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So if there's no economic benefit, why the tax breaks? Is it just plain bribery, i.e. the tech guys bribing the local government? Because if there's little local benefit, why give them the tax breaks at all? Somebody must be getting something from this deal, otherwise why not tax them as much as possible - they'd have to build somewhere anyway, and if nobody gets any benefit locally, then nobody should be giving them the tax break. I suspect there's some benefit at least to somebody here. Is that just the bribery benefit or there's more to it?
It certainly seems to be that way.
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I guess that from the local government point of view a large business paying <100% of the standard local taxes after tax breaks looks a lot better than a large business paying 0% because they found a better offer somewhere else.
The question is whether the taxes raised are going to be a net benefit after fully accounting for the costs of hosting these businesses. At some point it tips over into a net loss, and the closer it is to that point the less worthwhile it is. Given that one side has billions of investment capital and a fleet of corporate professionals dedicated to getting a datacentre built at the optimal cost while their opposition are a set of competitors each consisting of a bunch of minor league politicians and their under-funded, under-paid, under-experienced and under-qualified admin staff who also have to manage their other various duties it's a safe bet that a deal will favour the business.
Nice thing, though, is that it can favor the business and still offer that local municipality benefits far greater than if they hadn't given tax breaks. The devil is in the details, of course, but trying to extract as much from the municipality as possible to the the extent that the municipality has net losses from the transaction is something that would cost the business quite a lot of money, likely with diminishing returns as they have to rely on more and more obscure loopholes (that invite court challenges) or hire more and more expensive lawyers who are better negotiators, and it's not like these data center businesses are lacking for other places in which to invest money that have positive expected value.
I think one aspect that my statement doesn't capture, though, is the humiliation or "pride" at having "won" against the business, which I think may be a big deal for a lot of the politicians and the electorate that support them. I kinda understand that this is important, but also, I kinda don't, and I wish more politicians, ideologues, etc. especially from my side of the aisle, would embrace our side being humiliated if it means that we actually make life better for people; it's only through embracing our humiliation that we can prove to ourselves that we actually care about making life better, rather than about feeling pride at believing that we're the kinds of people who make lives better.
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