Nissan's taking a hit where it didn't expect, thanks to their failing full-size truck sales. According to the Madison County Journal, when Nissan built their plant in Canton, Mississippi, the automaker struck a deal with the county for accelerated depreciation on machinery. The company claimed it would depreciate faster, as it would be "used more frequently across multiple work shifts." Obviously, the local politicians would have said yes to a back massage write-off clause to get the plant. So they agreed. But things aren't working out quite like they planned. The county pays $1.67m per year on debts related to incentives they bestowed upon Nissan. Last year the plant only brought in $1.64m in taxes. And now that the plant isn't generating the estimated tax revenue due to production cuts, the county wants to tax the machinery using a standard depreciation scale. Of course, Nissan protested, saying "the assessment should not be based on a bond payment, it should be based on true value… nothing has changed to take away from the spirit of [the original] agreement." The county says that that may have been the case originally, but running two shifts instead of three changes the equation and doesn't wear out the machinery as fast. The county board of supervisors passed the new tax assessment unanimously. Anyone want to place any bets on whether Nissan will invest any more on expanding their operations in the Magnolia State?
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Here you can see the fundamental problem of trying to not let the free market work properly with regards to an economy.
Trying to stand behind the curtain and pull levers, as politicians and as companies, results in such idiocy as this.
Here’s a novel idea.
Let’s tax consumption and imported goods (a la the original intent of the United States Constitution) not income.
Then let’s actually let people (and companies) take chances with their OWN money and either do well, or go bust and start over.
There’s a huge incentive to making good widgets, cars, rubber bands, whatever – and giving decent customer service, and paying your workforce well in order to do all of that – with the final incentive is whether you succeed, or fail.
I know, I know – what a novel idea!
menno,
Please run for president. I’ll vote for you.
I second that I would vote for you too. I’m sure not voting for either clown I’m forced to choose from, I don’t trust either of them, and I sure don’t trust them with access to my wallet.
The county taxes the assessed value of capital equipment? Is that normal? Sounds like a pretty stupid idea to me, unless you want your populace to be poor and unproductive.
Wow I bet Nissan could get a better deal in Mexico.
If the county taxes the fair value of the equipment they may be sorry. he fair value of equipment depends on what you can make with it. Equipment used to build full sized trucks may not be worth very much.
Menno,
http://www.fairtax.org
menno – not to criticize your thinking (since it is a utopian ideal that in itself would be great). However, to play devil’s advocate…
What do you propose would be a course of action when you’re an elected official, and your critics (and trust me, there will be critics) blast you for not offering an incentive for companies to build a plant in your state? Instead, your free-market-takes-all approach would watch as another states swoop in with tasty incentives in order to entice a Nissan plant investment.
Your critics would bash you for the lost jobs in the construction of the plant. They’d demonstrate you are not willing to offer an attractive state that draws in investment for the creation of jobs within the plant. They would use examples of states that did use tax breaks and incentives to lure in jobs and revitalize their state with glorious levels of government tax revenue that provides their children improved schools.
HD,
I would suggest that we take all tax deals off the table under the federal level.
That way, there will be no special deals to lure companies from state to state, only to lure companies from other countries.
Many of these deals are not net gainers of jobs in reality, only on paper anyway. A favorite was Houston’s deals for Compaq to stay. They gave them everything. Meanwhile, all the computer manufacturers that worked out of strip centers went out of business. How fair was that? Did it really make more jobs? No, it just moved them into an easy to label group that the pols could take credit for.
Tankcrusher – what you’re proposing is decreasing the autonomy of the individual states in favor of granting more express power to the federal government. As it stands, the commerce clause and taxing/spending clause are already growing in their influence on the states, but your proposal is taking it to the next level.
There would be amazing amounts of resistance towards an attempt that further empowers the federal government. There would be severe backlash if the government was empowered to dictate the tax-laws within each state. Thus far, the government has been able to influence trade and to levy its own taxes, but it could not force tax conformity between the states.
I agree that it is a travesty when the free-judgment of individuals causes harm instead of good. I think it’s much easier to cite negative examples within government because the concept of government is that they are never really spending their own money (since they’re spending your money).
But I would contend that the reason our society works is that it allows for failure and places the onus on the people to make the right decision. The government is supposed to be the voice of the people, and it’s very easy to declare that the people are incapable of making the right decisions for themselves. But I believe in our flawed system more than many alternative systems.
States compete for investment dollars just as business compete for customers. I believe most people on this site are against price fixing laws since it hinders competition. Even individual cities can make themselves more attractive for investment. What about cities that levy more taxes on citizens in order to set up a communication or freight infrastructure? Would you ban those initiatives as well since they could be wasting dollars in an attempt to attract business?
Michigan is routinely criticized for its failure to attract tech jobs or industries outside of automotive. Contrast the performance of Detroit with Pittsburgh – it would be sad to think of a scenario where the only differentiation allowed at the federal level would be the geographic location of the township.
Well, it would be less state power, but it would also be more individual power. It really would not be more federal power, as it really doesn’t give the feds anything they already haven’t got.
Currently, the system is set up such that large corporations can push localities around for tax breaks at the expense of individuals. This would prevent that. What is wrong with that?
Why should large corporations get over on taxes when homeowners and small businesses do not?
Infrastructure improvements are fine, just so they are not targeted at specific companies. If you want to attract more air traffic, improve the airport. However, you can’t make a deal with one airline to bring their hub there.
If you want to stop taxing airlines, that is fine. But it needs to be all airlines, not just one. Anything set up to narrowly should be called what it is, corporate welfare, and prevented.
Clever buggers these Japanese – allways make a profit from your losses
Low taxes are an incentive.
Cut the taxes and the regulation and the rest will take care of itself.
Well, thanks for your votes of confidence, but I can’t take credit for my thinking. It comes straight out of the United States Constitution.
As for voting, well, I’ve decided some few elections ago that voting the the lesser of two evils – is voting for evil.
While (as a recent post here says) we can’t let the perfect be the enemy of the good in politics, I do believe we all should wake up – yes! wake up – and simply all stop voting for the two major parties. Ever. At all.
Let’s see what the Libertarians and the Constitution parties can do. Let’s actually get some people in who aren’t Elitist career politicians. You know, folks who actually understand the concept of leaving the majority of the real power local, then filtering the running of the nation upward on an as-needed basis, only.
Once again, just exactly as the original Founders intended.
And yes, our system of government sucks – until you compare it to every other form of government man has ever invented, that is. But it is rapidly deteriorating to the level of the other forms of government and unless we collectively wish to see this grand American Republic experiment end in failure after less than 250 years on Earth, we all have a responsibility to actually do something worthwhile to stop it.
Because clearly, if we continue on the path we are on, we’re going to go over a big, tall, cliff.
We all know it, if we are honest with ourselves and look around with scales fallen OFF our eyes.
And honestly, there is virtually NO material difference to the end result if “we” vote in the Obamanation or McPain. They’re both lackeys of the Elitist Amerikontrol Corporuption and we are given NO information about the alternative choices by the mass hysteria I mean media, kontrolled by the Elitist Amerikontrol Corporuption.
For God’s sake, people, stop and look around, start thinking for yourselves, and start talking to others about it before it’s too late.
As for this business of worrying whether one state comes out ahead of another, well, some states simply have no natural benefits for business to be there and “must” do “something” beneficial to obtain any businesses at all. Look at South Dakota. Amongst the lowest taxation in the country, in just about every category (especially important for businesses and their prospective employees both). Otherwise, who would suffer the super-extreme winters and wind, and even go there?
menno:
“Look at South Dakota. Amongst the lowest taxation in the country, in just about every category (especially important for businesses and their prospective employees both). Otherwise, who would suffer the super-extreme winters and wind, and even go there?”
South Dakota (or is it North Dakota?) has copied the banking laws of Delaware (a state I used to live and work in) and is now a mjor processing center for credit cards like Delaware and competes for it’s business. Nevada, formerly just known for gambling and whores, has copied Delaware’s incorporation laws and regulations and now a lot of companies incorporate there.
windswords: PRECISELY. Yes, it’s South Dakota.
Some of the other really highly rated states for biz are (as you mentioned) Nevada, also Washington is fairly “up there”.
Had a link to a story which “rated” states for small businesses (we all know that most job growth is still through small businesses rather than conglomerate humungous corporations which tend to export jobs to Mexico, China, etc) – hang on and I’ll try to find it for posting.
Found it.
http://money.cnn.com/popups/2006/fsb/beststates_taxes/index.html
We all know that small businesses manage to provide many more jobs overall than do large conglomerate corporations (which of late, especially, have been busy exporting jobs to Mexico and China) so here’s a link which might be of interest, windwards.
http://money.cnn.com/popups/2006/fsb/beststates_taxes/index.html
This is for menno, companies doing what they want is what got us into this mess the penalty for having a Republican free market! Over tax imports!! you want us to be more alienated from the world same backwards mentallity you Republicans posses revert to the past!!!!You Republicans should have the symbol of the Donkey because you are stubborn Mules who refuse to learn!!!! Don’t blame Nissan or Mississippi (Compare to the rest of the country this is still good news) for their mess blame the Bush Administration. I’m sure when the economy picks up they’ll be one of the places “Mississippi” that rebounds first(Does everyone forget about Katrina? I was visiting the Gulf Coast before and right after one of the the worst storm in American History!!! I recently went back again talk about a speedy recovery) that’s why I’m moving there from Orlando Florida worse place I’ve ever lived!!! At least Mississippi walks the walk while all Orlando does is do nothing but talk!!!