According to a story in the Post Register, Magpul has found a move-in ready building in their new production, distribution and shipping base in Cheyenne, Wyoming that not only meets their long-term needs but also prevents them from having to take up temporary residence until a final home is completed. This move will save the citizens of Wyoming over $4 Million in grant money. The change was recently approved by the Wyoming Business Commission and will be taken up this week by the Wyoming State Loan and Investment Board.
This will result in Wyoming investing $8.3 million in the project, and Cheyenne LEADS, the local economic development organization, will invest $1.1 million to help Magpul move. Operations should be in place by November.
The $8.3 million initially comes as a grant, but under the agreement, Magpul will repay about $3.7 million. Additionally, LEADS will sell the building to Magpul.
Tags: Magpul
Good for Magpul I guess….but WHY the freak does any government entity use tax payer dollars to help businesses? Either you can make it in business or you can’t. This is not supposed to be why we pay taxes…it’s bullshit.
This is very common and used as an incentive to attract business. Essentially, cities try to “outbid” each other with a packages.
The city will get it back plus much more as:
* MAGPUL pays it taxes,
* the employees pay their income and sales taxes,
* there are better job opportunities and a better financial future possible to the residents of the area,
* the second layer of businesses and people will also benefit (e.g. restaurants, retail, printing and computer services, trucking and distribution, gasoline,…)
According to R’s experience those things simply don’t happen.
I’m pleased to see we finally understand each other.
Businesses regularly receive incentives from the government at various levels to conduct business beneficial to that respective economy. The tax revenue and employment generated will far exceed the amount paid in by WY.
It’s not about helping a business with tax dollars, it’s about investing in successful businesses that don’t need the help in order to have them make money in whatever area offers the incentives and grow the local economy.
“Businesses regularly receive incentives from the government at various levels to conduct business beneficial to that respective economy. The tax revenue and employment generated will far exceed the amount paid in by WY.”
I would very much like to see the study or data you are using to support this assertion when there are literally volumes of economic studies establishing that the exact opposite is true. Simply because it sounds plausible doesn’t make it a fact. Truth be told, there are precious few public entities that ever fully recover the public funds allocated to attract private enterprise to the region, and the employment generated is traditionally and overwhelmingly low-wage, resulting in these companies being further subsidized by the public through social welfare programs (spoiler alert: your McDonald’s dollar menu items actually cost you far more than one dollar, away from the till).
What our gracious web host calls, “outbidding,” is more commonly referred to as whipsawing, and it’s specifically designed to raid the public coffers (aka your schools, utilities, roads, military, police, and fire) and liquidate common interests for the benefit of a very privileged and elite few. Simply put, it’s converting public resources into private wealth. Capital and labor will always be mobile, and as soon as the racket dries-up in one region, these private entities will play cities and states off of each other all over again to feather their beds somewhere else.
If you want to relocate, great. Good luck, and all the best for your future. But if you’re going to manufacture using electricity from the public utility grid, flush your toilets into the public waste and sanitation sewers, use water from our public utilities, employ people educated in the public schools and universities, rely on the security afforded through public police and fire protection, and drive your goods over roads that we collectively helped pay for and maintain, then you also have an obligation to pay your fair share, as we citizens already do.
Makes me wonder who the actual “takers” are in our current economy.
That’s an opinion. I have been on the business side of this and it’s that simple. Communities want companies to move in. They are willing to offer incentives of a wide variety to attract those businesses with a pay off of increased tax revenues in the out years and increased employment. Often is the case with manufacturers, that they spawn an entire micro economy of suppliers and service providers that support that new business and its employees.
Since you have decided that attracting new businesses are bad for an economy, I’ll leave you the burden of proof. Please provide all of your source material that demonstrates how this is a bad thing.
Respectfully, reframing an individual’s argument to undermine the point being made is boorish. Cite exactly where it was stated, “attracting new businesses are bad for the economy.” That is your implication, and neither a statement of fact nor my position.
Moving on, you may begin here as a primer: http://itep.org/itep_reports/2013/08/tax-incentives-costly-for-states-drag-on-the-nation.php#.VBYMl9m9K0e
Power to the people bro
I perused your source material. It’s hardly a stack of studies and rather narrowly focuses in tax abatement for the company itself.
It doesn’t discuss civil bonds, loans or other measures used to attract business and it fails to measure the trickle out effect of the increased tax revenues based in increased employment and consumption on the economy.
Civil bonds, or did you mean to say municipal bonds? They’re not synonymous. One spurs and bankrolls public spending and the other is only useful if you’re in the pokey. Either way it’s splitting hairs and muddying the discussion. You’re free to peruse the footnotes, follow the links, ad infinitum, beyond the executive summary, to your dear heart’s content.
I’ve been fortunate enough to have worked and lobbied with experts in state and regional tax policy for years, and this is a broader question of accountability and whether or not we are truly receiving the most bang for our buck(s). We continuously refer to these incentives as “investments,” but I am not comfortable with that term if there continuously fails to be any quantifiable return on said investments beyond just anecdotal observations or the, “well, everyone else seems to be doing it,” motivator. Like I said, the money has to come from somewhere, and if we’re repurposing funds from, for example, early childhood education programs that have historically shown a 13 to 1 return on investment, to fund a tax incentive package on the unenforceable promise to create new private sector jobs that may or may not ever materialize, that’s just not good public policy. http://www.pewtrusts.org/~/media/legacy/uploadedfiles/wwwpewtrustsorg/reports/economic_mobility/PewEvaluatingStateTaxIncentivesReportpdf.pdf
To entertain your sophmoric and unbecoming red-baiting, there is also a very legitimate policy discussion as to how much involvement a public entity should have in any economic system other than as a regulatory agent or arbiter in the event of a dispute. The best moments in my work come from those that decry “big government” yet are the first in the cue when the checks are being handed out, all without any discernable sense of shame or irony.
Fair enough. Now that you’ve come out of your shell, we can actually discuss the issue. Nobody twists these localities to offer the incentives. They do so willingly. You seem to act like these things are solely intended to support robber barons and other crooks and never benefit a city. Employing the unemployed, particularly in manufacturing, is not bad. Ask a guy who is out if work how much he wants a job. Even better if he is going to be trained to do something new, he wasn’t already trained for. I look at it as a true sign of a free market where towns are willing to compete for businesses to locate in their area.
Foolish would be a town that incentivizes a competitor to an existing business. The trick is to seek out complimentary, yet distinct businesses within your area in order to promote jobs and further economic development.
On the contrary, I would argue that a reliance on public subsidization is not, by definition, a free market. Additionally, Adam Smith established that a free market requires competition at an atomized level to maintain equilibrium. Your stated position appears to, correct me if I am mistaken, require a public entity to pick winners and losers, freezing out any competition, and artificially engineering the entire cottage industry around it. I also would assert that any entity which is sufficiently large enough such that their decisions alone, by and of themselves, impact and affect entire market variables is not, by definition, a free market.
True, nobody twisted the arms of these cities to subsidize private industry, in the strictly literal sense. Economically, it’s a little more fuzzy. A true, according-to-Hoyle free market has a buyer and a seller in any transaction. The assumption is that both the buyer and seller exist on equal footing and each has the ability to disengage from negotiations at any time without harm or injury. The reality may be something different. My concern, and my point, is that private industry is keenly aware of the desperate economic reality of most workers, as well as the political consequences of inaction on the part of said public entity. This awareness has taken simple subsidy seeking and morphed it into a more predatory economic equivalent of the “prisoners dilemma.” My concern is not with well considered subsidization, rather the predation. I’m not indicting Magpul in this assessment, it’s just that I always view these arrangements with a jaundiced eye.
Congrats to Magpul for standing by their convictions, and then SAVING the state of Wyoming money! Out-freakin’-Standing!
R,
I will concede that many government incentives will never be recovered. For instance, when you look at green energy startups, or startups in general. For our case, however, this was pretty simple math. We make X amount per year. We pay X amount in taxes. We will be bringing X number of jobs that also pay X amount in taxes. These are not pie in the sky numbers, these are existing right now, and are the jobs that are in transit, and the revenue figures that will continue to be generated, even if we don’t figure in projected growth. The math works out well for the state of WY. We certainly didn’t NEED an incentive to be able to move, but because the math is so easy with us–there are very real benefits that will be realized immediately, without much of a “gamble” with the public treasury–there were plenty of offers for a mutually beneficial relationship with a large number of potential new home states.
Thank you for your reply, it is appreciated. You’re very right to highlight the difference between a startup and an already established enterprise. I have no doubt, when simply considering just your global brand recognition and brand loyalty alone, that you will be able to replicate your success in a different geographic location. Kudos as well for your commitment to domestic manufacturing. When I transcend the strict economics of any arrangement into the moral and ethical facets of incentivizing private industry, keeping the money stateside is hugely important and can be either a deal maker, or breaker.
To be fair to your candor and explanation, while I’m overtly critical, from a microeconomic level, I’ve never faulted a company for taking public money. Makes all of the sense in the world why one would. Regrettably, when assessed through my macro filter, I currently view this as a zero sum transaction, even a net loss, when allowing for all of the variables between yourselves, your employees, and the States of CO and WY respectively. This is not to say this net loss can’t, or won’t, be reversed on a long enough timeline given current and projected growth. I’m certain it will. It is where we stand today.
To the question of public subsidization and incentives is two-fold in my experience: 1) Are public incentives, by their very existence, altering and affecting natural market variables to the detriment of any requisite and required market competition (aka picking winners and losers)? and 2) Does the capitalization of these packages require the repurposing of public tax dollars to the long-term detriment of core governmental functions and responsibilities (aka using one credit card to pay off another credit card)?
I’m not expecting you to have the answers to those concerns, as they’re much larger than just you and I, I’m simply stating my observations and experiences. The data surrounding these issues are concerning to me, and the political realities surrounding action them one way or another are profound. We want so desperately to feel good again that we often override our more rational selves in the pursuit of that end.
I wish you nothing but luck in your new location, and continued good fortune for the future.
I was at the Colorado legislature during the gun law fight. I watched the Magpul folks fight along side us to stave of the ridiculous Bloomberg laws. Magpul went above and beyond for us Colorado gun owners. We will miss them and wish them all the best in the future. They truly are Brothers and Sisters in arms…..
~Max
Posted from deep inside “Colorado Occupied Territory”. We continue to fight…..