From: bzs@ussr.std.com (Barry Shein)
Subject: Re: Lotus as a public charity
Organization: The World
	<2798975736@dwetzel.mis.stratus.com>
	<1992Sep11.180148.1002@miki.pictel.com>
Date: Sat, 12 Sep 1992 00:58:50 GMT


From: boba@miki.pictel.com (Bob Alexander)
>>Ah, but if the tax rate for businesses in Cambridge is 10% and Lotus is 
>>paying 9% because they've struck a special deal, then Lotus is getting a 
>>1% tax subsidy from Cambridge.  (Also not the real numbers)  
>
>What is your definition of "subsidy?"  My dictionary says "a grant or
>gift of money: as (a) a sum of money formerly granted by the British
>Parliament to the crown and raised by special taxation (b) money
>granted by one state to another (c) a grant by a government to a
>private person or company to assist an enterprise deemed advantageous
>to the public."
>
>I.e., when a government gives money to someone, it is a subsidy.
>
>When a government allows a person (or company) to keep his honestly
>earned property, it is not a subsidy.  It is a tax cut.

If the govt changes the rules for one individual (or some small group)
then I think the word subsidy is appropriate.

A tax cut would seem to imply that the govt is providing less or doing
less or somehow living without that money in the budget. If they are
merely supporting the same services as they were before, charging one
party less, and making up for it by charging others proportionately
more, it is a form of subsidy.

So unless you believe that Cambridge will cover the $800K/yr tax
reduction to Lotus by spending $800K/yr less than they originally
planned it is a subsidy. In fact, one could argue that it is still a
subsidy, because rather than making up the difference in tax monies,
the community is making up the difference by living with less.

Otherwise Lotus is getting 100% of the services they were originally
charged for, but getting to keep some of that money for other uses.
That's a subsidy. If perhaps Lotus now had to pay to remove their own
sewage or fix their own street then perhaps you could argue that a
fair deal was struck and there is a clear exchange of value that does
not affect the rest of the taxpayers, since their (the taxpayers')
burden has also been reduced.

Put another way, you're trying to draw a fine distinction between $10
put in my pocket (that I didn't have before) because I paid $100 in
taxes but the govt granted me back $10, versus $10 in my pocket
because the govt decided to take only $90, As a special case to me, to
exact some specific behavior from me. I assure you, as a
businessperson, I would not make that distinction. $10 more in my
pocket is $10 more in my pocket.

If it happened to everyone or even most everyone or some
undiscriminated set like all businesses over $1M, then I suppose tax
cut would be more appropriate than "subsidy". But as it stands subsidy
seems to be a fine term to describe the very special situation.

The fact that the money is being allowed for a very specific
remuneration, ie, staying in Cambridge, pushes it closer to a subsidy
as opposed to some sort of tax cut (i.e. implying some change in the
tax laws.) There's a quid pro quo involved, as with most subsidies.

Note that none of this makes it particularly right or wrong, I am
merely arguing the terminology. It may well be worthwhile for the
taxpayers of Cambridge to burden a little more to keep Lotus around,
or maybe not.

>One of my favorite authors, Robert Heinlein, believed you should
>always do your duty.  But he also said that you should not let others
>define for you what your duty is.  

That's very nice. I just saw a movie based on one of his novels from
back around 1960. It was very comical, especially the way these guys
who are the first to land on the moon get in an argument over where
the best landing site is by looking out the window and shouting their
opinions at each other as the rocket plummets to the surface. What a
visionary...

Oh well, I suppose I should go buy a copy of Danielle Steele and see
if *she* has anything cogent to say on the matter to counterpoint
with...

--
        -Barry Shein

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