPP was referring to strip mining.
What I don't understand is how that is analogous to building a datacenter.
Strip mines leave behind enormous external costs. Datacenters don't.
A Matter of degree.
Now perhaps an allowable example might be the FoxConn Debacle in wisconsin - would that one be okay? Not specifically a datacenter, but perhaps if permission is granted, we can note that a bill of goods was sold to thr people of Wisconsin, a town mortgaged it's future, and this Foxconn miracle was sold by no less than the 45th president of the United States as the 8th wonder of the world. A neighborhood was seized by eminent domain, and razed to provide for 13,000 jobs that were suppos
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Anywhere you dig crap out of the ground, you gotta put the crap somewhere. It's a problem. While the removal of entire mountaintops is egregious, the alternatives are pretty bad themselves. Hopefully we can, through recycling, alternative energy, space exploration(?), etc., greatly diminish how much extractive industry we need.
One of the most horrendous examples of what can go wrong:
https://en.wikipedia.org/wiki/Aberfan_disaster [wikipedia.org]
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Anywhere you dig crap out of the ground, you gotta put the crap somewhere. It's a problem. While the removal of entire mountaintops is egregious, the alternatives are pretty bad themselves. Hopefully we can, through recycling, alternative energy, space exploration(?), etc., greatly diminish how much extractive industry we need.
One of the most horrendous examples of what can go wrong: https://en.wikipedia.org/wiki/Aberfan_disaster [wikipedia.org]
Horrifying. People do want ways to make a living, but..
While we're on such a happy subject, here's a recent listing of different tailing dam failures: https://www.wise-uranium.org/m... [wise-uranium.org] What is very disturbing is the number of people killed. Some of the more third world cases have hundreds of people killed.
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Holy fuck, that is fabulously third-world.
It has many West Virginia citizens up in arms, and they are normally pretty accepting of bad practices. The pity is, it's a beautiful place without the carnage.
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The pity is, it's a beautiful place without the carnage.
It is! I drove through it on my way from Arkansas to DC once when I was younger. Gorgeous country.
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Water, electricity and land.
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The only surprise is that anyone is surprised.. (Score:5, Insightful)
Even the smallest of operations generally tries to avoid opening the door to whatever broom closet they've stashed a couple of servers in more than is strictly necessary; and the bigger and more professional the setup the greater the emphasis on not having a lot of people running around inside the datacenter with screwdrivers and/or futzing with cabling. Hyperscale operations are, unsurprisingly, about as good as the state of the art currently allows at doing things in big, efficient, batches(in some cases with fairly large assemblies shipped in as units; in some cases with outside specialists who pop in briefly for complex setup and then leave); which pretty much leaves the local economy with whatever initial construction jobs are involved in building the place; and some ongoing security guard and facilities maintenance postings.
Even if the operators are feeling benevolent enough to not use assorted subcontracting tricks to make sure that all those jobs are precarious and filled by expendable nobodies who can be discarded whenever convenient, we aren't talking about a significant headcount; and basically none of it is connected to the shiny "tech sector"; the most skilled positions are potentially electrical and HVAC.
If you've got some dirt cheap land and are close enough to power and fiber that isn't necessarily a brutal blight upon the community; but everyone had better be going in eyes open about the fact that these places simply don't have much local labor requirement, what labor they do require is only tenuously linked to 'tech'; and there's no reason to expect good faith and benevolent employment from the operators.
Outlaw "Location Selection" Tax Breaks (Score:5, Insightful)
First, these mega-corporations hold auctions to see which location is willing to give the biggest tax breaks. The sums of money involved are so huge that it can offset the cost of setting up in the location in the first place. But guess what? That location still needs to raise the tax revenue! So who gets to pay? Why, all the other local corporations and local residents, thank you very much.
Next, the arrival of a good chunk of top-earning management in the location can send residential property prices spiralling. Great if you're an employee with the mega-corp, because suddenly you get the pick of the best local real estate. But the net result is that property prices spike. Who gets to suffer? Why, all the local residents not working for the mega-corp.
Now obviously, the newly-arrived mega-corp is going to hire local people, right? After all, that's what they argued the massive tax breaks for, yes? So they keep their promise and post vacancies for staff. Except, wait... They want to tempt the very best of the local population of employees to go work for them. They're not there to hire managers for $7.25 an hour [although there will be no shortage of jobs at that salary, no doubt]. But this gives us a third problem... it means that now local businesses, some of whom were closely balancing the books by paying people as much as they could afford, are required to compete with trillion-dollar multi-national mega-corporations, who will pay whatever they want in order to get the people they want.
We've all seen this play out so many times, right? The big national grocery chain turns up in a small town. Six months later half the high street stores are out of business, all the independent local gas stations are closed.
There's a quick fix to this, of course. Outlaw states and municipal districts for offering tax breaks for relocating companies. Do it at the federal level. Then everyone gets to compete on slightly more level terms. Obviously still not all the way fair, but it would help.
Outlaw "Location Selection" Tax Breaks And Votes (Score:1)
So if the voters are ok with the trade-offs, and vote their ok. Then we can gather a larger group to vote again and override the clearly improperly thinking first group's vote. Yes, that sounds super democratic.
Re:Outlaw "Location Selection" Tax Breaks And Vote (Score:5, Insightful)
These sweetheart tax breaks are a Prisoner's Dilemma [wikipedia.org]. Local jurisdictions offer them because others offer them. But we would be collectively better off if no one offered them. Companies could then make their expansion decisions based on economic efficiency rather than tax policy.
Local democracy can't fix the problem, just as the isolated prisoner doesn't benefit from unilateral silence. Congress should ban these sweetheart deals at the national level.
Preventing a collectively harmful race-to-the-bottom is exactly why we have the Constitution's Commerce Clause [wikipedia.org].
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Why stop at the Federal Gov't, go ask the UN!
Bullshit (Score:3, Insightful)
But that means you have to vote in primary elections and you have to pay attention to who you're voting for and you have to vote based on policy and not on how patriotic a politicians advertisements m
Re: Bullshit (Score:2)
Yeah, well done AOC and friends. Instead of direct tax revenues from Amazon as well as tens of thousands of jobs, direct and indirect, with taxes arising from those jobs, they get zero. A proper victory that is not marred by AOC apparently believing, despite having a degree in economics, that withdrawing the tax break somehow freed up the 'money' to be spent on public services.
Except it wasn't a lot of jobs (Score:2)
Meanwhile they can now spend that money on, IDK, something that'll actually create jobs? Like investing in schools, roads and healthcare.
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500,000 square feet is a lot of space for a handful of executives. Were they to each have an office the size of a football pitch?
This money they can spend on other things, what money is that? A tax break isn't a case of literally taking $2.8 billion from the coffers to hand to Amazon.
We can use an analogy for this. I give you a one month free trial of my new streaming service that ordinarily costs $10 per month. This doesn't mean I'm paying you $10 and it also doesn't mean I would have $10 if I hadn't offer
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Unless there is a federal law prohibiting this, this will be business as usual whereas the biggest players always get special benefits which the smaller players never get.
Maybe they can offer such deals, if they are tied to hard numbers in terms of how many local employees are recruited, what sort of other benefits they will provide to the neighbourhood, etc.
If the hard numbers are not hit, they automatically have to pay back all the subsidies + a penalty.
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"So who gets to pay?"
Next year, when a new company gets tax breaks to come in, the current receipient then gets higher taxes to cover the new breaks.
Actual capitalists would not treat with localities that offer one-off taxes breaks since it just hides the true costs of things from the market making it inefficient.
EU rules prevent this sort of competition (Score:2)
But the US hasn't got those laws. It's doable, and the rules create an environment where there isn't the silly competition this story shows.
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Nope, this is a good sounding, but terrible idea.
Why do we have Hollywood in California, but not in NY even when the theaters were in East Coast? Because California offered better terms (being away from Edison's litigation: https://www.mentalfloss.com/ar... [mentalfloss.com])
Why is Georgia the major breakout in new movie development? The same reason: they offered very good terms: https://www.georgia.org/press-... [georgia.org].
And yes, not all experiences are rosy, some will get outlandish deals for no return. But this is life, and bannin
Why offer incentives for a data center? (Score:3)
I don't see the rationale for offering incentives to build a data center. They generally have a very small staff while consuming a boatload of electricity. So what is the benefit of their presence other than taxes?
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give us the tax brake or we put it china, mexico, (Score:2)
give us the tax brake or we put it china, mexico, ect
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They generally have a very small staff while consuming a boatload of electricity.
In most of America, electricity is provided by the private sector and is sold at a profit and taxed.
From the perspective of the electric company, the local government, and local residents, the baseload power demand, grid improvements, and jobs at the power company are benefits.
So what is the benefit of their presence other than taxes?
What is the downside to their presence?
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In most of America, electricity is provided by the private sector and is sold at a profit and taxed.
From the perspective of the electric company, the local government, and local residents, the baseload power demand, grid improvements, and jobs at the power company are benefits.
You just justified their presence by using electrical service taxes? I don't always agree with you, but I expect better from you.
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They generally have a very small staff while consuming a boatload of electricity.
In most of America, electricity is provided by the private sector and is sold at a profit and taxed.
From the perspective of the electric company, the local government, and local residents, the baseload power demand, grid improvements, and jobs at the power company are benefits.
So what is the benefit of their presence other than taxes?
What is the downside to their presence?
I don't object to their presence unless if it drives up power costs for local residents like some mining operations have.
But my point was about incentives to attract them. Why offer tax breaks when the main benefit is the taxes?
It would be different if it was an office complex with an expectation of hiring thousands of permanent workers
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I don't see the rationale for offering incentives to build a data center. They generally have a very small staff while consuming a boatload of electricity. So what is the benefit of their presence other than taxes?
The suckrs in the towns are told that they'll have lots of High quality jerbs. Kind of like a Datacenter version of this https://reason.com/2021/04/21/... [reason.com]
13,000 jerbs. Touted as the 8th wonder of the world, a neighborhood razed after being taken by eminent domain. The town of Mount Pleasant investing a billion dollars, the state taxpayers footing 80 million dollars in taxes. All from Republican Governor and genius Scott Walker.
I read these things, and I try to not think about 80 percent of humanity i
Well, I bet one side effect (Score:2)
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I'd take that bet.
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business plan (Score:2)
Shit jobs is part of the business plan. Where else can they find people that will take these shit jobs?
They go where land is cheap, power is cheap, and labor is cheap. They need the cheapest place for the hardware. Everything can be done remotely from anywhere.
Beggars can't be choosers (Score:3)
These little hellholes are in no position to negotiate and the direct tax revenue is not the only tax revenue.
Large data centers are better than hog farms or other industries small towns currently attract and they know this.
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Many, if not most, of the Loudon County, Virginia, "data center alley" facilities use recycled water to cool their plants, courtesy of the local water treatment plant [loudounwater.org].
In contrast to the Prineville, Oregon, facilities that I mentioned in my other response to this post, those Loudon County "data center alley" facilities are powered mostly by nonrenewable energy.
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Loudon County is pretty far from Lake Anna. I'd like to know how to get this information.
Here it says 64% of power in Virginia is non-renewable: https://www.nei.org/resources/fact-sheets/virginia [nei.org].
I know. Free tax credits. Bad! Who is upset? (Score:1)
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Prosecution (Score:3)
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Really, better laws need to be made to improve the enforcement, but good luck with that. The people you're fighting against are the richest people in the country, and they can put up awe-inspiring and highly effective misinformation fights.
Sounds familiar (Score:5, Informative)
This same situation, taxpayers getting stuck with the bill [brookings.edu], exists when it comes to sports stadiums. In short, despite pronouncements from the owners, building stadiums and having games played does not equate to economic activity [theatlantic.com] to offset the costs [washingtontimes.com].
For example, in 2013 [forbes.com] the owner of the Minnesota Vikings wanted Minneapolis taxpayers to foot most of the bill for a new stadium. After all, what's $548 million among friends? That would come out to $77.30 per ticket for the next thirty years. And that cost did not include the tax exemptions for the property itself, the parking garages, nor the exemptions on the building materials.
Fast forward to December of 2020 and due to covid, the city couldn't afford to pay its $17 million debt payment [alphanewsmn.com] so it was asking for all Minnesotans to help pay the debt.
The Buffalo Bills are even worse, asking the taxpayers to foot the entire $1.5 billion price tag [nbcsports.com] of a new stadium. It is doubtful the local community, let alone the state, will recoup that money any time in the near future.
Just as it is not the responsibility of taxpayer to prop up failing businesses such as J.P. Morgan or Wachovia, it is not the responsibility of taxpayers to prop up the failing sports industry. If the teams want the taxpayers to cough up money then the players and staff should all be be required to be residents of the municipality where the stadiums are located. That would at least get some tax revenue from all those high priced salaries to help offset the cost of building the thing.
They bring power and influence (Score:2)