What I'm describing is asking businesses to pay some of the local costs associated with their operations.flockofseagulls104 wrote:What you are describing is, in other words, extortion. Thank you for that clarification. And the targetted businesses will have many places which will be more than happy to host them and offer them incentives to move there, rather than treating them as a cash cow.Bob78164 wrote:You appear to misunderstand basic microeconomics. In competitive industries, business pricing is set primarily by competition, not by the cost structure. That's because if a business in such an industry attempts to raise its prices while its competitors don't, customers flock (you see what I did there?) to the competition instead.flockofseagulls104 wrote:[bob-tel, let me clue you in on something.... Businesses don't get taxed. Their cost of doing business goes up. They adjust in many ways. Mostly by raising prices on the goods or services they produce or sell. Or in this case not hiring more employees or reducing the number of employees they have. Whatever way they adjust, it comes down to the fact that we, the end consumer, pays the tax, not the company.
Companies hire workers when they expect the value added by the worker to exceed the worker's cost. I have a very hard time believing that a worker who will get hired at the cost of a six-figure salary (remember, we're talking about headquarters employees) plus benefits will suddenly become uneconomical when $250 is added to that cost.
What's left? The affected companies will make less profit. (By the way, the same phenomenon in reverse explains why the recent enormous business tax cuts haven't translated to higher wages for workers. The companies are using their increased profits for stock buy-backs, just as economists said they would. Score one for the scientific method and billionaires. Score one against the middle class.)
I'm not worried about a tax of this magnitude affecting either pricing or employment. The real risk Seattle is taking is that its large employers will find the tax sufficiently onerous, with little enough benefit, that it becomes worth the considerable price of relocating. Seattle is obviously gambling that its unique features, the benefits it offers (including those funded by the new tax), and the cost of a move will deter this from occurring. --Bob
The evidence, by the way, suggests that you're mistaken about higher taxes inevitably leading to a worse economy and lower taxes inevitably leading to a better economy. Services and labor-force quality matter too. Kansas is one data point. California, which recently surpassed the United Kingdom as the world's fourth largest economy, is another. --Bob