Small and Medium Sized Firms Say “No Thanks” to Tax Breaks

Here’s a Wall Street Journal cover story on how the complexity and attendant costliness of applying for, receiving, and following up on tax breaks is causing small and medium sized firms to say “no thanks,” thus leaving those financial incentives to the bigger companies who can afford to spread the cost of handling these things over a larger base of operations.

 

(LH)

Gross vs. Net

This article, about a proposed casino in North Jersey, raises the importance of understanding what is gross versus what is net.  In other words, if the new casino will generate 100 units of economic impact for New Jersey, but 60 of those units are just internally shifting from within the state, then the net impact of the casino isn’t +100, it’s +40, and from an ROI standpoint it’s the +40 and not the +100 that the state should be looking at.

 

(LH)

Uber

The Philadelphia Inquirer published an interesting article this week on a new cab/limo service called Uber, which is now operating in Philadelphia. 

http://articles.philly.com/2012-07-12/news/32633478_1_travis-kalanick-uber-luxury-car-service

The service costs almost twice as much as an ordinary cab, but by using a free app on your smartphone you can instantly summon a car to your location by tapping a button, ride in a shiny black Lincoln Town Car, and enjoy free cold water bottles while you ride. Additionally, the app instantly charges your account for the cost of your ride (tip included) so you do not have to worry about having cash on hand. 

I found this concept interesting, and worthy of a discussion on multiple points.

  • Some local cab companies are getting upset arguing that Uber should not be allowed since Uber cars that act as a hybrid taxi/limo service did not register for an official Philadelphia cab license and do not follow licensing rules to operate (I believe Uber is arguing there is a loophole that applies to their service since they are not officially taxis).  
  • What prevents people from accidentally butt-dialing Uber and ordering a ride? Do you think there are consequences if people order an Uber car, and then end up not waiting around until the car arrives at their location?
  • Would you pay for this service?
  • Interesting Note: they just opened a London Uber service in time for the Summer Olympics

Economic Development

In researching compartive economic development models the data seems to indicate that there is a race to the bottom, i.e. the states or country that gives away the most to projects that would have been developed anyway win. The problem with that thesis is it’s a bit simplistic as there are many examples of states in that it:

1. Fails to recongixe that we live in a global economy as well as a natinal ecoomy and companies and invtors have real chocies;

2. It’s most often put forth by northeastern states and California which have been the major losers in the economic growth fo rthe last ten years;

3. It assumes sound government polices do not matter in business location decisions when it’s one of the top three considerations in the decsion maker’s consideration;

4. If a state or nation has sound policies and government, is there a need for economic development giveaways at all?

Thoughts?

Domenick