Corporate Welfare

Toyota Says Sayonara (Sort Of) to the Golden State

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Driving away with a brand new government subsidy!
Credit: Francesc Esteve / photo on flickr

Texas Gov. Rick Perry is probably looking a bit smugger than usual, if that's at all possible. In the latest commerce-war news between Texas and California—a battle which California appears to be losing badly—Toyota has announced it's moving its headquarters from the Golden State to the Lone Star State.

As a result, 3,000 jobs will be transferred to California to Texas. Not everybody will be going, though. According to the Associated Press, 2,300 jobs will remain in California after the move. But before we mock high-tax, high-regulation California for getting another kick in the moneybasket, let's see how Perry lured Toyota there:

Perry, who made two visits to California to lure employers to his state, said Texas offered Toyota $40 million in incentives from the taxpayer-funded Texas Enterprise Fund. The Republican governor said Toyota is expected to invest $300 million in the new headquarters.

Guess I'll put the streamers and confetti away. Here's a list (pdf) of all the poor, desperate companies that needed Texas' help to find a new home, to the tune of about $465 million in taxpayer funds so far. Besides such mom-and-pop shops like Toyota, Texas Enterprise Fund (TEF) awards have gone to needy folks like Bank of America, Home Depot, Lockheed Martin, and Samsung.

Yes, California is indeed a terrible, awful, high-tax, high-regulation place to do business. The mayor of Torrance spells it out:

"When you look at the whole package, it's difficult to be a business here," lamented Torrance Mayor Frank Scotto, whose community on the edge of the Pacific will suffer as the jobs migrate to Texas.

"If all these great, high-end jobs are leaving California, then we are going to turn into a place that's a retirement community" with low-paying service-sector jobs, Scotto said. "We can't have that," he added, warning that unless the state has a change of attitude, "it's going to be way too late."

The system that Texas is using to win this fight should give small government supporters pause, though. This method writ large feeds the existing cold war-style battle where states use tax dollars to lure in businesses from other states. That's the entire purpose of the TEF program. Many of the businesses who have gotten money from the program were also donors to Gov. Perry. But as the Fort Worth Star-Telegram noted in 2011, leaders in Texas feel as though they have to engage in this sort of competition because other states do it, too. This method may bring home the votes, but arguably it delays real wealth generation and economic growth due to the costs of the program. It's part of the same mistaken belief that publicly funded sports facilities "generate" commerce when they really just shift it from one community to another (if that). Even states with conservative reputations are afraid to stop, though, unless all the other states stop, too.

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  1. If a politician is going to pay bribes, he should have to do so out of his own pocket.

    Though on the other hand, the change in environment has to be worth around $260 million on its own if the bribe was so small (as far as corporate welfare goes)

  2. Texas Gov. Rick Perry is probably looking a bit smugger than usual, if that’s at all possible

    Nice editorialization, Shackford. Borders on demonization – well played.

    1. we call Gov Perry The Milkman. because he delivers, but mostly because of his aggie cheerleader outfit.

    2. Texas Gov. Rick Perry is probably looking a bit smugger than usual, if that’s at all possible.

      He’s still no Ted Cruz.

      1. I agree and frankly Rick Perry is a traitor to both libertarians AND SoCons and people need to know he’s scum.

        However, Reason is being a bit too Puritan-like to attack this program. Reason makes it sound like these are temporary jobs that’ll vanish once the incentives wear off. They aren’t. The jobs they bring here to Texas ARE real jobs.

        Many businesses want to move to Texas, but as any businessowner like myself will tell you, there are major costs involved with a move. Texas basically just pays for the move, but sees a return from increased revenues within 1 to 3 years in most cases.

        Frankly, Texas should triple this fund. It’s amazing how many corporations are moving here. They want to come here for the ZERO state income tax, good regulations, etc. They are just held back by the moving costs, so this program greases the wheels.

        1. I also would state the program was never Rick Perry’s idea and he should NOT get credit for it. In fact, he has jeopardized this fund with his other shenanigans and just tries to take credit for it because he’s aiming at a presidential bid (which will fail because many Texans hate his guts for lying to us on immigration, and his backpedaling on secession basically pissed off both sides).

  3. Torrance (along with El Segundo) is the most business friendly place in SoCal. If they left Torrance, the state must be really bad.

      1. Without clicking that link, is it related to where you left your wallet

  4. From my lib friend who works at the Torrance office:

    “I have never worked for a company that is so dedicated to its employees and has so much class. Even when breaking the worst news, it is handled with respect and absolute class. Regardless of the decisions we will have to make moving forward, it is a privilege to work for TMS.”

    1. Shorter lib friend: Please take me with you Toyota.

      1. No thank you, we don’t need any more liberal Californians fucking up what little good we still have here in Texas (you know when our cops aren’t being ridiculously horrible authoritarian assholes).

        1. It’s their JOB to be “authoritarian”. There has never been a Republic in history ruled in any manner other than that (although democracy can give the deceptive appearance of self-rule, it has always been an illusion). Frankly, you’re just lucky you’re not being flogged or thrown in gladiator pits like the Roman Republic the US is based on.

          Technically we are an Aristocracy (or Aristocratic Republic if you prefer), i.e. rule by the prominent elite, not a Democratic Republic, since the word “demos” refers to a system of choosing representatives by lottery.

          If we had such a lottery, libertarians might actually have 30% of Congress instead of the 1% there is now. It’s a contradiction to be a “libertarian politician”.

          Who is going to spend millions campaigning for a government job on a platform of not taking the salary or using the power of said job?

    2. Tell this person that Texas is absolutely horrible and to stay put. The weather is shit, we’re all gun-toting rednecks, and every bar is like a saloon in old timey Dodge City.

      1. Are you trying to convince me to relocate to Texas? Because you’re doing a bang up job.

      2. Where do I sign up?!

      3. The same year I paid $125,000 for a 890 SF condo in Denver, my son paid $145,000 for a 3 bedroom, 3 bath, 2 car garage brick house with a swimming pool in Farmers Branch (ie, Dallas). But it still gets to 100 as early as April and as late as October. People seem to be just as friendly in both places and I love the adventure of driving on snow, so I’ll stay put.

        1. As I said in another thread, I am interviewing for a job in Boulder tomorrow. I went to CU and I love living in CO but I am definitely waffling between the two. I agree with your assessment 100%. I love the weather year round near Denver.

          1. Really is there any choice between the two? Unless you’re some hippie snowboarder Colorado has little appeal. Texas is the place where the jobs are at, that isn’t over-run by liberals, and has booming real estate/growth.

            Really unless you’re just in Colorado for the pot, in which case you are undoing the effort of many libertarians to portray the movement as not being all potheads. If I am going to argue to end the drug war, I don’t want to believe it’s just so that a bunch of libertines can start making bad choices, the whole idea of libertarianism is to have faith in people making the right choices rather than giving permission to make wrong ones.

        2. BS. We all know you that what you really love the experience of driving on weed.

          1. +1 John Stewart in Half Baked

        3. At least Denver has the luxury of the Rockies for lots of fun year round.

        4. I would rather it be hot in the summer and swimming in my pool than stuck (or driving?!? – who likes risking their life for a gallon of milk? besides apparently you?) in a winter blizzard in Denver.

          BTW – only one time ever (2006) has it hit 100 in April in Dallas, and only twice in May (both 1985 on the last two days of the month), and only once in October (1979, on the 1st).

  5. Please let Governor Perry know that I am willing to relocate from California to Texas for a measly 1% of that $40 million. C’mon Rick, what’s $400k between buddies?

    1. I’ll move from New York to Texas for that sum (and take seriously doing so for half of it).

      1. You mean you’ll pay that sum to escape NY, right?

      2. Take a look at what you could get a house like yours for in Fort Worth or Corpus Christi. $200k might be closer than you think, especially taking into account cost of living.

        1. I don’t own a house.

          I can’t afford one here.

        2. Are you kidding me?! I can get a 5200 sq. ft house that sits on 1.25 acres, has a pool and outdoor grill, 5 BD, 6 BA, 3 fireplaces, and a pond, all for what my 3 BD, 2 BA condo in Chicago costs. Fuck.

          1. Considering a trip South?

          2. I’ve been gunning for that for a long time, but my wife has roots in the Chicago area. We’ll be here for at least a couple more years before moving on.

          3. I’ve been looking at real estate porn lately.

            1. Yeah, I visit Trulia at least once every couple of days.

            2. I’ve got 160 acres I’ll sell you in MT.

              $3.6M

              1. Does that include mineral rights and all?

                1. I would honestly have to look into that, but I believe it does.

              2. That’s 159 too many acres for me.

                Does it have a trout stream.

                Also, do you really have 160 acres? You’re quite the Dwight Schrute.

                1. No trout stream. But it borders Forest Service and has plenty of deer and elk.

                  We have 160 acres near Butte, another 20 in Boulder MT and I live on 20 in Belt.

                  1. What is your land mine budget? That’s a lot of booby trapping….

                  2. I just looked up land prices in MT. Perhaps your asking price is a little high?

                    1. Think?

                      Tell ya what, for you, I’ll let you have it for what it’s been on the market for for the last 4 years. $289K.

                    2. Depends on how much gold you have buried there.

              3. I’ve got 640 acres I’ll sell you in Washington state. Great views of the Columbia River.

                $500k

    2. You aint worth it. 😛

  6. The system that Texas is using to win this fight

    …is common to all states and says very little, if anything, about the effectiveness (or lack thereof) of less regulation and less taxation. Most states cover at least part of what one could call ‘closing costs’ for business relocation; not saying that’s a good thing but such government policy typically only has a marginal impact on *where* businesses move to, not whether they move out of a failing state or not.

    1. This. The analysis that any major company goes through in deciding that it should move facilities is a DCF over a long period that is intended to ascertain the financial impact of remaining in that jurisdiction given the regulatory and tax consequences (and in some subjective consideration of the electoral climate of said jurisdiction and its potential for turning around).

      The people at Toyota know California is nowhere near as derp as it will be in a decade’s time, but over a ten year window, I’m sure the costs of investing $300 mil into moving their operation will be dwarfed by the tax and regulatory savings, even removing the Texas relocation subsidy from the equation.

      1. They were going to move somewhere. The $40M ensured it was TexASS.

        1. Probably not completely true. If Massachusetts had offered $41M do you think Toyota would have high tailed it to Boston? I doubt it. $40M in the context of a major disruption like that isn’t exactly pocket change, but it’s a relatively small part of a larger financial picture.

          1. I didn’t explain myself very well.

            What I meant was, they are leaving CA for a lower tax/regulation state. The $40M was factored into the overall package and ensured it was TX over someplace else with similar taxes/regulations.

            1. Yeah, I gotcha. That might have been partly a comprehension fail on my part – that is fairly clear in hindsight.

            2. “The $40M was factored into the overall package and ensured it was TX over someplace else with similar taxes/regulations.”

              What states tend – and will continue to trend, long-term – to be similarly hospitable in terms of taxes and regulations?

              In other words, what states are competing (certainly less gaudily) with Texas to entice economic refugees away from the cyanotically suffocating “blue” jurisdictions?

              1. http://freedominthe50states.org/overall/texas

                Texas ranks #14 in terms of overall freedom and only #24 in terms of regulatory freedom.

                “…despite its reputation as a low-regulation state, it is only average for regulatory policy?while it is above average for fiscal policy.”

    2. Yeah, this. Been through it. We’ll always troll the states for dough, CAUSE THEY’RE ALMOST ALWAYS HANDING IT OUT.

      1. It’s 3:00 somewhere…

        1. In Squirrelandia, it always 1500 hours.

          1. Yes. I tried responding to FdA about his land deal and I got skwurld.

    3. Yeah, this. Been through it. We’ll always troll the states for dough, CAUSE THEY’RE ALMOST ALWAYS HANDING IT OUT.

    4. Yes – The state handout might tip the scales between better locations, but companies are looking longer term than a break to cover some of the moving costs.

      State taxes, regulations, labor pool and rules, all more important.

      I see the ridiculous NY 10-year tax break ads every time I turn on the TV. Still don’t believe it will work even once.

  7. It should be noted that Nissan left Torrance for Nashville, must have been almost than ten years ago now.

    190th Street won’t be the same again…ever.

    I wonder how bad things will have to get before they figure it out.

    1. I wonder how bad things will have to get until they start jacking up exit taxes on businesses.

      1. Thankfully, federalism more or less prohibits capital controls by the several states amongst themselves.

        1. It’s not a control on capital, it’s a tax on layoffs and cesation of employment opportunities.

          1. It works so well for France.

        1. Because they do other business in the state they’d probably have a harder time dodging. Courts would just pull it from their other business units operating in the state.

    2. “I wonder how bad things will have to get before they figure it out.”

      Moonbeam and Co. are patting themselves on the back for ‘balancing’ the budget. It’ll take a wholesale emptying of Silicon Valley to break through that smug-shield.

      1. for ‘balancing’ the budget

        …by switching from accrual-based accounting to cash-based. That $6 billion CA owes the pension fund? Not gonna count it because, under cash-based accounting, CA has not realized it.

        1. Did they seriously do that?

          1. Who’s going to stop them? The Republicans? Until the recent vacating (ie, convicted, indicted) state senators, the Democrats have an absolute majority in both chamber. They can pass whatever they want.

            Moonbeam is currently trying his very darndest to break Prop 1A’s actual stipulation just to spend all of the Federal matching fund. Law be damned.

    3. Detroit, with nicer beaches.

    4. This is California we’re talking about, so they’ll figure it out with a nice Directive 10-289.

    5. 190th was never the same after I moved away (Herondo).

  8. The more important question is, will the people who own Toyotas ever learn how to fucking drive, or at least not in the passing lane?

    1. When I drive my old Toyota truck, I make sure to stay in the right lane. Mostly because the damn thing is underpowered and with a 4-spd autocrapic and 4.10 gears, going over 70 is a chore.

      1. Even relatively new Toyotas are a massive pain in the ass to drive on the highway. Once you hit 60, you have to floor it to get any kind of response at all.

        1. Yes, but you can’t kill them through neglect and use. It takes active hostility.

        2. I have a 2007 Toyota Sienna. I can easily get it into the triple digits.

          1. Fair enough. V6 right? I was thinking of 4 cylinders like the Camry.

            1. Yep, V6.

          2. Well, yeah – but who likes driving off of cliffs?

            1. Thelma and Louise?

            2. I’ve actually pulled it going slightly uphill on I-10.

      2. note, I have a V6 too – but 190hp and a mid-sized truck != speed galore.

        But if you want to go offroad, or haul a shit load of wood… or get somewhere in the sticks during a Michigan blizzard.

    2. So old people like dependable, cheap cars.

      1. Corolla divers are the fucking spawn of the Devil. Where ever there is a slowly moving, rolling backup, there’s a Corolla, leading the way.

        1. Only assholes drive Corollas*?

          I’d love to see the data backing such a claim.

          *I drive Hondas.

          1. I never said that, but the Venn overlap of Asshole Drivers and Corolla Drivers is pretty fucking large.

            Just. Get. Out. Of. My. Fucking. Way.

            1. I guess I have just never noticed the model of car that pisses me off the most, only the person in the car (and to protect myself, I will not disclose those traits that I observe).

              1. It’s not the model car. It’s the old man, driving a truck, wearing a hat.

            2. It used to be the Ford Taurus was a sure sign of an idiot driver. For some reason it has switched to Toyota cars (I almost never have a problem with someone driving a Toyota truck.)

              1. In Dallas, spotting a taxi on the highway would instantly send me into an apoplectic rage because those motherfuckers drive slower than school buses on the goddamn interstate.

              2. In MD, there are 4 types of left lane fuckwits:

                1. Corolla drivers (but almost any Toyota will do)
                2. Buick drivers
                3. Hybrid drivers
                4. Commercial van/truck

                For some odd reason, people have been moving over lately, but others just don’t have the first clue as to the rules of the road.

                1. Oh you are a fellow MDer?

                  I will now pay more attention on 695.

                  1. Heh. Nope, it’s 95/395 in and out of Bal’mer for me. I bounce between the Beltways.

                2. Virginian here, in my experience MD has literally the worst driver’s in these United States. How do you cope?

                3. Virginian here, in my experience MD has literally the worst driver’s in these United States. How do you cope?

                  1. Have you ever been to NJ?

                    1. NJ is not far behind but at least they drive with a sense of urgency.

            3. There are a few Nissan Leaf drivers in my neighborhood. They’re consistently awful.

              “Hmm, the left turn lane is red so I’ll idle forward for two blocks to save battery even though the lane I’m currently in leads to a green light.”

              I also have a thing about Audi drivers, but that’s more about the people I know who drive Audis and less about how Audis are driven on the road.

              1. I also have a thing about Audi drivers

                I’ve noticed that a lot of the cockstains who used to drive BMWs have switched to Audi for some reason.

                The few Leaf drivers I’ve seen seem even more insufferably smug than Prius drivers.

              2. BMW 7 series appear to only start for assholes.

            4. Just. Get. Out. Of. My. Fucking. Way.

              Fuck. You. Pay. Me.

              1. Ramming speed!

            5. Dodge Durangos seem to be the choice of a-holes here in Sunny Minnesota.

            6. In NYC (for me) it’s Zip-Cars of any model. They are invariably piloted by NYC residents who haven’t driven an automobile since they left Ohio after high-school/college. This city is not kind to timid drivers. Also frustrating, the Yeshiva yellow school buses; when reaching their stops, cut across both directions of traffic and block the entire road while discharging children.

              1. “…the Yeshiva yellow school buses; when reaching their stops, cut across both directions of traffic and block the entire road while discharging children.”

                Well, they kinda gotta, right? I’ve stayed as far away from New York the Damned as anybody living around Philadelphia can manage, but I’ve driven in that hell-hole enough times to know that if those school bus drivers don’t take extraordinary measures to “block the entire road while discharging children,” a whole generation of Yeshiva kids would be converted to street pizzas.

                New York drivers – n00bs and norms and nabobs all together – are homunculi with the brains and manners of piranha.

          2. I am an asshole. We don’t drive Toyotas. Dumbasses that don’t pay attention to their surroundings and/or never learned lane etiquette – THAT is the Corolla’s target market.

            Around here that boils down to teenagers, cheap greens, and Asian immigrants.

            I’ve thought about compiling cross sectional demographic and model data of the people that thoroughly aggravate me (note: this is a large sample), but keeping a spreadsheet while driving isn’t my forte.

        2. Hey now, My Corolla S (Because it’s so sporty) has seen 105 a few times. Of course here in Texas that is going slow

    3. When you pull up behind someone in Texas, they pull over for you.

      But I’m sure that will change when Texas fills up with Californians.

      1. When you pull up behind someone in Texas, they pull over for you.

        The first time my wife, who grew up in the Chicago area, visited TX, we were driving down a 2 lane state highway when we came up on a guy in pickup truck with a horse trailer attached (common sight on TX backroads). When he pulled over to let us past, she was flabergasted. I grew up in TX, so I’d seen it before a million times.

        Her: “What’s he pulling over for?”

        Me: “He’s letting us past since there’s no good passing zones and we can go faster than he can.”

        Her: “Leting… us… past!? Holy shit! You mean people here don’t drive like assholes who think they own the road?”

        Me: “It used to be a lot more common, but now we’re infested with migrants from asshole states like Illinois.” *ducks*

        1. I’d be angry….but, instead, I hope you can spray for that kind of infestation.

          I do have to say, my best friend who moved from IL down to TX is the first libertarian I knew. So you owe us one libertarian in return, thank you!

        2. “When he pulled over to let us past, she was flabergasted. I grew up in TX, so I’d seen it before a million times.”

          I grew up in South Jersey – not North Jersey, where they’re all just Noo Yawkuhs with duplicitous license plates – and it’s common in rural areas down here, too.

          Most of us learn to drive (well before we’re legally licensed) on flatbed fix-ups and other farm equipment that doesn’t get onto the county roads much, and you learn to yield politely or you get a whack upside your head from Dad or one of your uncles.

        3. My wife from Indiana had the same reaction. Then when he waved to her as she passed she was convinced he was drunk.

          In all fairness I don’t think it’s legal in all states to drive on the shoulder to allow someone to pass.

  9. I don’t see the issue. States compete for jobs. They can use various means to do so lifestyle, climate, schools, direct incentives, etc. Some involve tax money some don’t. Seems to me that in the long run the very existence of a bunch of big and little businesses in a tax/business friendly (yes I know that does mean some amount of cronyism) state will have a compounding effect on job growth and the economy. A good thing, imo, despite its lack of libertarian purity.

    1. Especially if fucking California/Illinois/New York is part of the deal…

      1. You don’t need to pay businesses to leave IL – just indicate you will let them in.

        /WI and IN

    2. RTFA:

      This method may bring home the votes, but arguably it delays real wealth generation and economic growth due to the costs of the program. It’s part of the same mistaken belief that publicly funded sports facilities “generate” commerce when they really just shift it from one community to another (if that)

      1. It only delays “wealth generation” in the sense that its a longer period before the business being relocated has paid enough taxes (between actual business taxes as well as revenue collected from the paychecks and consumption generated sales activity from the employees of said business) to justify the cost to the public fisc.

        But it will within have already added orders of magnitude more than $40 mil in actual economic activity to the state before it ever does to the govt.

        1. Do you know whether it would add more to the economy than it would have had it never been taken from the taxpayers in the first place?

        2. You mean that it will pay taxes to the state.

          Economic activity doesn’t care where you generate it. We all get the benefit whether it’s generated in California or Texas.

          This is nothing more than scumbag politicians shaking down the public to pay for them looking good in the papers.

          1. We all get the benefit whether it’s generated in California or Texas.

            But Texas is still taking less overall, right? We will have more individuals keeping more of their own money.

            1. Probably, but so what?

              How is it again that everyone else is supposed to pay for their gain? If it makes sense for a business to move then by all means, do so. Don’t ask me to pay for it.

              1. Probably, but so what?

                Meaning more benefit than would have been produced in CA.

                (Not that I don’t agree with you on paying subsidies.)

              2. I was just pointing out that we (I assume you meant as a country) will benefit more with Toyota in Texas vs. California.

                Until Texas fucks everything up of course.

                1. I was just pointing out that we (I assume you meant as a country) will benefit more with Toyota in Texas vs. California.

                  I don’t disagree with that, but think how much more we’d have without state gubmints walking over each other to lure them into their state with taxpayer-financed candy.

                  If states giving public money to businesses was the key to economic power, then socialism would be a smashing success and Europe would be eating our lunch.

            2. Considering the fact we have no income tax and our state sales tax hasn’t increased since I moved here 20+ years ago, I’d say we’re keeping a pretty decent amount of our money.

              Of course on the flip side, our property taxes are pretty high so, we are getting fucked in that regard.

              1. Always be protesting those appraisals. It’s the Texas way to get lower property taxes. The out of staters get here and pay full price making my taxes increase. Damn Feriners!

    3. The ends never justify the means.

  10. the existing cold war-style battle where states use tax dollars to lure in businesses from other states

    Sooo, Mutual Assured Departures?

  11. I guess I’m in the crowd that thinks that of all the things the State wastes money on, this one is well down the list of things to rail against. If you were looking to hire an employee, would you give them a starting bonus? From a revenue generation point of view, this appears to be the same sort of deal. Although, as pointed out public and private entities should have very different standards of conduct in libertarian societies that don’t go full Ancap.

    1. Perry has no skin of his own in the game. Employers that offer bonuses, do.

      This scheme is Corporate Welfare 101. What happens when they leave your state for a better offer from Tennessee?

      1. This scheme is Corporate Welfare 101

        That’s right.

        What happens when they leave your state for a better offer from Tennessee?

        Make a better offer?

      2. Perry didn’t just steal the money. It was authorized by the governing system they have in place to do just what he did. Like I said, it probably isn’t libertarian, but it is extremely low on my list. Let’s put our fire on state action that objectively makes people’s lives worse. When they leave for Tennessee, probably there will be several or even dozens of small businesses that didn’t exist before, most of whom will survive once the Toyota employees move on. 2500 people spending good salaries in your state for five years is probably going to spur some secondary growth.

        1. Perry didn’t just steal the money. It was authorized by the governing system they have in place to do just what he did.

          That is stealing. That money was not collected voluntarily. This is every bit as bad as shit like Solyndra and Government Motors.

        2. You could make the same argument about leaving military bases open. Think of all the brothels businesses that depend on them!

          All they are doing is shifting the money around. For those businesses in TX to benefit, they have to harm the ones that depend on it in CA. Unless Toyota is truly increasing productivity or producing wealth by this move, it is really a zero-sum game.

          1. Unless Toyota is truly increasing productivity or producing wealth by this move, it is really a zero-sum game.

            Why would you presume they are not? What other reason would they have for undertaking a move that is going to cost them hundreds of millions of dollars in lost productivity and direct costs? It’s in anticipation of some future benefit that is going to exceed by orders of magnitude the $40M. Doesn’t justify serving up the subsidies, but you don’t have to turn into an economic retard and peddle long-busted zero-sum fallacies to oppose the subsidy or to recognize that there’s almost assuredly a benefit to the company in excess of the subsidy to justify the move.

            1. I’m really gobsmacked at all of the closet collectivists coming out today.

              I can’t presume anything of the sort. For all we know, Toyota could screw up the move and lose money on it or all of the CA retards moving in could change the political landscape. TX suddenly changes the rules and raises Toyota’s costs. All I can look at is what’s on the table.

              It’s no more retarded than a former staffer of mine, who had a solar panel system installed on his house, for zero cost to him, thanks to all the subsidies and grants. He enjoyed all the benefits, while the public bore all the costs. He tried to justify it via “But, but GLOBAL WARMING,” but it’s all the same thing: privatizing the benefits, socializing the costs and justifying it through speculation as to any public benefit.

        3. Like I said, it probably isn’t libertarian, but it is extremely low on my list.

          Why is it that we’re supposed to look the other way when some popular business is getting its palm greased for what benefits it and it alone?

          Fuck them. They’re no better than any other rent-seeker.

          1. I’m actually shocked to see these types of arguments from anyone inside the comentariat besides Tony and Shreik.

      3. What happens when they leave your state for a better offer from Tennessee?

        They won’t leave your state for a better offer if you have a good regulatory climate; if they’re doing well and the offer is right they’ll expand to Tennessee and keep the Texas facility and if they’re doing poorly they’re not going to abandon a sure deal for something that is only potentially marginally preferable.

        That is what is missed in these “gotchas” — the reason a company would wholesale abandon a state has little to nothing to do with what other states are offering (those things being rather insignificant in the long run); it has everything to do with the long-term prognosis of economic health in the state (factors which are impacted more by taxation/regulation than any other factor controllable by a state government).

        1. it has everything to do with the long-term prognosis of economic health in the state

          Exactly right. Toyota sees the climate in CA and expects to be taxed at a higher rate 10 years down the road, and may suffer in attracting personnel. Even if TX jacks up their taxes 10 years down the road, it will at worst be only to a level that CA is already at.

          Toyota made this decision yesterday, but they’ve been looking at it for several years. From a logistical standpoint it makes sense – Toyota will never build another assembly plant in CA in the next 20 years, but they certainly have a chance to do so in the mid-section or south of the country so that is where they are going. When Toyota first set up shop in the US, it made sense to be in SoCal, but now it no longer makes as much sense.

      4. What happens when they leave your state for a better offer from Tennessee?

        You apparently think businesses are far more economically mobile than they really are, especially something of this scope. They will incur significant costs in relocating employees, severance for existing employees that refuse to move or that are not being offered the move, training and HR costs associated with new employees in the new location, transaction taxes on sales and acquisition of real estate or leasing commissions associated with real estate, etc etc etc.

        It is a considerable investment to move an operation of that size 1,500 miles away. Businesses don’t do that willy-nilly because of some relocation package offer of $40 mil which is paltry compared to the amount it will cost them to make the move, not accounting for the lack of certainty in the success of any such endeavor.

        None of this is to suggest that I’m entirely ok with such public subsidy or find it desirable, but its absurd to suggest that businesses relocate existing business units from state to state on a routine basis to take advantage of such structures.

        1. None of this is to suggest that I’m entirely ok with such public subsidy or find it desirable, but its absurd to suggest that businesses relocate existing business units from state to state on a routine basis to take advantage of such structures.

          I’m aware of the costs, but if businesses weren’t willing to pull up and move elsewhere, the states wouldn’t be pimping for them to move there. Companies do and have responded to these offers. It’s likely they were looking to move anyway, but now the state’s taxpayers are on the hook for it.

          If TX is really better for Toyota’s bottom line, then it should pay for the fucking move itself. Don’t ask the rest of us to underwrite it, when we have no choice in the matter.

          1. Toyota ISN’T asking, Texas is offering.

            1. I doubt very much that Toyota was just sitting there, minding its own business, when Rick Perry started cold-calling them, begging them to come to TX.

              They wanted to move out of CA to a better business climate. I get that and don’t blame them one bit. But, they also want someone else to underwrite it so they don’t have to pay the full cost.

              1. But you have to look at it from a realistic standpoint.

                Several states offered to underwrite a move. Most of them probably offered MORE than the $40M Texas offered. The state slush fund was created years ago, it will not go unused. The time to complain was when the slush fund was created in the first place.

                Personally, I think a state creating slush funds is an indication that the financial health of the state is ALREADY bad.

          2. Toyota is already leaving California. After this decision is made, one of the determining factor is who’s going to pay for the relocation. I mean, even without this extra cherry on the top, Texas is still the clear favorite choice. Texas just went out of their way to accommodate.

        2. Looks like I should have scrolled before replying above.

      5. The state of Texas has lots of skin in the game. Texas won’t be collecting income tax on the those 3,000 jobs, however, they will be paying sales tax every time they shop, eat at restaurant, etc…

        If the average salary of relocating workers in $70k, the Texas economy just got bigger by over $200 million – before Toyota spent on anything besides salaries.

        I’m guessing that the $40 million handout has a payback period well under 5 years.

        1. “I’m guessing that the $40 million handout has a payback period well under 5 years.”

          Sounds like a good investment too me.

          /Sarcasm

          These are they same bullshit arguments I see on Gizmodo for people trying to argue for “investment” by goverment in the “green” energy sector.

          1. The difference is, consumers actually want to buy Toyotas.

            1. Great. There’s a huge demand for Toyotas, so the state of TX doesn’t need to steal from its citizens to give the money to Toyota, right?

              1. Never said I agree with the subsidies. But it’s not the same as green energy.

                Smart theft rather than theft to buy unicorns.

                1. They’re are both subsidizing business regardless of which companies have the better business model. They’re both based off the simple idea that the ends justify the means… and smart is pretty relative. Is Toyota a better/smarter bet than Solyndra? Sure, are there smarter “investements” than Toyota? I don’t know, but I sure as hell don’t trust Rick Perry and other politicians to steal my money and make that decision for me.

                  Shit, this is libertarianism 101.

                  1. My grammer sucks…

              2. I don’t agree with state subsidies either – I’m just disagreeing with the “no skin in the game” statement.

                1. I’m just disagreeing with the “no skin in the game” statement.

                  What skin does the TX gubmint have in the game? Zero. This costs them nothing, since it’s not their money.

                  It’s like arguing that Congress has something to lose by overspending. No, they don’t.

                  1. Unlike Congress, the state of Texas can’t print up cash.

              3. Is it stealing from citizens to give a company an upfront tax break?

                Or are you saying this facility won’t be paying over $40M in taxes over time?

                1. Is it stealing from citizens to give a company an upfront tax break?

                  Perry, who made two visits to California to lure employers to his state, said Texas offered Toyota $40 million in incentives from the taxpayer-funded Texas Enterprise Fund.

                  Or are you saying this facility won’t be paying over $40M in taxes over time?

                  Let me put it this way: I don’t care that you’re only stealing my computer, so that you can get a job and support your family. You’re still stealing my computer.

          2. Neither is a good use of government, but offering tax incentives to an established business for relocation in anticipation of the extra few hundred million dollars in taxable revenue doing the state more good than harm is, in practical terms, probably less risky than speculating in start ups with a failure rate high enough that it prohibits them from obtaining private financing even from the most risk-taking angel investors using taxpayer money.

            1. So, IOW, the ends justifies the means so long as it, what? Pro business?

      6. What happens when they leave your state for a better offer from Tennessee?

        It’s extremely expensive to move a company. You don’t want to do it more than once. I suspect that’s THE ONLY reason anyone remains in CA.

        1. Correct – the $40 mil might cover some of the HR and moving expenses. It probably doesn’t cover the business disruption.

          They moved to Texas because of what comes next.

    2. If you were looking to hire an employee, would you give them a starting bonus?

      I wouldn’t give them a starting bonus by mugging somebody else.

  12. If you were looking to hire an employee, would you give them a starting bonus?

    In a dying economy, the employers who remain provide a signing ‘bonus’ of not verbally abusing you for the first week. Being completely replacable with the vast throngs of unemployed, they don’t try to lure people.

    And then they wonder why turnover is so high.

    1. Oops, I brooksed my reply. I had a sad. 🙁

  13. California-related: do anti-cancer meds have a “this product is known by the state of California to cause cancer” warning on them?

    1. Wouldn’t surprise me. A lot of cancer treatments cause secondary cancer.

      Prop 65 is one of the dumbest things ever, but at least those stupid signs aren’t very expensive.

      1. As I understand it, the regulatory compliance costs are significant, and it exposes companies to enormous risk. It has been a windfall for ambulance chasers too.

        1. Companies that manufacture the materials have to pay $thousands to have their products tested for all of these things. It’s the same for RoHS, REACH, and conflict mineral reporting, but only conflict (thanks Dodd-Frank Wall Street Reform Act that had absolutely nothing to do with conflict minerals out of the Congo) has the at-fault parties listed as every single person in that supply chain. For RoHS and REACH (as far as I know) it is only the original company that is guilty if they lie.

          I’m not sure how Prop 65 plays out with this blame game.

          1. I’ve always wondered: could a company just slap those warning labels on all of its products, regardless of whether it’s true or not, in order to avoid having to go through all the bullshit?

            1. The attorney general of CA has a list of chemicals. If those chemicals are in a building, the sign goes up in front. Almost every single business in CA has the sign up.

              1. Almost every single business in CA has the sign up.

                So, IOW, the signs are meaningless.

                1. Of course, like many laws (not just in CA) I’ve seen the label on distilled, demineralized water. CYA is all it amounts to, either that or CA is the most unhealthy place in the country, there are tings there causing cancer that are perfectly harmless in the real world.

            2. You could, which is what I suspect some of the outfits out of China that I deal with do. I’ve gotten multiple reports from some that are exactly the same, except that the photo and description is different (for example, one is for plastic molding compound and another is for copper wire).

              The RoHS list only gets updated once every several years and generally just adds requirements that can already be met with the previous testing.

              REACH is more of a, “I swear before Congress that these aren’t intentionally put in the product.” That list gets updated like every 6 months.

              Conflict is the only one that, according to the SEC, if the smelter lied on where they got their gold, tin, tantalum, tungsten, etc. from (the DRC or any of its surrounding countries), but certifies that they didn’t come from there, then EVERYONE (publicly traded companies) down the line is guilty whether they had knowledge of this or not.

            3. I’ve always wondered: could a company just slap those warning labels on all of its products

              WARNING: Living could be hazardous to your health.

  14. It’s not the GM bailout writ small but it’s a wealth transfer.

    After the NLRB went after Boeing for their publicized RTW move to South Carolina, these deals provide plausible deniability for the fleeing company. “Cheaper labor force motivating our move? No way, we’re taking the tax incentives from the governor!”

  15. Yeah, Yeah, Its all fun and games down there in Texas…… Until they realize all these assholes Toyota (and others) are bringing with them wreak the place like they did in Cali.

    1. Recently re-located Toyota Prog-tard employee#1: “EWWW!!! This place is all, like, redneckish and Teathuglikkkan-y!”

      Recently re-located Toyota Prog-tard employee#2: “The other day I actually saw, like, a pickup truck with an actual gun rack in the back window! I almost died!!!! We need to turn this place into a progressive utopia like the one our employer could no longer afford to do business in, quick!” /Derp

      1. The fact that the commentariat would be in the process of sacrificing the commenter to the racism gods if he said this exact same thing about, say, Mexicans or Chinese people immigrating to the United States instead of Californians immigrating to Texas is almost ironical.

        1. (I wish there was an edit/delete button. It was snark ya’ll, let’s not start a whole thing)

          1. Just ’cause one politically correct cement-head gets his knickers in a knot you want to edit or delete a perfectly perceptive (and wittily-cast) post?

            Sheesh, fella. Stand your ground, and let ’em sweat.

  16. I’m gonna guess Toyota will be paying well in excess of $40M in taxes for this facility over time, so no butthurt from me over them getting an upfront rebate on part of this theft.

    Got problems with all the other businesses also not getting the tax break, but less theft is better.

    1. As an investor in a Texas company that won’t be gaining any sales when Toyota moves here, I second the motion for tax decreases for all. And don’t forget that plopping 3,000 employees into an area is going to drive up the wages that existing employers already pay.
      I could never understand some of the Chamber of Commerce mentality that is always plumping for new business at the expense of some of its own membership.

      1. Well, it’s a round-up cattle head count mentality, and Texas wears it on it’s arm for good or bad. This is part of Texas’ move in the grand chess game of politics. And yes, the inevitable route will be that they will have to tighten the belt, and things will happen, some people will get angry, leave in four years when California, nearing bankruptcy again, throws ‘incentives’ and they move back, or Toyota becomes obsolete when technology advances, etc. but that’s the universal ebb and flow

  17. Since the donor angle was brought up, there’s one thing to be made clear – Perry can’t hand out this money himself. The grants require the unanimous consent of the Governor, Lieutenant Governor, and state Speaker of the House.

    1. Exactly. I love how if a company goes from blue state to red, they’re evil, bribed and greedy. But if one goes from red to blue (trying to think of the few instances…) then they’re heroes of the people

  18. What’s that, Brown? ‘Budget Surplus’ becoming more and more fictional?

  19. If the Texas state government is getting increases in tax revenues sufficient to keep the TEF liquid (and actually gaining ground in terms of further revenue growth), might it not be admissible that this “cold war-style battle where states use tax dollars to lure in businesses from other states” is one in which the fruits of victory are more than paying the costs thereof?

    Beyond that, it’s not only good that the people and government of Texas (as an aggregate) should be benefiting by these tactics but that the government of California – and the electorate who keep these fascisti in office – should be punished.

    What is it about “creative destruction” that the publishers of a nominally libertarian periodical don’t seem to get yet?

  20. California looks at businesses as cows to be milked. When CAL-OSHA comes to inspect, you are going to get fined for something, that’s all there is too it. They will find something no matter how minor. Their job is not safety, it’s to bring home bacon to the state.

    California is hostile to anything that creates odor, heat, light, smoke, dust, non potable liquids, steam, or sweat.

    As much as California did for Tesla, they didn’t give California a second look for their battery plant. That speaks for itself.

    Lastly, California has found it necessary to waive environmental regulations to get it’s own projects built, because they can’t get anywhere if they follow the rules everyone else has to follow.

    So in the private sector, costs are added every step of the way until you just can’t be competitive and either give up or move. And the bureaucrats cheer, while the politicians cry about lost revenue!

    To run a business in California is to be treated with hated.

  21. $40MM? Doesn’t seem like a lot of money compared to what CA is going to lose in tax receipts from those lost jobs, and the cash flow into the local economy from Toyota just being there and open – all of which will be contributing to the prosperity of TX now.
    I would venture to say that those TEF funds will be used to underwrite the services that Toyota’s people will need in melding into the community in Plano: advice from real-estate professionals, moving professionals, etc., all the little things that can make a move like this a nightmare for the individuals involved – who now will be freed from CA’s Top-5 State Income Tax, high utility bills, poor roads, and other deteriorating infrastructure and services.
    I can only wonder what took Toyota so long (though the bogus ‘unintended acceleration’ dust-up might have had something to do with it).

  22. One problem is that you can always transfer people out of California to another state, but because of housing, taxes, and other costs, you can’t get people to transfer in without offering a much larger salary.

    Most people don’t want to give up a middle class lifestyle in the south for slum-life in the bay area.

  23. People (and REASON) equate too much importance to the Texas state incentive payment (a program I oppose, BTW). It is NOT a factor in a company deciding to LEAVE a state. It will be a factor (one of many — some more important, such as state taxes) in deciding which state to move TO.

    The Texas incentive payment is welcome by such relocating companies, but not even CLOSE to being sufficient to motivate any company to leave CA. In Toyoto’s case, the $40 million Texas giveaway covers a bit over 13% of the cost of a new $300 million HQ building — the biggest cost but one of many outlays necessitated by such a move.

    NO ONE wants to disrupt their business by moving. Valued employees are lost, business ops are adversely impacted, moving costs for all must be paid, a new building must be leased or built — moving is a cost and logistic nightmare. But make California sufficiently anti-business, and ever more companies will make the same decision — painfully, reluctantly, remorsefully — but nevertheless make the same decision as Toyota and other CA refugee businesses.

  24. According to recent U.S. census figures, the 2009 median household income in California is significantly higher than Texas.
    CA — $58,931
    TX — $48,259 — 18.1% less than CA

    But, ADJUSTED FOR THE COST OF LIVING, the Texas median household income is significantly higher than California.
    TX — $53,009
    CA — $44,456 — 16.1% less than TX
    http://en.wikipedia.org/wiki/H…..ian_income

  25. California residential electricity costs an average of 27.6% more per kWh than the national average. CA commercial rates are 44.4% higher. For industrial use, CA electricity is 74.4% higher than the national average (October, 2013). California industrial electricity rates are more than double Texas. NOTE: SDG&E is even higher. http://www.eia.gov/electricity…..pmt_5_06_a

    A 2011 survey of home water bills for the 20 largest U.S. cities found that for 200 gallons a day usage, San Diego was the highest cost. At 400 gal/day, San Diego was third highest.
    http://www.circleofblue.org/wa…..ats590.jpg

  26. California residential electricity costs an average of 27.6% more per kWh than the national average. CA commercial rates are 44.4% higher. For industrial use, CA electricity is 74.4% higher than the national average (October, 2013). California industrial electricity rates are more than double Texas. NOTE: SDG&E is even higher. http://www.eia.gov/electricity…..pmt_5_06_a

    A 2011 survey of home water bills for the 20 largest U.S. cities found that for 200 gallons a day usage, San Diego was the highest cost. At 400 gal/day, San Diego was third highest.
    http://www.circleofblue.org/wa…..ats590.jpg

  27. California residential electricity costs an average of 27.6% more per kWh than the national average. CA commercial rates are 44.4% higher. For industrial use, CA electricity is 74.4% higher than the national average (October, 2013). California industrial electricity rates are more than double Texas. NOTE: SDG&E is even higher. http://www.eia.gov/electricity…..pmt_5_06_a

    A 2011 survey of home water bills for the 20 largest U.S. cities found that for 200 gallons a day usage, San Diego was the highest cost. At 400 gal/day, San Diego was third highest.
    http://www.circleofblue.org/wa…..ats590.jpg

  28. California’s 2013 “business tax climate” ranks 3rd worst in the nation ? behind New Jersey and anchor-clanker New York state. In addition, CA has a lock on the worst rank in the Small Business Tax Index ? a whopping 8.3% worse than 2nd worst state.
    http://taxfoundation.org/artic…..mate-index and http://www.sbecouncil.org/wp-c…..4Final.pdf

  29. Not a good move for employees as california is best

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