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Iowa's New Top Crop Is Server Farms

kdawson posted more than 5 years ago | from the that's-no-corn dept.

The Internet 111

1sockchuck writes "Microsoft just confirmed that it will build a $500M data center in Iowa, following the lead of Google, which is nearing completion of a $600M facility in the state. Boosted by generous tax incentives and affordable power, Iowa is prevailing in a fierce competition with other states for these huge data center projects for tech titans. Iowa officials say they intend to leverage that track record to attract even more projects in a bid to transform the state into a mecca for server farms." The Economist covers this trend more broadly, focusing on Washington state and Iceland angling to become server-farm destinations.

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Iowa takes lead in corporate welfare (2, Insightful)

XanC (644172) | more than 5 years ago | (#24706165)

Discuss.

Re:Iowa takes lead in corporate welfare (3, Insightful)

Kohath (38547) | more than 5 years ago | (#24706233)

Tax cuts are not welfare.

If you decide not to hold up a liquor store, that's not a generous gift you've given the liquor store owner.

Re:Iowa takes lead in corporate welfare (1)

the_B0fh (208483) | more than 5 years ago | (#24706285)

Sure it is. You do not know how many liquor stores I've been generous to today.

Re:Iowa takes lead in corporate welfare (2, Insightful)

AvitarX (172628) | more than 5 years ago | (#24706343)

Assuming the state runs on an ab out balanced budget it does mean citizens are taking a larger percentage of the taxes. It could still be better for them though. The fact that Corporate taxes are essentially a tax on customers of that corporation, and that most Google and MS customers are not from Iowa, would mean that the citizens of Iowa are paying taxes that in a normal (for that state) structure would be paid by people world wide.

If the power is really so cheap why the need for tax breaks?

This is really more like corporate affirmative action (for advantaged corporations) than welfare though.

Re:Iowa takes lead in corporate welfare (1, Troll)

Kohath (38547) | more than 5 years ago | (#24706683)

Assuming the state runs on an ab out balanced budget it does mean citizens are taking a larger percentage of the taxes.

Or they can just cut the budget and shrink the government.

Re:Iowa takes lead in corporate welfare (1, Funny)

Usquebaugh (230216) | more than 5 years ago | (#24706801)

Now that's just crazy talk!

Shrink the government, why that's un-american.

Re:Iowa takes lead in corporate welfare (2, Insightful)

AvitarX (172628) | more than 5 years ago | (#24707223)

I didn't say they were paying more. I said they were paying a larger percentage. That would be true with a smaller government too (what did ab out mean, probably that I am too stupid to proof read).

Giving benefits to a type of company you want while not extending them to other companies you apparently don't want (small businesses I guess?) is affirmative action, weather you approve or not.

I will say that taxing corporate profits is kind of silly for most companies. If a company is in a competitive market (or playing nice by not returning much more than 10-15 percent) a tax on them is just a tax on customers. You could argue that this provides a local benefit by spreading the tax burden from those that are outside of equivalent jurisdiction (as those foreign to the local become customers and help the profits), but it is really more a strategy to help government tax people that are too dumb to realize it, since everyone hates corporations (except the one that pays them).

I also think there is an argument to tax large profits for the sake of encouraging re-investment (for example a 50% tax on all profit over 15% of gross would encourage some of that extra profit to be spent on R&D (or salaries, probably for those who need it least). You could even allow years where profits ate 10% to allow the extra 5% to be deducted from future years.

All of that could still be bad, because in new fields people relay on better than 15% return (VC's), I don't know how much of what they make is capitol gains, and how much true profit.

Re:Iowa takes lead in corporate welfare (1)

Kohath (38547) | more than 5 years ago | (#24707627)

A large percentage of a small number is still a small number. Cutting the size of the government is the only way to decrease the burden on everyone.

Also, this seems poorly thought out:

I also think there is an argument to tax large profits for the sake of encouraging re-investment (for example a 50% tax on all profit over 15% of gross would encourage some of that extra profit to be spent on R&D (or salaries, probably for those who need it least). You could even allow years where profits ate 10% to allow the extra 5% to be deducted from future years.

The only reason to invest is to earn profits. You can't tax profits to provide an incentive to invest. If I ran a company under your rules, I wouldn't invest just for the opportunity to lose it all in tax payments when the investments pay off. I'd use cash to buy back the stock to increase investors' capital gains and save the investment for when the rules change (or move offshore where I could get a better return and actually keep it).

Re:Iowa takes lead in corporate welfare (1)

AvitarX (172628) | more than 5 years ago | (#24709123)

It is poorly thought out. It is not my job, nor will it ever be, to think these things through.

It will only eliminate one type of investment though. It will eliminate investment in creating efficiencies in a non-competitive market.

There will still be incentive to come out with new products, or getting existing ones into new markets (growing overall gross, allowing for more profit in raw numbers, for example Exxon's 9% is a huge number, and would be 100% tax free under that proposal).

In a competitive market there would be incentive to add efficiency to lower price and grow market share.

Companies that are making huge profits are usually (I am making this up, I am sure there are other scenarios that lead to huge profits, that do not get there from co-operation of the masses) doing so with monopolies that we as the people have granted them as a reward for inventing, or designing something we want. Those companies will be the ones that are hit by the additional tax.

Apple for example, designs products that people really like, and is rewarded by us for doing so. We choose to let them be the only ones to make iPods (through patents, and copyright). Because they have a monopoly on iPods they get to charge some of the extra value an iPod has vs a simple mark-up of the cost of making one.

Apple still profits under 15% (using the first result I got googling which was Q2 2007), and still would not be taxed. 15% is a huge return on sales, and very few companies would pay any tax. The fact that most companies are willing to invest money when the return is likely to be far less than 15% leads me to believe that there would be investment in growth even if you took 100% of everything past 15%.

Re:Iowa takes lead in corporate welfare (1)

dorzak (142233) | more than 5 years ago | (#24707981)

I didn't say they were paying more. I said they were paying a larger percentage. That would be true with a smaller government too (what did ab out mean, probably that I am too stupid to proof read).

Hmm... that assumes the tax revenue won't grow at all.

If there was not a business there before, and I offer 50% off the taxes, I am still growing my tax revenue.

Say taxes before were 100 million dollars. 80% paid by citizens. With no break the comany would pay 2 million, with a 50% break 1 million.

Tax revenue is now 101million. Citizens are still paying the same in taxes, and their percentage of the taxes has gone down some. Instead of 80% of the taxes they are paying 79.2%.

It might come back up to 80% with taxes on workers attracted by the new business.

Re:Iowa takes lead in corporate welfare (1)

zippthorne (748122) | more than 5 years ago | (#24709265)

The real problem is where politicians notice this and offer "sweetheart deals" to a specific company to get them to come in. Then they can claim "bringing in those jobs."

But if the "sweetheart deal" was the policy for *every* company, how many more companies would immigrate. Unfortunately, in a way that the politician cannot claim individual, direct credit for.

So, instead, the policy is to be slightly (or heavily) hostile to businesses in general, and use specific high-profile cases to bring them back in. That way, even if employment is constant or declining the politicians can claim to have "brought jobs."

At least.. that's how it works here on the east coast.

Re:Iowa takes lead in corporate welfare (1)

mOdQuArK! (87332) | more than 5 years ago | (#24713859)

If a company is in a competitive market (or playing nice by not returning much more than 10-15 percent) a tax on them is just a tax on customers.

Actually, that's backward - only in a NON-competitive market can companies directly pass on the cost of additional taxes to their customers.

Re:Iowa takes lead in corporate welfare (-1, Troll)

Anonymous Coward | more than 5 years ago | (#24707837)

If Barack Obama is elected, we will look back on the government of today as miniscule.

Re:Iowa takes lead in corporate welfare (1)

Tubal-Cain (1289912) | more than 5 years ago | (#24708161)

That's a lot more complicated than it sounds, and everybody feels that their favorite department isn't the cone that needs to be cut back. In fact, they could use a few of the $$$s you free up from somewhere else.

Re:Iowa takes lead in corporate welfare (1)

dorzak (142233) | more than 5 years ago | (#24707869)

A lot of time tax incentives does not mean the abscence of all taxes.

If a state agrees to tax a server farm 50% less than another state, the state giving the incentive still receives taxes.

Further, those are taxes they would not have received if the company had not taken the incentives.

Then you have the secondary tax effects. If the server farms adds jobs for everything from janitors and managers to network admins. Those then pay state income tax (if applicable), and make purchases in that state and pay state sales tax.

Usually tax incentives are done to promote business with the understanding is there will still be a net gain in tax revenue.

Before somebody starts accusing me of being Republican a lot of tax incentives for development and redevelopment come from Democrats. Ever heard of "urban renewal zones"?

Re:Iowa takes lead in corporate welfare (1)

Jah-Wren Ryel (80510) | more than 5 years ago | (#24714571)

Then you have the secondary tax effects. If the server farms adds jobs for everything from janitors and managers to network admins. Those then pay state income tax (if applicable), and make purchases in that state and pay state sales tax.

What do you want to bet that at least half of the high paying jobs (managers, network admins) and up living out of state and just telecommuting in? Once constructed and populated, all these facilities really need on site are a janitor, some rent-a-cops and manual labor trained in how to replace blades.

Usually tax incentives are done to promote business with the understanding is there will still be a net gain in tax revenue.

Replace "understanding" with "hope and prayer" and I'll agree. As far as I know, such benefits have never been realized as measured by any formal, after-the-fact, study. However, all the studies I have seen have been wrt to the massive tax subsidies given to professional sports franchaises and their stadiums.

Re:Iowa takes lead in corporate welfare (1)

larry bagina (561269) | more than 5 years ago | (#24708151)

Since google/ms/etc are building new facilities there, it could actually increase the amount and percent of tax revenue coming from corporations (and therefore decrease the percentage from individuals). Even if they're paying a discounted tax rate, it's than if they were located elsewhere.

Re:Iowa takes lead in corporate welfare (1)

initdeep (1073290) | more than 5 years ago | (#24709101)

exactly.

not only that, but the cost for land, electricity, easy access to major telcom backbones from SEVERAL carriers (I-35 and I-80 cross in the middle of the state), makes the location also ideal.

I live in Iowa and the ability to easily deploy datacenters here, along with several local universities with decent MIS/CIS programs also means easy access to talent.

Now through in that the cost of living here is SIGNIFICANTLY lower than many places where data centers are traditionally located, and the lack of natural disaster opportunities (no hurricanes or seismic activity is a bonus) and you can see why Iowa, South Dakota, and Nebraska dominated a recent study on where to place your datacenter.

also throw in that many companies want to physically distance separate their data centers and putting one in the middle of the country along with one on each coast is a pretty good plan.

Re:Iowa takes lead in corporate welfare (1)

rwade (131726) | more than 5 years ago | (#24706389)

Businesses expect to pay taxes. A liquor store has no reason to believe that it will be held up, unless so threatened. In such a case, retraction of such threat would represent welfare.

In any case, Iowa may believe that tax cuts to businesses that may bring work beyond corn to its state are in its best interest. The jury is out on whether this works.

Re:Iowa takes lead in corporate welfare (1)

the_B0fh (208483) | more than 5 years ago | (#24706425)

Spoken like a person who has never paid protection money... though I suppose you could argue it's a form of taxation.

Re:Iowa takes lead in corporate welfare (1, Informative)

Anonymous Coward | more than 5 years ago | (#24708083)

Difference between protection money and taxes - whether or not the collectors use baseball bats and guns or handcuffs and guns.

Re:Iowa takes lead in corporate welfare (1)

Beezlebub33 (1220368) | more than 5 years ago | (#24710385)

Not even close.

The difference is who benefits (in theory) from the money collected. Protection money goes to the individual threatening the business, and only to him. Nobody has a say in how that money is used.

Taxes by the state are spent for the benefit of the people, and the decisions are made by their representatives and those hired by the state.

Complaining that tax money is inefficiently spent (it is) or that there is corruption (there is) does not negate the fundamental difference between protection money and taxes.

And you're a dick.

Re:Iowa takes lead in corporate welfare (1)

the_B0fh (208483) | more than 5 years ago | (#24711645)

Nah, he's just joking. Though, in some cases, the "protection money" people do provide some limited services, from what I understand. But only from a self interest point of view (ie, keeping the goose a-laying)

Re:Iowa takes lead in corporate welfare (1)

Kohath (38547) | more than 5 years ago | (#24712769)

From the point of view of the person getting "taxed", he's completely correct.

I'm guessing that he is like me. I pay a huge amount in taxes. I see very little benefit -- and in many cases, I see the money being used to make things objectively worse for me.

I know that if I could keep my tax money, my life would be better. But there are people out there who don't work as hard who have empowered themselves to take my earnings from me. They are the government class -- they receive the benefits of my work.

And there are people like you. You agree that the government class deserves the benefits of my work more than I do. You insist on it.

And between you and the people in the government class, you are a majority. And the rest of us are subject to your decisions, as serfs were once subject to their lord or slaves to their masters. We have a voice, but it's a minority voice. We simply don't get to choose who benefits from the work we do and the wages we earn. But we know that it's not us.

It's wrong to steal from people. At their current level and structure, taxes are stealing from one person for the benefit of another. But the injustice and immorality of the tax system is never a problem for the people who benefit from it -- just as the injustice and immorality of slavery was well-understood but it was insufficient to lead most slave owners to free their slaves. And rationalizations about what the slaves were provided in return for their labor were common.

Re:Iowa takes lead in corporate welfare (1)

Beezlebub33 (1220368) | more than 5 years ago | (#24712963)

I also pay huge amounts in taxes. I think that some of it is wasted, some of it is spent on things I disagree with. But, when I actually look at the budget (and I do) I just don't see the huge amounts that are being wasted or misspent, especially at the local and state level. When there is waste in my area, I raise hell, and so should you. But, where are the huge amounts being spent that you think are being unfairly spent? Can you name even 25% that you think are just plain wrong? Take a look at any state budget and tell me where to cut 25%.

If I could keep my tax money, my life would be worse, and I think that yours would be too. You would be richer, yes, we agree on that. That doesn't make your life better. The conditions of your life and your fellow citizens would be worse, and that makes life worse for everyone.

You are free to disagree. But, yes, you are outnumbered, and therefore outvoted, and so you lose. The way to win is to convince us that there are gobs of money being wasted. Where are they?

Re:Iowa takes lead in corporate welfare (1)

m0rph3us0 (549631) | more than 5 years ago | (#24713271)

Easy, from each project cut 25%. This is what large companies do, except their depts are required to cut their budget by 10% each year.

Sorry, but there is no column in the budget specifically for waste.

Waste in gov't happens like this:
It's the end of year, I'm a manager and I have money left over in my budget. If I don't spend it next year I will get less. Lets get new chairs and some new printers. Companies that sell to the gov't know this and phone around end of year to sell things to waste money. Hopefully they will spend a little over their budget. Then they go to their manager and request more for next year.

Re:Iowa takes lead in corporate welfare (1)

larry bagina (561269) | more than 5 years ago | (#24708275)

That liquor store owner knows some customers will shoplift. He knows that some employees will help themselves to a bottle now and then. And he knows that somebody might pull a gun and empty the register.

Re:Iowa takes lead in corporate welfare (2, Informative)

Jah-Wren Ryel (80510) | more than 5 years ago | (#24707335)

Tax cuts are not welfare.

If you decide not to hold up a liquor store, that's not a generous gift you've given the liquor store owner.

Welfare is taking from one group to support another group.

If you do not pay taxes, but you consume government provided resources, then the government is taking from one group to support you.
Ergo, tax breaks (which is what we are talking about here, not actual cuts) are welfare.

Re:Iowa takes lead in corporate welfare (1)

Kohath (38547) | more than 5 years ago | (#24709685)

If you do not pay taxes, but you consume government provided resources...

This is not the case, in general, for ordinary working people that engage in business in the US. In general, the people who consume government are not the tax payers. Government has become a wealth re-distribution scheme from people who produce to people who don't.

No one involved in a data center project is likely to be a large consumer of government services. They are going to be net tax-payers. The only question is whether how much damage the government can do to them. This deal limits that damage somewhat.

Re:Iowa takes lead in corporate welfare (1)

Beezlebub33 (1220368) | more than 5 years ago | (#24710663)

No one involved in a data center project is likely to be a large consumer of government services.

Sure they will be large consumers of government services. They will drive on the roads, they will receive protection from the police, they will sent their kids to school, they will visit the parks, they will use the state courts, they will eat the food inspected by the government. A person with a decent job will use as much of these particular services than people without jobs.

They are going to be net tax-payers. The only question is whether how much damage the government can do to them. This deal limits that damage somewhat.

The state government (in this case anyway) is the not enemy. It's providing necessary services used by everyone and begrudging them the money to do so effectively is short-sighted and destructive.

Yes, there are parasites that live off government money, but they are not where most of the money goes. Where you live might be different, but I live in Virginia. Take a look at the budget: http://dpb.virginia.gov/budget/faq.cfm [virginia.gov] or try http://dpb.virginia.gov/budget/vabud/vabud.cfm?vBiennium=2008-2010&vTable=O [virginia.gov]

I'm sure there's plenty of waste, fraud and abuse, but most of it is not. The idea that "Government has become a wealth re-distribution scheme from people who produce to people who don't" is overblown bullshit. Most of the money is reasonably well spent, and there are plenty of people watching the government and how spends its money. And they aren't sitting around making fatuous statements in anti-government rants.

Re:Iowa takes lead in corporate welfare (1)

Kohath (38547) | more than 5 years ago | (#24711913)

They will drive on the roads...

Gas taxes pay for the roads. They are not exempt from gas taxes. This "roads" nonsense is always brought up as something generic taxes pay for, but they don't. Roads are self-funded by their users' gas tax payments. We'd have them even if income and sales taxes were both zero.

...they will receive protection from the police...

Property taxes pay for police. But I bet they'll hire private security because the police service they get is inadequate for them.

...they will sent their kids to school...

Corporate entities don't have kids. Their workers' property taxes and income taxes will pay for the schools. They don't get a tax break on either of those.

...they will visit the parks...

Corporate entities don't go to the park. Server farms don't use parks. This is similar to schools.

...they will use the state courts...

Yes. Unless they have arbitration agreements and use private arbitration instead. Many companies are moving to private arbitration because the courts take too long, are too expensive, and sometimes do a poor job.

they will eat the food inspected by the government

Servers don't eat. See "schools" above.

The state government (in this case anyway) is the not enemy. It's providing necessary services used by everyone and begrudging them the money to do so effectively is short-sighted and destructive.

Yes they are. And they have many, many times the amount of money they need to do the job they should do. The rest is used for handouts and make-work and inefficiency, injustice and meddling and interfering and corruption.

Most of the money is reasonably well spent, and there are plenty of people watching the government and how spends its money.

Not right now. It's 4 PM -- time for government workers to go home while the rest of us work until 5:30 or later.

No one is saying that every government dollar is wasted. Most government dollars are simply spent inefficiently or handed out to non-producers or used to pay for lavish government-worker benefits and above-average salaries.

Re:Iowa takes lead in corporate welfare (1)

Beezlebub33 (1220368) | more than 5 years ago | (#24712797)

They will drive on the roads...

Gas taxes pay for the roads. They are not exempt from gas taxes. This "roads" nonsense is always brought up as something generic taxes pay for, but they don't. Roads are self-funded by their users' gas tax payments. We'd have them even if income and sales taxes were both zero.

You didn't look at the web sites that I referenced, did you? Where is the gas tax? It's part of the Transportation revenue, making up 13% of the nongeneral revenue which is itself 54.7%. So, at most 7% of revenue is gas tax, although much of that is other taxes (look at the link for an actual list). Transportation expenditures are 13 percent of the budget. So, you're just plain wrong (by 50%). Half of the "roads" is from general revenue; you can call it 'nonsense' if you want, but the rest of us can look at the web site.

they will eat the food inspected by the government

Servers don't eat. See "schools" above.

What are you talking about? In the GP, you talk about the "ordinary working people" and compare them to "people who consume government". Those are human beings, not servers or corporate entities. Those people are the ones that pay most of the taxes (look it up! individual income tax revenue is 20 times corporate) and they are the ones getting the services.

The state government (in this case anyway) is the not enemy. It's providing necessary services used by everyone and begrudging them the money to do so effectively is short-sighted and destructive.

Yes they are. And they have many, many times the amount of money they need to do the job they should do. The rest is used for handouts and make-work and inefficiency, injustice and meddling and interfering and corruption.

Ah...This is the crux of the matter. You and I think that the government should be doing different things. Take a look at the budget (for Virginia, or Iowa, or where ever) and tell me what parts they are getting 'many, many times' more money than they need to do their job? What would you get rid of to reduce the taxes by half? Be specific. Would you get rid of the entire education and transportation parts of the budget? Eliminate the state courts entirely? Just drop State Troopers? Or would you cut everything by 50%?

Most of the money is reasonably well spent, and there are plenty of people watching the government and how spends its money.

Not right now. It's 4 PM -- time for government workers to go home while the rest of us work until 5:30 or later.

No one is saying that every government dollar is wasted. Most government dollars are simply spent inefficiently or handed out to non-producers or used to pay for lavish government-worker benefits and above-average salaries.

That's just not my experience. If that's yours, then you need to elect different representatives, or run yourself. It's a democracy, you know. he benefits and salaries is particular is wrong. I don't work for the government, but I know people who do. They don't make more than me, and their benefits are decent, but not exorbitant.

Plus, if it's 4 pm and you are working until 5:30, what are you doing posting on /.? Slacker, get to work!

Re:Iowa takes lead in corporate welfare (1)

Kohath (38547) | more than 5 years ago | (#24713929)

"Transportation" is a trick. It's a code word. Gas taxes pay for roads. "Transportation" includes transit and transit is a subsidized benefit. Transit users pay about 10% of the bill for their transportation. The rest is taken from everyone else. "Transportation" also includes rest stops, art projects, bike trails, employee diversity programs at the DOT, and lots of other things that are not roads. Also, roads could be built and maintained for a lot less if they'd allow non-union contractors to work on them.

Oh, and in Virginia, you also have a port authority under "Transportation". Container ships are not roads. Airports are not roads either.

After a few minutes of looking, here's some stuff that would I change:

- I'd start with a salary freeze for all government employees.
- No pensions for retirees. 401Ks only
- Health insurance could not be better than average for private-sector employees in the state.
- I'd solicit bids from the private sector for anything a government employee does.
- Universities that have "gender studies" programs don't need government funding for them. Public universities should have to provide a cost-benefit study for each degree program they offer. If the benefit of the degree doesn't outweigh the cost by some large factor, the professors should be laid off and that part of the institution should be closed.
- I'd tell the museums and public libraries that they'd eventually get zero public money and they should start fund-raising in the private sector.
- I'd institute mandatory drug testing for people on public assistance and some people who receive other benefits. This would stop the government from subsidizing drug use and get some habitual drug users to move out of the state.
- I'd provide a tax credit for private schools tuition. In time, most students would be enrolled in private schools and most of the k-12 public education could be eliminated or privatized away.
- No government medical assistance (insurance) would be available to able-bodied adults
- Almost everything in the Dept of Commerce and Trade could be eliminated or privatized
- Most of the functions of the Dept of Health could be transitioned to private charities.

It seems pretty clear the the budget could be cut by at least half and probably a lot more over time. And Virginia seems better run than my state.

Re:Iowa takes lead in corporate welfare (1)

Beezlebub33 (1220368) | more than 5 years ago | (#24714323)

Excellent list. Not a place that I'd like to live, but thanks for letting me know where you stand.

I think that the place that you are envisioning would be a horrible place. Without public schools, libraries, universities, almost no health system support, truly horrible government employees, it would be a nasty, darwinian existence. While I don't want to live in a purely socialist, coddled society, I don't want to live in the wild west either. Best of luck, but I'll move to someplace else if this ever came to pass.

Re:Iowa takes lead in corporate welfare (1)

natedubbya (645990) | more than 5 years ago | (#24713205)

If you do not pay taxes, but you consume government provided resources, then the government is taking from one group to support you. Ergo, tax breaks (which is what we are talking about here, not actual cuts) are welfare.

10 bucks says people will mod you up because you used the word "ergo". But your conclusion doesn't actually follow from your premise in this case. Microsoft is not consuming government resources tax-free, they're still paying to move there, paying to build their buildings, etc. An incentive of lower taxes does not equate with free government resources. Ergo, your conclusion is false.

Re:Iowa takes lead in corporate welfare (1)

Jah-Wren Ryel (80510) | more than 5 years ago | (#24714301)

Microsoft is not consuming government resources tax-free, they're still paying to move there, paying to build their buildings, etc.

Your conclusion does not actually follow from your premise in this case.
Moving, building, etc are not government services, the fact that anyone is paying for them is irrelevant.
Ergo your conclusion is false.

Re:Iowa takes lead in corporate welfare (0)

Anonymous Coward | more than 5 years ago | (#24712577)

Yes, tax cuts for those that don't need them are still welfare.

Re:Iowa takes lead in corporate welfare (2, Informative)

TubeSteak (669689) | more than 5 years ago | (#24706311)

Iowa Values Fund (IVF) [iowalifechanging.com]

It is pretty much a sellers market when it comes to big industrial/commercial development. The data center guys can afford to shop around for the best set of tax breaks, tax credits and other sweetheart deals.

Re:Iowa takes lead in corporate welfare (4, Insightful)

CambodiaSam (1153015) | more than 5 years ago | (#24706483)

Think of it as a "Tax Sale". The state can give up-front breaks to the corporation, they can offset this with additional revenue that is brought in from the ancillaries: more high-salary (high tax) workers moving in, other associated businesses that will benefit (and pay more taxes), and even other effects like rising property taxes.

Now I'm thinking like a business person on this. I have a deep cynicism that tells me that your average scum sucking low-rent politician isn't doing this kind of analysis. They're likely just handing over the tax breaks to generate a larger pool of benevolent corporations that give to their re-election coffers, and to stamp their campaign signs with "I created ### jobs for Iowa" pandering.

I get the feeling my ranting is going to burn some Karma. Oh well, it's election season, anything goes!!!

Re:Iowa takes lead in corporate welfare (1)

qoncept (599709) | more than 5 years ago | (#24706543)

What "analysis" ? You didn't do any yourself. It's common sense that you want to create more jobs, and that creating more jobs improves the economy. You can only speculate what a politicians motives are, but tangible results are measurable. If you get the results you want, who cares what's going on in a politician's head?

Re:Iowa takes lead in corporate welfare (2, Insightful)

mdfst13 (664665) | more than 5 years ago | (#24707061)

tangible results are measurable

Sure, but correlation is not causation. Let's assume that Iowa were not handing out tax breaks. What might happen instead? It's quite possible that the server farms would still go there (it's centrally located, cheap power, and low wages). Then they'd have all the current benefits plus higher tax revenues.

You can only measure results if you know what would happen without intervention. Without that, all that you are measuring is current state. You don't know if the current state is because of your change or despite it.

Re:Iowa takes lead in corporate welfare (1)

initdeep (1073290) | more than 5 years ago | (#24709209)

Ahh but since competing areas in the same basic geography also could be chosen, why not make your offer more enticing?

Thats what the state did to compare with South Dakota and Nebraska.

Re:Iowa takes lead in corporate welfare (1)

KlomDark (6370) | more than 5 years ago | (#24710023)

Nebraska? Competitive? Sheee-it. This state has its collective heads up its ass when it comes to competing with Iowa.

Especially with most of the population living in Omaha, which sits along the state line. Iowa has cheaper gas by nearly 20 cents at times, due to Nebraska's extortionate gas taxes, which just went up three cents a few weeks ago, just as gas was crossing the $4 mark. Iowa has casinos, Omaha doesn't. Millions of dollars flow across the river from Nebraska all the time. It's fuckin stupid.

Re:Iowa takes lead in corporate welfare (2, Informative)

sakusha (441986) | more than 5 years ago | (#24707323)

Yeah, well the project is going to bring only 75 jobs [informationweek.com] to Iowa. I suspect most of the employees will be transferred in from out of state. If BillG had his way, they'd all be hired from India on H-1B visas for $15k per year.

Re:Iowa takes lead in corporate welfare (1)

KUHurdler (584689) | more than 5 years ago | (#24707851)

You're not thinking about the big picture. It also takes construction crews to build the facility.
and when those 75 jobs begin, their families will be local consumers that spend money for other jobs that will be needed. Their kids will need schooling... The power company will need people to upgrade and maintain their infrastructure.

It's not just 75 jobs, the list goes on and on.

Re:Iowa takes lead in corporate welfare (2, Interesting)

sakusha (441986) | more than 5 years ago | (#24708003)

You might be overestimating the construction jobs, since Microsoft is experimenting with server farms in shipping containers [datacenterknowledge.com] , like those Sun Modular Datacenters. Des Moines already has massive IT infrastructure since it's the world's biggest centers for insurance data processing. They're going to use infrastructure that is already there.
No, I don't see many local jobs coming out of this. I see more strain on our local infrastructure. I see more power consumption and more pollution from coal-fired power plants.

Re:Iowa takes lead in corporate welfare (1)

initdeep (1073290) | more than 5 years ago | (#24709297)

i disagree.

I think that there will be many additional jobs KEPT because of this.

Every construction project going on currently in Iowa of this magnitude has been on the books for at least 4 years.

Want to know how many new ones are coming up the pipeline?
Here's a hint.
There aren't that many.

So if you have no big projects, then people leave the area to go to other places and work, and take all of their wage tax dollars, their consumption tax dollars, and their discretionary spending tax dollars to otehr places, which is a net loss of tax dollars to the state which means that tax burden to the remaining in the state goes up since we fail to lower spending when tax income decreases.

Re:Iowa takes lead in corporate welfare (1)

sakusha (441986) | more than 5 years ago | (#24710571)

You haven't been reading the news. Iowa was recently devastated by floods, the damage to the University of Iowa campus alone is estimated at over $230 million. Massive repair projects will take a decade to complete. This is not a time when Iowans can afford to give Corporate Welfare to Bill Gates.

Re:Iowa takes lead in corporate welfare (1)

dorzak (142233) | more than 5 years ago | (#24708149)

Yes, but once there they will pay state income and sales taxes. Either directly or indirectly they will pay property tax. If they buy property they pay it directly, if they rent, their landlord pays it.

Given relative cost of living, that $15k goes further for the one spending it.

If they transfer people in, those people transferring in experience something similar to a pay raise - same pay, reduced cost of living.

75 jobs probably doesn't count secondary employment.

75 more people employed means a few more restaurants stay in business or go into business, which means some jobs there, and so on across multiple sectors.

Re:Iowa takes lead in corporate welfare (1)

dorzak (142233) | more than 5 years ago | (#24708183)

Just read the article.

Those jobs are expected to pay $70,000 per year.

Using CNNMoney's calculator $70,000 in Iowa is equivalent to $92,000 is Seattle.

Iowa Corporate Welfare: the specifics (1)

sakusha (441986) | more than 5 years ago | (#24708569)

I found the exact description of the tax exemptions [state.ia.us] Microsoft is getting. They pay no taxes on:

Computers, cooling systems, electric power wiring, backup power systems (including fuel to run them), electricity (!!!!!), cabling and racks, and batteries. And there's a weasely clause "..including but not limited to.." that seems to give them a blanket waiver on just about anything they can bury in the budget.

In return, MSFT agrees to make $200mil in investments in the site within 6 years.

This is definitely corporate welfare. I want an exemption on MY electricity for MY computers!

Re:Iowa Corporate Welfare: the specifics (1)

initdeep (1073290) | more than 5 years ago | (#24709317)

they pay no taxes to the state on the electricity.

they pay for the electricity.

there is a substantial difference.

comprehension is huge.

Re:Iowa Corporate Welfare: the specifics (1)

sakusha (441986) | more than 5 years ago | (#24709627)

I just checked my bill, I'm paying about a 15% tax rate on electricity and about 13% on natural gas. I'm using the same gas & electric company that the new server farm will. That is one hell of a tax break, considering it is going to be the single largest operating expense once the server farm is built. My utilities taxes pay for Microsoft's corporate welfare.

Re:Iowa takes lead in corporate welfare (1)

NeoSkandranon (515696) | more than 5 years ago | (#24707755)

It might not even be a matter of corporate donations. A politician who brings a "high tech" or otherwise easy to spin as prestigious job site to an out of the way locale will never stop patting himself on the back for it.

Re:Iowa takes lead in corporate welfare (1)

initdeep (1073290) | more than 5 years ago | (#24709173)

Except that Iowa has, for years, been leaking good jobs to other places, and that for many years now, the best and brightest have left the state to seek better jobs elsewhere.

by enticing them to stay (by having good tech jobs located in the state) they are also ensuring that they are keeping the state moving toward a younger demographic which will spend more money becuase they have more money.

it's called economics, and as much as I hate the local poli's, they are actually thinking about this in this instance.

if you have a set amount of tax coming into the state coffer's. and you do nothing, that amoun (hopefully) stays the same.

If you offer slight discounts to new businesses, the total amount coming in goes up. Not as much as it could, but it does go up.

Add in all of the other taxes that go along with this, and you will see that overall, the amount of incoming tax dollars goes up, which is a win for the people living in the state.

Re:Iowa takes lead in corporate welfare (1)

LWATCDR (28044) | more than 5 years ago | (#24710331)

But bringing jobs is a good thing.
I mean think about it you give a tax break to a company to move to your state. That is a gain in tax base and jobs.
The problem comes with giving tax breaks to keep a company. Frankly in the mid-west there is a real shortage of jobs. Heck there are towns in Kansas that will give you house and pay you per child to move there. They are closing schools left and right not to save money but because they don't have the bodies to put in them!
Iowa is working hard to attract companies.
And to be honest I doubt that many of these companies are going to donate a lot of money at the state level. I could be wrong but I just don't see it.
You know sometimes politicians do the right thing for the right reasons. I can not imagine that being a state level politician in Iowa is a path to wealth and power.

Re:Iowa takes lead in corporate welfare (1)

eln (21727) | more than 5 years ago | (#24706685)

With the increasing popularity of Lights Out Management, attracting data centers seems like a poor use of corporate welfare, since only the lowest paid workers (rack and stack, junior technicians to push power buttons) will actually need to work on-site.

Re:Iowa takes lead in corporate welfare (1)

Kohath (38547) | more than 5 years ago | (#24706791)

...since only the lowest paid workers (rack and stack, junior technicians to push power buttons) will actually need to work on-site.

And they are so lowly that no one should give a crap about them?

Re:Iowa takes lead in corporate welfare (1)

eln (21727) | more than 5 years ago | (#24706853)

My point is that giving a corporation millions in tax breaks in exchange for a very small number of low-paid jobs is not the best way to go about attracting employers to your area.

Hell, even a call center would offer more work opportunities to the local citizenry.

Re:Iowa takes lead in corporate welfare (1)

corbettw (214229) | more than 5 years ago | (#24707311)

Although if the local government owns the power utility, they might make up their money there. I have no idea if this is the case in Iowa, of course, but it may very well be.

And keep in mind that data center techs typically make anywhere from $20 to $30 per hour; that's a pretty good wage in Iowa.

Re:Iowa takes lead in corporate welfare (1)

sakusha (441986) | more than 5 years ago | (#24707391)

No, Iowa is mostly rural co-op electric companies, the co-ops even own 30% of the Duane Arnold nuclear power plant. And its operating license is set to expire in 2014.

Re:Iowa takes lead in corporate welfare (1)

initdeep (1073290) | more than 5 years ago | (#24709373)

They will most likely be connected to Alliant energy which is a consortium of several smaller companies (Intersate power, IES, etc)

Re:Iowa takes lead in corporate welfare (1)

Kohath (38547) | more than 5 years ago | (#24707477)

I still don't understand. Why are "a very small number of low-paid jobs" not a good thing again? Any small number is larger than zero.

It would seem to be clear that offering large tax breaks to every (and also "any") employer, regardless of how big, would be a good way to increase employment.

The only way this is not a good thing is if you think that increased government revenue ought to be the goal of everyone's life.

Re:Iowa takes lead in corporate welfare (1, Informative)

Anonymous Coward | more than 5 years ago | (#24707629)

I still don't understand. Why are "a very small number of low-paid jobs" not a good thing again? Any small number is larger than zero.
Opportunity cost. The money could have been spent to bring in more jobs that pay better.

Re:Iowa takes lead in corporate welfare (0)

KUHurdler (584689) | more than 5 years ago | (#24707907)

I don't think you realize that "tax breaks" doesn't cost the state anything. They just not TAKING that particular money... so that they can get other money (taxes) later.

Re:Iowa takes lead in corporate welfare (1)

ComputerizedYoga (466024) | more than 5 years ago | (#24708193)

Jobs count, but they're not the _only_ thing that counts. A tiny number of jobs doesn't make a big difference to anything, no matter how good they are... that 75 jobs number is reminiscent of a larger grocery store or a Walmart's staffing levels... albeit with maybe three times the average salary of such places.

On the other hand, giving a corporation millions in tax breaks in order for them to build a half a billion dollars worth of assessable commercial facility on what was maybe a hundred thousand dollars worth of property tax exempt agricultural land makes a pretty big difference on your local (as in municipal or county) property tax assessments when the breaks expire. A Google or Microsoft isn't going to invest that much in a facility and then relocate it and bulldoze when they start paying property tax on it... they're going to stay there and keep doing business.

If your choice, as a local or regional politician, is to give a big company or group of companies an incentive for a couple years in exchange for a quarter million or half a million a year in property tax intake starting when those breaks expire, or to have them build a city, county or state over and never give you those revenues, it makes a damned lot of sense to give them a tax break and pretty much guarantee that you're going to see that uptick in revenues in a couple years.

These tax incentives are, in general, waivers which say the state/county/local taxing authority won't assess property tax on the company for some number of years. It's not like they're writing google and microsoft a check. The state just sort of ... forgets to tax the property for a couple years in exchange for the massive increase in property value of that individual parcel of land.

Tax incentives are not corporate welfare (1, Insightful)

MikeRT (947531) | more than 5 years ago | (#24706751)

No one is giving them money, they're being allowed to keep more of their revenues. The whole point of welfare is that you give someone money that they would have never had in the first place. Based on your so-called logic, any tax break for the middle class is now a form of welfare.

Iowa's top crop (0)

symbolset (646467) | more than 5 years ago | (#24706879)

Iowa's top crop, and the top cash crop for the US, is marijuana. It beats out these server farms by far, and it does it without taxpayer subsidies.

Part of our economic problem right now is we're expending huge amounts of capital to drive a large segment of the economy off of the books. When the underground economy is larger than the aboveboard one, things get pretty chaotic fast.

Re:Iowa's top crop (0)

Anonymous Coward | more than 5 years ago | (#24706991)

I'm guessing there's more meth than even marijuana in Iowa, judging from my experiences living there. Not really your point but I totally agree with you.

Re:Iowa's top crop (1)

initdeep (1073290) | more than 5 years ago | (#24709393)

Not even close.

MEth production is much higher than MJ, and both are pretty low down the totem pole.

Stop believing the hyped up bullshit.

Re:Iowa takes lead in corporate welfare (1)

NoOnesMessiah (442788) | more than 5 years ago | (#24710061)

Oh, come on. Dozens of jobs, not hundreds, with little or no extra community impact. And all of this for the low, low price of tax abatements and taxpayers money to provide the infrastructure for a huge ol' company to continue making enormous amounts of money which they will keep to themselves.

Frankly, if I'm going to decide to use my super-powers for evil, I'll choose the kind of evil that might actually make me some money. I'll take a pass on Microsoft in Iowa, thanks.

Re:Iowa takes lead in corporate welfare (0)

Anonymous Coward | more than 5 years ago | (#24710463)

So does this, combined with the war going on with Russia mean that Iowa may join NAFTA before Georgia?

Cheap power? (2, Informative)

billsf (34378) | more than 5 years ago | (#24706271)

There is more than just that. Washington state has about the lowest electricity rates in the world from all the hydro-electric generation.

Re:Cheap power? (1)

Hyppy (74366) | more than 5 years ago | (#24706299)

Perhaps the generous tax incentives?

Re:Cheap power? (3, Funny)

CronoCloud (590650) | more than 5 years ago | (#24706495)

s/generous\ tax\ incentives/bribes

Re:Cheap power? (0)

Anonymous Coward | more than 5 years ago | (#24714691)

s/generous\ tax\ incentives/bribes

Why do you need to escape out the spaces?

Re:Cheap power? (0)

Anonymous Coward | more than 5 years ago | (#24706603)

Iowa doesn't command as high of wages as the West coast, including Washington state. It is centrally located within the US, fiber in every direction if you will. It may also be more geologically sound than SF or other areas near the Pacific "ring of fire". Granted, there is a risk of tornadoes and floods, but proper siting and construction can easily minimize those concerns.

Re:Cheap power? (1)

KernelMuncher (989766) | more than 5 years ago | (#24707013)

I'm surprised more companies aren't locating to the US Midwest. Generally those states have some of the top education results in the nation. Iowa has had the highest state SAT averages for years:

http://www.midwestsites.com/stellent2/groups/public/documents/pub/mws_am_ed_000924.hcsp [midwestsites.com]

The Midwest is also trying to keep it's college graduates from leaving the area. Good paying, high-tech jobs are one way to that end. So tax incentives are probably not too difficult to get. Land is cheap. Salaries can be much less than SF or NYC and still be competitive for the area. And employees get to have a high quality of life - low pollution, little traffic, good local schools, cheap homes, etc.

There's lot's to like about putting part of your company in the Midwest.

Re:Cheap power? (-1, Troll)

Anonymous Coward | more than 5 years ago | (#24708487)

High SAT scores?

Oh... 92% white, 3% hispanic, 2% black. That explains it.

Re:Cheap power? (1)

UID30 (176734) | more than 5 years ago | (#24707165)

i live in an area whose power is supplied by TVA (Tennessee Valley Authority) hydro-electric ... who just announced a 20% increase in rates. Apparently they felt left out of the energy-crunch-customer-price-gouging... either that or it's taking them a LOT more gas to truck in the electricity after their water turbines produce it ... *blink*.

Re:Cheap power? (1)

miller60 (554835) | more than 5 years ago | (#24710921)

True, but Washington State recently withdrew a tax break for data centers [datacenterknowledge.com] , ruling that they're not eligible for a tax incentive for manufacturers because they don't actually make anything. I think the savings from the power benefit are larger than the tax cut, but some companies want both. Iowa's ready to deal, and it's not alone.

Other factors? (1, Interesting)

Anonymous Coward | more than 5 years ago | (#24706661)

Now I had heard that stable geology was an important factor for large server farms. That's a minus point for Iceland, how does Iowa fare on that front?

At least they're not outsourcing (1)

ShadowWraith (1322747) | more than 5 years ago | (#24706839)

This is good for the IT industry in the states. This'll create more jobs and shows that it's still practical to have IT services in the US. Maybe the outsourcing craze is slowing down and the future of US computech isn't as bleak as it seems.

Iowa's New Top Crop Is Server Farms (1)

martyb (196687) | more than 5 years ago | (#24707005)

Iowa's New Top Crop Is Server Farms

I RTFA, but I *still* don't know what Microsoft's and Google's server farms used for seeds! ;)

Re:Iowa's New Top Crop Is Server Farms (1)

UID30 (176734) | more than 5 years ago | (#24707099)

Iowa's New Top Crop Is Server Farms

I RTFA, but I *still* don't know what Microsoft's and Google's server farms used for seeds! ;)

i think they used USB thumb drives ...

Re:Iowa's New Top Crop Is Server Farms (1)

CDOS_CDOS run (669823) | more than 5 years ago | (#24707417)

Mac mini's! They grow up to be real computers some day! (ducks the flying objects from the Apple Deciples)

Re:Iowa's New Top Crop Is Server Farms (2, Funny)

perlchild (582235) | more than 5 years ago | (#24710101)

If you can plant a 300$ mac mini and get a 4500$ xServe, I'd say that's a cash crop. *goes to do that with mine*

Re:Iowa's New Top Crop Is Server Farms (1)

bhtooefr (649901) | more than 5 years ago | (#24710405)

Mac Minis grow up to be Xserves. ;)

You mean eee PCs, I think. ;)

Re:Iowa's New Top Crop Is Server Farms (1)

JustOK (667959) | more than 5 years ago | (#24711579)

definitely some sorta micro kernel

Really? (2, Funny)

CaptainPatent (1087643) | more than 5 years ago | (#24707293)

I'm glad they did something useful with those server seeds. I heard something somewhere about Pharmers opening up packets...

they must have done an INSERT INTO ground.

I wonder how far away from the Mississippi river.. (1)

t-maxx cowboy (449313) | more than 5 years ago | (#24707405)

I wonder how far away from the Mississippi river, these data centers are in Iowa. I would hate to see all these data centers flooded some day.

Re:I wonder how far away from the Mississippi rive (1, Informative)

Anonymous Coward | more than 5 years ago | (#24707793)

Well, google's data center is in Council Bluffs (or counciltucky as we Omahogs call it) so Iowa would have some troubles on their hands if the Mississippi flooded it. They may have some more trouble with the Missouri river. Then again, they're on the bluffs, so unless they specifically built it in the floodplain, they're probably fine.

Bloody hell, they hear about some flooding in the news and suddenly the entire state is at risk...

Re:I wonder how far away from the Mississippi rive (1)

citricshooter (159349) | more than 5 years ago | (#24707897)

Google's is on the other side of the state, near Council Bluffs. Microsoft's is in the central part of the state in West Des Moines. Neither is close to the Mississippi, however, either could be close enough to a river to be affected when we get the next 1000 year flood.

Re:I wonder how far away from the Mississippi rive (1)

jsailor (255868) | more than 5 years ago | (#24708221)

There are many, many factors in selecting locations for data centers. In the end, you need to compromise on some things and tax incentives certainly influence the decision.

The online service oriented data centers tend to be "lights out" in that they'll run for an extended period of time without humans coming in and screwing things up. While it's doubtful that any of these data centers are in a 100 year flood plane, the "lights out" functionality means they need not worry as much about their employees being impacted by a flood. Just keep the power and data circuits flowing and the corporate overlords still get paid. Automation of the mechanical and electrical systems is progessing (at a turtle's pace compared to IT, but it's still moving) so much of the facility side can be operated remotely as well.

Further, many of these types of setups are employing sealed shipping containers (e.g. Sun's MD-20, HP's POD, Rackable System's whatever they call it, etc.) inside the buildings. The old raised floor and controlled rooms are being replaced by concrete slabs, containers, and shipping cranes. They don't even open the containers unless more than 10 or 20% of the systems inside have failed. Again, a highly controlled and protected environment with little human interference.

All that being said, flood plane is typically in the top considerations. Others include:
-power cost (and cost stability)
-availability of 69 or 138 kV feeds
-distance from flight paths
-proximity to transportation
-distance for rail lines that carry chemicals or other bad things
-access to staff and service for IT kit and mechanical/electrical systems
-latency requirements (not as much of a factor for most web services)
-access to and diversity of telecom (washington area mid west on this one)
-land and construction costs (construction much greater than land)
-zoning restrictions and flexibility for land and telecom delivery
-average hourly temperature and humidity (both impact the ability to gain "free" cooling and you can find studies showing that you get more free cooling in AZ than you do in IL)
-proximity to executive's homes/summer homes/favoriate vacation areas
-etc., etc.

Re:I wonder how far away from the Mississippi rive (1)

initdeep (1073290) | more than 5 years ago | (#24709515)

Actually both are in the 1000 year flood plain.
but so is all of Iowa.
and most of the great plains as well.

Re:I wonder how far away from the Mississippi rive (1)

dorzak (142233) | more than 5 years ago | (#24708289)

West Des Moines is on some significant bluffs. It is a place people flee to when there is flooding.

Re:I wonder how far away from the Mississippi rive (1)

initdeep (1073290) | more than 5 years ago | (#24709503)

based upon the locations already selected (and in use for the Google DC)if they are underwater, so is most of the great plains.

Both are statistically damn near impossible to flood.

there are many "High" areas in Iowa as it is bordered on both sides by two rather large river systems with rather large bluffs on both sides.

the center of the state also has some serious river systems which also have created large bluffs (though not as tall).

Alternative (to) energy (0)

Anonymous Coward | more than 5 years ago | (#24708879)

Does this mean the 2012 presidential candidates will push server based ethanol?

50 - 75 jobs? (0)

Anonymous Coward | more than 5 years ago | (#24710249)

This server farm is generating all of FIFTY to SEVENTY-FIVE jobs with an avg salary of 70k/yr. Iowa is a low cost-of-living state with good power and a high attrition rate, the local govt will do what they can to keep people here. The state will probably count how many construction workers it takes to build the place and call those "jobs generated", when the real number, considering the scope of the project, is insignificant.

It may be a good move in that with both Google and Microsoft here, the IT people will have a nice place to intern at or tour, and if we're lucky, there may be some residual bandwidth upgrades to lean on.

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