Cities Are Competing to Give Amazon the 'Mother of All Civic Giveaways' (vice.com)

Louise Matsakis, reporting for Motherboard: Amazon announced earlier this month that it was looking to build a second headquarters outside Seattle, where more than 40,000 of the company's more than 380,000 employees currently work. The tech giant is searching for a locale with at least a million people, a diverse population, and excellent schools, among other qualifications. It gave municipalities six weeks -- until October 19 -- to submit a proposal to be chosen. Local governments in more than 100 American and Canadian cities, including places like San Diego, Chicago, Dallas, and Detroit, quickly scrambled to outline why they should be home to Amazon's new corporate office, which is expected to employ up to 50,000 workers. The mayor of Washington D.C., Muriel Bowser, even made a scripted video for Amazon explaining why the capital should be picked. It featured an Echo, Amazon's smart speaker. But experts who have studied Amazon's business practices say having one of the most tax-allergic corporations in the world come to your hometown might not actually be a good thing.

Comments

New York Times wrote about this last week.

[Powys]

They figured Denver to be the best spot https://www.nytimes.com/intera...

Re:New York Times wrote about this last week.

[irrational_design]

Not mentioned in the article, but Denver is a lot more central to the rest of the country.

Re:New York Times wrote about this last week.

[bobbied]

They figured Denver to be the best spot https://www.nytimes.com/intera...

Maybe they are right but For the wrong reasons. Amazon isn't looking for a distribution center to ship from, but a place to house 50K employees that work behind the distribution centers, websites and such. They are looking for a place where they can attract and keep good technical and management talent, not people to pack boxes... So Denver is likely in the running, but will suffer from being an expensive place to live (and thus an expensive place to find and keep employees). I'm guessing they will end up someplace else...

Re:New York Times wrote about this last week.

[sirpwn4g3]

I believe KC would be a pretty good spot as well, and would be more central than Denver. I'm just not sure if KC is making any kind of real push.

Re:New York Times wrote about this last week.

[Anonymous Coward]

From that article:
"So Denver it is. The city’s lifestyle and affordability, coupled with the supply of tech talent from nearby universities, has already helped build a thriving start-up scene in Denver and Boulder, 40 minutes away. Big tech companies, including Google, Twitter, Oracle and I.B.M., have offices in the two cities. Denver has been attracting college graduates at an even faster rate than the largest cities. The region has the benefits of places like San Francisco and Seattle — outdoor recreation, microbreweries, diversity and a culture of inclusion (specifically cited by Amazon) — but the cost of living is still low enough to make it affordable, and lots of big-city refugees have been moving there for this reason. Amazon would be smart to follow them."

Re:New York Times wrote about this last week.

[Luthair]

They did ignore Canada and a few of the cities which rank near the top of global city lists have expressed interest. From the Stackoverflow story earlier developers are currently cheaper in Canada than the US though obviously adding another country & currency might be seen as more risky.

Re:New York Times wrote about this last week.

[swb]

The NYT analysis was more detailed than that and actually ran through a lot of the numbers of a lot of cities to reach the Denver conclusion.

That being said, they mention the attention Denver already has from a lot of other tech companies so it may be too late, and that by the time Amazon decides Denver may already be on its way to too expensive, if it isn't already.

I think Amazon might want to consider some kind of place that isn't obviously up and coming and may be initially dismissed as either too small-town or too rust belt.

I think Amazon will have to recruit a lot out outside talent no matter where they site, and it may look more attractive to go someplace with a cheaper standard of living where the salaries may go further.

They may also get more bargains on real estate and buildings -- buying into an already growing market makes for even more competition for real estate resources.

Tax bullshit

[bhcompy]

But experts who have studied Amazon's business practices say having one of the most tax-allergic corporations in the world come to your hometown might not actually be a good thing.

Sure, they'll ask for incentives, but 50000 employed people including a significant number of them being well paid makes a big difference in things like property tax, land value, etc.

Re:Tax bullshit

[Altus]

Yeah but you do have to figure that that helps some areas more than others. Places that already have high property values and high rates of tech employment might not see as much benefit as other locations. On the other hand, locations that stand a to gain the most from that bump in employment are more likely to give the best tax breaks.

Re:Tax bullshit

[vux984]

Sure, they'll ask for incentives, but 50000 employed people including a significant number of them being well paid makes a big difference in things like property tax, land value, etc.

Because big corporations don't already benefit from economies of scale, they should also get such large tax incentives that new laws have to be passed, while pitting cities and states against eachother to pay for them.

When people complain that corporations don't pay their fair share, this is precisely the sort of thing that needs to be stopped. Instead of passing legislation to grant amazon incentives, there should be federal law banning the practice outright.

Large corporations do not need, and should not receive 'incentives'. They already do not compete on an even footing, and it is ludicrous to further bend, and even rewrite, the rules in their favor.

Re:Tax bullshit

[jbmartin6]

If that's the case, why don't they just get rid of the taxes in the first place instead of just offering 'incentives' to a politically connected few? I always feel the idea of this sort of incentive is just admitting that the taxes are driving away businesses.

Re:Tax bullshit

[RightwingNutjob]

Baloney. Income taxes and sales taxes (where they respectively exist) are paid to the state government (and sometimes city government) regardless of whether people pay their property taxes (if they exist) to a rich suburb or a less tony district. They also patronize businesses that can be located anywhere in the metro area to do things like eat, furnish their homes, etc etc etc.

Having an extra billion dollars or so of annual payroll is a positive, no matter how you spin it. Unless of course you choose to spin it as, "I'm not gettin' any therefore you can't have any either." In which case you're guilty of Envy and should be ashamed of yourself.

Re:Tax bullshit

[MightyYar]

I'd like the opposite direction - remove corporate taxes altogether and instead tax capital gains (and the special dividend) at normal income tax rates. Adjust rates and loopholes to fill any revenue holes. Sure, thousands of accountants and tax lawyers would suddenly be looking for work - but it would destroy this kind of thing. And it would make the US into a very attractive site for any multinational.

Re:Tax bullshit

[gurps_npc]

Not how it works. The high paid guys set up homes outside of the city. Then they put 50,000 minimum wage jobs that last a year.

People talk about how ineffective government is? This is EXACTLY the kind of thing government does poorly.

If your tax incentive idea is worthwhile it should be a permanent part of your tax structure and available to all.

The only reason to limit it's availability (either for a set time or for a certain company/kind of business) is because it is a crappy idea that would bankrupt the government if used too much.

Re:Tax bullshit

[MitchDev]

Last week, 15 mod points. Today with your post, nopne. +5000 to you

Re:Tax bullshit

[ShanghaiBill]

Instead of passing legislation to grant amazon incentives, there should be federal law banning the practice outright.

This is the best solution. The incentives are a prisoner's dilemma. Each jurisdiction feels compelled to offer them because others offer them, but they would all be better off if no one offered them. Preventing this sort of self-destructive competition between the states is exactly why the commerce clause exists.

Instead, the states should focus on broad policies that help all businesses, such as streamlining permits, regulatory transparency, and reforming silly zoning laws that keep startups out of garages.

Re:Tax bullshit

[bluefoxlucid]

It's not just property tax. Amazon gets money from all over the world, pays wages, and those people have taxable income. They spend it locally, bringing your economy up with that spending. It's cash flow.

I make a similar argument for my universal Social Security: because it pays more to below-average-income households than it takes, below-average-income cities see a net cash flow. In Baltimore, MD, that would have been $2 billion in 2016. That's untaxable (it counts as income for means-tested welfare, but not for tax purposes, says my proposed policy), yet it gets spent and creates income to local businesses, wages, and so forth. Part of that flows out of the city up the corporate chain or to the suppliers; part of it stays in the city as wages. More comes twice a month, building it up continuously.

It's the end of poor inner cities.

An interesting effect, especially considering the after-tax income at every household income level and on corporate profits is higher under this system. I even slightly-lowered the payroll tax and the Federal deficit in the process.

Re:Tax bullshit

[Kohath]

You don't understand. They think taxes are what life is about and that citizens and businesses exist to serve the government and provide for the government's needs.

If someone has a job, but the government doesn't get to cash in on that job, then that job has no value.

Re:Tax bullshit

[cayenne8]

This is the best solution. The incentives are a prisoner's dilemma. Each jurisdiction feels compelled to offer them because others offer them, but they would all be better off if no one offered them. Preventing this sort of self-destructive competition between the states is exactly why the commerce clause [wikipedia.org] exists.

Except this is NOT interstate commerce....that concept has been bastardized badly over the years, allowing federal overreach....but this is a bit of a stretch to say this is.

This is purely between a state and a private business. This is not dealing with sale of goods between states which is interstate commerce.

What's next'? States (and even cities) can't compete for the Olympics? They can't compete to have the Super Bowl?

This is NOT the purview of the Federal Govt. And should not be.

Re:Tax bullshit

[uncqual]

[...] there should be federal law banning the practice outright.

Where in the Constitution is Congress granted the power to set state and local tax policy? I think you would need an amendment to the Constitution and that seems unlikely to happen as 3/4 of the states must approve that!

Re:Tax bullshit

[Altus]

No I mean more like the amount of benefit that San Francisco would see in getting the HQ vs say, Denver. Property values can only go up so much, eventually the cost of living would drive out smaller employers, even in tech (I think you could already argue that this is happening in the valley which has lead to other cities becoming startup hubs). In Denver I think you would see a much higher upside to bringing in those 50K good paying jobs which might make it worth bending over backwards for Amazon where in another part of the country it might make less sense.

Re:Tax bullshit

[vux984]

Would you also tax corporate capital gains?

Re:Tax bullshit

[uncqual]

No city, county, or state is "compelled" to offer incentives to Amazon and no sane city, county, or state (all controlled by democratically elected voters) would do so if it hurt them.

Some cities, counties, and states will place a higher value on Amazon's presence - perhaps because they are trying to "move up" in the food chain and are therefore confident in offering incentives that will help them do so -- a rising tide lifts all boats so it's a win-win for everyone. Others may explicitly not want an Amazon HQ so would not offer any incentives or may have zoning laws that would make it impractical for Amazon to establish a HQ there.

Re:Tax bullshit

[Obfuscant]

but they would all be better off if no one offered them.

Nope. Those jurisdictions with lower taxes would be better off because they would be more attractive. Preventing local government (you know, the local people elected to deal with local matters) from governing would put jurisdictions with higher tax rates at a disadvantage.

Preventing this sort of self-destructive competition

The vary large number of cities that benefited from economic incentives for business would disagree that this is self-destructive.

and reforming silly zoning laws that keep startups out of garages.

As a property owner, I am quite happy that the guy next door cannot set up an auto repair shop in his garage, or many other "startup" businesses that are not well suited to residential neighborhoods.

Re:Tax bullshit

[Geoffrey.landis]

This is the best solution. The incentives are a prisoner's dilemma. Each jurisdiction feels compelled to offer them because others offer them, but they would all be better off if no one offered them. Preventing this sort of self-destructive competition between the states is exactly why the commerce clause [wikipedia.org] exists.

Except this is NOT interstate commerce....

Yes it is. It is about one state bidding against another to win a business that operates across the entire U.S.. That's very clearly commerce.

Re:Tax bullshit

[MightyYar]

No - it would just be "income" and I wouldn't tax corporate income. Get it on the way out.

Re:Tax bullshit

[Obfuscant]

I always feel the idea of this sort of incentive is just admitting that the taxes are driving away businesses.

Has there ever been any question that taxes have a negative impact on business siting decisions? I think it is pretty well known that taxes fall into the "lesser of two (or more) evils" category when a company decides where to locate, not "gee this tax is really great for business, let's site there."

Re:Tax bullshit

[Obfuscant]

Then they put 50,000 minimum wage jobs that last a year.

First, that 50,000 jobs that weren't there before. Second, churn is an avoidable expense, so no company is looking to turn over their 50,000 person workforce every year. It costs a lot less to keep the same already trained employee on the job than to get rid of him after a year just because.

Re:Tax bullshit

[whoever57]

Having an extra billion dollars or so of annual payroll is a positive, no matter how you spin it.

Not if the state agrees to a tax credit/rebate that includes rebating the estimated sales and income taxes paid by the new employees. Such deals are not unheard of.

Re:Tax bullshit

[alvinrod]

In general I agree with the sentiment, but I don't think this particular implementation would work out well as there are some unintended consequences when it becomes better for companies to hold on to cash rather than return it to shareholders, which would additional taxes. It also creates an incentive for a person to incorporate as some kind of sole-proprietorship that can avoid paying taxes on profits instead of recording that income as personal income. Sure you could make something like that illegal, but what's to stop someone from creating a small business that happens to be completely employee owned that attempts to do the same thing?

Re:Tax bullshit

[cayenne8]

Yes it is. It is about one state bidding against another to win a business that operates across the entire U.S.. That's very clearly commerce.

No, actual interstate commerce is the SALE of goods across state lines.

No goods are being traded or having the sale impinged upon in this case.

Re:Tax bullshit

[Mike Van Pelt]

I'd like the opposite direction - remove corporate taxes altogether and instead tax capital gains (and the special dividend) at normal income tax rates.

I could go along with this for dividends, but for capital gains, I'd want the gain "taxed at normal income tax rates" to be adjusted for inflation over the period the assets were held. Same with interest income.

Of course, what "the usual suspects" are going to want to do is tax dividends and capital gains at normal rates, and increase the corporate income tax, too.

Re:Tax bullshit

[bhcompy]

This is a completely different argument. Your utopia doesn't exist. This Amazon situation is happening in the world as it exists today and must be evaluated in such an environment.

Re:Tax bullshit

[MightyYar]

I could go along with this for dividends, but for capital gains, I'd want the gain "taxed at normal income tax rates" to be adjusted for inflation over the period the assets were held. Same with interest income.

I don't have an immediate objection to that. You don't want to dissuade people from long-term investment in assets. The numbers would have to work out, and I'd point out that we don't do this today.

Re:Tax bullshit

[vux984]

Then it would never be "out".

The wealthy would just own corporations, and the corporations would own and pay for everything else.

If want to go on vacation? My corporation sends me to Paris, for business meetings, meeting potential vendors, or looking at possible expansion sites.

If want a cottage, my corporation buys it as an investment property, and I pay nominal rent to the corporation when i stay there. I also do that for my various homes, and cars.

I'd draw a nominal salary for food and clothing, maybe 30 or 40,000 per year, to cover that plus my nominal rents, and depreciating assets (so I realize some tax advantages from those). And the rest of my millions, in assets, property, stock holdings, ... all growing tax free.

I don't think this works.

Re:Tax bullshit

[datavirtue]

Tax corporations, you tax me more. Corporations do not pay taxes. Their customers do.

Re:Tax bullshit

[vux984]

But..that is NOT something the federal government is empowered by the constitution to do.

Arguably, the commerce clause actually does apply here since the issue is state A luring a specific entity from state B.

But even if didn't, its in the states collective best interest not to play this game, but unless they all agree not to play it, the one who plays it wins at the expense of the rest. This is precisely the sort of issue the federal government should be involved in, and if that takes an amendment ... then it should be done.

That is PURELY on a state level. And it should be.

Why should large companies be allowed to pit states against each other for public handouts? How do we the public benefit from that?

Re:Tax bullshit

[gurps_npc]

1) I did not say or mean 50,000 permanent jobs for a churning workforce. I said 50,000 jobs that last a year. As in after that year automation replaces them with a 15 man team and 1000 robots.

2) Second, 50,000 minimum wage jobs end up COSTING the city and state money, not giving it. A minimum wage job is about $15k a year. Two parents, family of 2 at that wage will pay on average less than $3,000 to the state and local taxes and it cost more than that per year to pay for their kids schooling, police, fire, roads, etc. You end up attracting people to the area that cost the state more than they earn.

These kind of deals always promise more than they put out. There is no such thing as a free lunch, the guy promising the moon is always lying.

Re:Tax bullshit

[ShanghaiBill]

What's next'? States (and even cities) can't compete for the Olympics? They can't compete to have the Super Bowl?

Yes, that would be fantastic. I don't pay taxes so my local government can hand them over to a sport franchise.

Re:Tax bullshit

[king neckbeard]

Amazon is definitely crossing state lines, so amazon in general is definitely interstate commerce. This particular deal isn't shipping goods across state lines, but it is part of an interstate bidding war, and thus would fall under "necessary and proper."

I will agree that the interstate commerce clause has been expanded beyond where it should, but this is preventing a prisoner's dilemma, which is exactly the kind of thing you need a federal government for.

Re:Tax bullshit

[ShanghaiBill]

No goods are being traded or having the sale impinged upon in this case.

Amazon is getting taxpayer funded subsidizes which its competitors are not getting. That clearly gives them a competitive advantage in interstate commerce that most reasonable people should see as unfair.

Re:Tax bullshit

[Obfuscant]

Your sentiment is a clear demonstration of the antagonistic attitude towards business in America.

Yeah, 'cause showing support for governments giving incentives to businesses to locate in their jurisdictions is just so, umm, anti-business. Right.

Re:Tax bullshit

[MightyYar]

it becomes better for companies to hold on to cash

Yes, but this is a short-term problem. Eventually every stock holder dies... and the people with the most stock are old.

It also creates an incentive for a person to incorporate as some kind of sole-proprietorship that can avoid paying taxes on profits instead of recording that income as personal income.

But profits would eventually need to be drawn out of the entity.

but what's to stop someone from creating a small business that happens to be completely employee owned that attempts to do the same thing?

If the employees ever plan on spending their money, it will get taxed.

I'm not sure the side effect of essentially not taxing savings every year is a bad thing. It's effectively like an IRA.

Re:Tax bullshit

[Obfuscant]

A minimum wage job is about $15k a year. Two parents, family of 2 at that wage

Minimum wage was not and is not intended to be a wage for four people.

You end up attracting people to the area that cost the state more than they earn.

You end up paying people already in the area $15k more than they had.

And no company is going to come into a town, hire 50,000 people, and then fire all of them after just one year.

Re:Tax bullshit

[MightyYar]

Their groceries are part of the business. Their car and house part of the business. And suddenly nobody pays income tax at all.

What? How?

Wealthy people that can hire creative attorneys already live this lifestyle.

Yes, I'm trying to but a huge dent in that industry.

When you change the rules to make that process easier or even more lucrative,

What process? Do what? If you take any money out of a corporation, it will get taxed as income. If you want to buy groceries, you take $100 out of your corporation, pay your $25 in taxes, and then buy your groceries. If you want to buy a yacht, you take $10,000,000 out of the corporation and pay $2,500,000 in taxes and then buy your yacht.

Re:Tax bullshit

[networkBoy]

Not if the state agrees to a tax credit/rebate that includes rebating the estimated sales and income taxes paid by the new employees.

"rebating" it to who? The employees? I'm sure I'm missing something, but please explain how this rebate would work.

Rebating it to the company (Amazon in this case).
Thus We expect that you will hire these 100 people at $1/year and they will each pay $0.10/year in total taxes (sales, property) to the municipality (total: $10.00). The state/municipality then gives $10 in tax breaks (offset to property tax, zoning fees, what have you) to the company.

The direct net is zero, indirect there is still a (much smaller) gain as those employees each spend $0.01 at the donut shop per year and the shop owner now has an additional $1.00 to spend that will itself produce tax income, though much less than the first order taxes that were rebated.

Re:Tax bullshit

[ShanghaiBill]

The vary large number of cities that benefited from economic incentives for business would disagree that this is self-destructive.

Many economist believe that the "very large number" is zero, and that these incentives just shift jobs away from unsubsidized sectors. Every dollar of subsidy that Amazon receives means an extra dollar in taxes somewhere else in the local economy.

These subsidies are premised on the assumption that politicians are smarter than capitalists at making investment decisions. If that were true, the Soviet Union would have won the Cold War.

Re:Tax bullshit

[MightyYar]

the corporations would own and pay for everything else.

Like what? A place to live? That is taxable compensation. A car? That is taxable compensation. Food? Taxable compensation. You don't just leave the current rules in place and reduce taxes - you tax money on the way out of the corporation.

If want to go on vacation? My corporation sends me to Paris, for business meetings, meeting potential vendors, or looking at possible expansion sites.

Who cares? They do that right now under the current system. Why does my system get held to a standard that the current system does not? Anything you do to fix this in the current system can be applied to my proposal.

Re:Tax bullshit

[networkBoy]

there should be federal law banning the practice outright.

My google fu is failing me badly to find the proper quote and author, but here's the gist of it:

Any time someone says "There ought to be a law" there almost certainly shouldn't be one.

Re:Tax bullshit

[PopeRatzo]

"rebating" it to who? The employees? I'm sure I'm missing something, but please explain how this rebate would work.

I think he's talking about rebating the state income tax withholding money back to the corporation, which is a common way you see states sweeten these corporate deals.

Here's how they work: You work for Company X and you have your 7% (or whatever) withheld from you paycheck by the company. Instead of having to then hand that money over to the state government, the government just tells the corporation, "Oh, you can keep that, and would you also like your dick sucked?"

So, the money is not only taken from the state tax coffers, but it's still being paid by the poor fucking employees. All these "incentive" deals are shitty, but this particular feature is particularly shitty, and they rarely work out to the benefit of anyone but the corporation and the politicians, who go on to claim a "big win". The numbers that the deal are based on never, ever add up. If the corporation promises 50,000 jobs, it turns out to be 5,000, or 500. The tax cuts, and rebates, and credits stay forever, but those jobs end up disappearing eventually because these deals happen most often in "right to work" states, where there can never be enough poor people to satisfy the needs of Capital.

Re:Tax bullshit

[king neckbeard]

No city, county, or state is "compelled" to offer incentives to Amazon and no sane city, county, or state (all controlled by democratically elected voters) would do so if it hurt them.

You are making some really ridiculous statements without support for your premises.
1.Governments are sane.
2. Governments are democratically controlled by voters.
3. Governments and citizens have perfect information.

The reality is that a small handful of well connected people will get bulk of the benefits, the public will suffer, but they'll get popular support because people will do mental gymnastics to insist that this is indeed a net benefit. Since Joe Sixpack doesn't understand macroenomics, you can just yell about jobs and throw in some buzzwords and get enough public support to not lose re-election over this.

Re:Tax bullshit

[RightwingNutjob]

It can't be zero unless you're actively subsidizing them out of tax revenues collected exclusively from people who have no connection to the new employer. Consider the following example: Even if the new employer were given tax-free status for ever, and anyone hired by them doesn't have to pay any kind of state or local taxes, even sales taxes, the fact that the company is doing work at that location and is being paid (a lot) by its customers to do that work, and is bringing that money to its new city and giving it out to its employees means that there is more money circulating through the local economy, the rest of which makes more profits selling to the newcomers and paying taxes on that economic activity.

Re:Tax bullshit

[king neckbeard]

The evaluation is that there is a problem, and the solution is to change the rules so there isn't a prisoner's dilemma.

Re:Tax bullshit

[RightwingNutjob]

In relative terms, maybe. In perceived terms, definitely agree. In absolute terms, it's less clear cut, but my educated guess is that it's not much of a difference. N people working at 100% of prevailing wage (SV salaries in Atlanta...really?) is the same amount of wealth flowing into Denver as it is into SF or Boston or Toronto.

Re:Tax bullshit

[vux984]

Like what? A place to live? That is taxable compensation. A car? That is taxable compensation. Food? Taxable compensation.

I already covered those. My taxable compensation will be 30k per year, maybe. Big deal, I'll pay taxes on that, happily.

you tax money on the way out of the corporation.

Encouraging me to keep money inside the corporation.

Who cares? They do that right now under the current system.

Yes, they do. And they pay corporate taxes. Your proposed your system preserves all the abuses and loopholes they already had, but reduces the taxes they pay. Nice.

Why does my system get held to a standard that the current system does not?

Your system is being compared to the current system to see if it is actually in some way "better". What other possible standard should we hold your system to? How it it BETTER than the current system? From what I can see, it just makes things worse.

Re:Tax bullshit

[Macdude]

What you want is to tax the crap out of any money held by corporations, which incentivises them to invest in growing their operations or paying out their money in dividends (you make dividends an expense), wages, etc.

Corporations are sitting on billions and billions of dollars, this is harming the economy. You want money to circulate, not sit.

Re:Tax bullshit

[Anonymous Coward]

Since Canadian cities are part of the list, I feel it is important to mention that Canadian cities do not directly receive income tax in Canada. Also, most Canadian cities (at least Ontarian cities) have zero sales tax at the city level (the high sales taxes are provincial and/or federal taxes, paid directly to the provincial or federal government).

Canadian cities typically make their bank from property taxes and transfer payments from the provincial government. They also make quite a bit from selling goods and services (As a random example: Local landfill fees, permit costs, inspection costs, parking tickets). Yeah, they don't all look like goods and services, but to the municipal government, they are.

https://en.wikipedia.org/wiki/Municipal_government_in_Canada#Structure_and_funding

Higher populations are good and bad. Good because there's more people to collect property tax from, bad because small cities tend to get much more in per capital transfer payments from the provincial/federal government.

Re:Tax bullshit

[Macdude]

Your sentiment is a clear demonstration of the antagonistic attitude towards business in America.

It's always fun to see someone who is pro-business and free-enterprise bend themselves into pretzels trying to defend corporate welfare.

Re:Tax bullshit

[Shotgun]

This is purely between a state and a private business. This is not dealing with sale of goods between states which is interstate commerce.

Seems to me that this is a private business that is openly auctioning off the privilege of hosting its corporate branch to all the states. That would make it interstate and commerce.

Re:Tax bullshit

[Obfuscant]

corporate welfare

Somehow I don't think Amazon needs a tax break from any local government to stay in business. It's hard to call it welfare otherwise.

It is, however, often a good deal for the citizens, so maybe calling it "citizen welfare" would be the right term.

Re:Tax bullshit

[suutar]

Like what? A place to live? That is taxable compensation. A car? That is taxable compensation. Food? Taxable compensation.

I already covered those. My taxable compensation will be 30k per year, maybe. Big deal, I'll pay taxes on that, happily.

I think he's saying that beyond that 30k in cash, the value of the house above and beyond your "nominal" payments also qualifies as a taxable benefit. That is, if the area tends to rent a house comparable to yours for 5k/mo and you're paying 1k/mo, that's 48k/yr of (non-cash) benefit that is taxable. If you're paying 5k/mo, there's no overage that's taxable, but now you're spending more than your 30k.

Re:Tax bullshit

[MightyYar]

Whats to stop the owner of the corp from eating corp owned food, using the corp owned jet, driving the corp owned sports car, and living in the corp owned house.

Changes in tax law making those taxable compensation. As I said, closing the loopholes.

I'm not pretending that this would fix every abuse of the current system, so don't pooh-pooh it just because it's not perfect. Any fix you make to the current system can still be applied to the zero-tax-rate system.

Re:Tax bullshit

[rsilvergun]

When people complain that corporations don't pay their fair share, this is precisely the sort of thing that needs to be stopped. Instead of passing legislation to grant amazon incentives, there should be federal law banning the practice outright.

Bravo sir. If ever there was a legitimate use of the commerce clause that wasn't immediately obvious it is this. When States are pitted against each other it becomes interstate trade.

Re:Tax bullshit

[king neckbeard]

Are you also going to assume spherical cows, are are we going to discuss the real world where corporations are amoral, sociopathic, and hire enough lawyers and accountants to make sure that they win no matter what?

Re:Tax bullshit

[MightyYar]

Worse, they are sitting on billions held outside the country. Better to bring them in, which my system would encourage. I don't really care if they sit on a cash pile (or on short-term assets)... that means someone else in the economy can use it.

Re:Tax bullshit

[MightyYar]

Yes, they do. And they pay corporate taxes.

No, not on expenses they don't. They only pay taxes on profits - and they don't really do that.

Your proposed your system preserves all the abuses and loopholes they already had

No, I said, "Adjust rates and loopholes to fill any revenue holes.". I don't know why, but you are putting words in my mouth.

Re:Tax bullshit

[MightyYar]

the food will be catered as general rule (and thus never taxed)

This can be done right now. If you can fix this in the current system, you can fix it in my system.

Re:Tax bullshit

[vux984]

No, I said, "Adjust rates and loopholes to fill any revenue holes."

I read that as simply adjusting the regular tax rates to make your proposal net revenue neutral to the government.

I didn't realize I was supposed to read it as 'fixxing all the hard problems my proposal creates, exacerbates, or perpetuates is left as an exercise to the reader'. :p

Re:Tax bullshit

[Obfuscant]

Are you also going to assume spherical cows, are are we going to discuss the real world

You mean "real world" where no company is going to come into an area, build a headquarters, and hire 50,000 people just to fire them in a year, and that paying someone who has no job $15k means that he has $15k that he wouldn't otherwise have? Or "real world" where Amazon is going to open a headquarters in a city, hire 50,000 office workers at minimum wage to run the corporation, and then replace them all with robots in just a year? Who has the spherical cows?

where corporations are amoral, sociopathic, and hire enough lawyers and accountants to make sure that they win no matter what?

Are these "lawyers and accountants" the ones they're replacing with robots after hiring them for a year?

Re:Tax bullshit

[RightwingNutjob]

Explain to me how that money is taken from the state budget if the alternative to 50k jobs and no direct tax revenue is zero jobs, no direct tax revenue, and no indirect tax revenue? Money is being added if those jobs are there.

Re:Tax bullshit

[gurps_npc]

"Minimum wage was not and is not intended to be a wage for four people."

That statement is nonsensical. It's like saying "Horses are not intended to be ridden."

Is there some special law requiring companies to pay you more if you have 2 children? No? Then YES, minimum wage is intended to support four people.

Horses are ridden and similarly, many people support two children with two minimum wage jobs, as per my example.

But all of that is totally irrelevant. The topic is "Do states benefit from tax deals for businesses." And the answer to that is no. These deals always give low paying jobs that are temporary, not permanent.

P.S. You ignored the fact that in my actual example I had two people earning minimum wage to support two children.

Re:Tax bullshit

[Anonymous Coward]

... the corporations would own and pay for everything else.

So business as usual. The ideal setup includes a corporation running a trust holding the assets. Not fair but corporations are already designed to limit liability, so not a deal breaker.

pay nominal rent to the corporation ...

Precisely why other countries heavily tax the discount (the market price you're not paying) a corporation gives to employees.

I'd draw a nominal salary ...

Other countries know how to handle this dodge too: Where does a corporation acquire its income? If it's beholden to one business, it's taxed as an employee, regardless of the legal paperwork.

...all growing tax-free.

Start looking at US taxation practices and you'll realize how much the corporations control the politicians.

Re:Tax bullshit

[MightyYar]

I'm proposing this with clear eyes. I know it would be difficult. But the criticisms you launch my way exist in the current system and there is no magic bullet. I just wanted to make it clear that my goal is not to lower taxes or let people who own corporations off the hook. Quite the contrary - I want to shut down the corporate tax-dodging departments where some of the smartest people in the world are currently being employed simply to find loopholes. No government can go up against that in the long term and come out ahead.

Re:Tax bullshit

[whoever57]

Explain to me how that money is taken from the state budget

Simple.

Some, perhaps most of those people will move to that state to take those $50k jobs. When they come, they will have infrastructure needs. Their kids will need educating, etc.. All these add costs to the state, while there is no additional revenue from their employment.

Others will move from existing jobs within the state. The state will lose the revenue from the their state income and sales taxes.

You seem to be under the misapprehension that all or most of the people who take up these new jobs are currently residing in the state and are unemployed. That's an unreasonable assumption.

Re:Tax bullshit

[PopeRatzo]

Explain to me how that money is taken from the state budget

Not from the state budget. From the state coffers. It means someone else has to pay for the company's use of state resources. Because for every company that gets the sweetheart deal, there are many more who do not. It's the very definition of government "picking winners and losers".

if the alternative to 50k jobs

There aren't 50k jobs. There will not be 50k jobs. There's a cottage industry built around companies getting these sweetheart deals and not delivering. The tax benefits, credits, cuts and abatements are never tied to corporate performance. It's the lump of sugar up front and then adios.

Re:Tax bullshit

[RightwingNutjob]

Depends on the terms of the tax deal. If the incentivized company and its entire workforce are declared tax-free from both income, property, and state sales taxes, then you could have a point. Then the state budget only benefits indirectly from increased economic activity. And be taking off of the unemployment rolls some number of people to take up the low skill and mid skill jobs providing services to high skill employees of these large tech companies.

Re:Tax bullshit

[uncqual]

I didn't assume that governments are sane, just that if they are, they would not offer incentives that would hurt them.

Voters elect politicians - one person, one vote. If eligible voters choose not to vote or choose to elect politicians that don't run a sane government, that is their prerogative (unless, of course, the city, county, or state has implemented in their bylaws or constitution something like the Electoral College to stop the voters from making stupid mistakes, but I don't know of any such city, county, or state that has such provisions). So, yes, governments in the United States ARE controlled by the voters. The voters may not always make the right (i.e., presumably, the one king neckbeard thinks is right) choice, but that doesn't mean they didn't make the choice. It's rather like people who choose to spend their paycheck at the roulette table may not have made a wise choice, but it is definitely a choice they made.

Of course neither governments nor voters have perfect information -- no one does. True, some voters choose not to get much information or education and just vote as their Union says to, but again, that is their choice.

These are all facts.

How is City A "compelled" to offer incentives to a private business any more than Best Buy is "compelled" to price match Walmart's prices? There is no rule that any city has to play the game that way or that any retailer has to engage in a race to the lowest price. Most cities survive very nicely without a single Fortune 500 headquarters in their city limits so claiming that cities are "compelled" to engage in bidding wars to attract corporate headquarters is absurd.

In almost every entity from large families to multinational religions to multinational companies to local governments to national governments, a small percentage of well connected people have more influence than the average. Even in most communities of non-human social mammals, a few members usually have the bulk of the influence. It's probably as much human nature as walking upright is.

If the Federal Government were to try to "fix" this (non)problem, it would be an action by an even smaller percentage of well connected people forcing their judgement on individual communities.

Re:Tax bullshit

[uncqual]

I never said that all governments were sane. Sometimes the democratic process creates insane governments. That's life. Democracy sucks, but until someone comes up with something better, it's still my favorite form of government as long as basic rights are protected.

Re: Tax bullshit

[MightyYar]

First of all, when you say "perfectly legal", that means today. It doesn't need to be tomorrow.

Take borrowing. Go ahead and borrow against it and get ridiculously low interest rates. As you pay back the loan, you will need to draw money from somewhere, and that money will be taxed as income.

Re:Tax bullshit

[whoever57]

Depends on the terms of the tax deal. If the incentivized company and its entire workforce are declared tax-free from both income, property, and state sales taxes, then you could have a point.

Do you have a problem with reading comprehension?

My original post on this topic explained how this could work, and has worked in other deals: the state provides tax credits to the company which take account of the estimated tax payments (sales taxes, income taxes) of the employees.

So the employees still get to pay taxes, but the tax they pay effectively goes to their employer, not to the state.

Re:Tax bullshit

[Cheech Wizard]

I'll go with tax the corporations and eliminate personal income, sales and other taxes.

Re:Tax bullshit

[skam240]

"Minimum wage was not and is not intended to be a wage for four people."

Oh how poorly educated you are in regards to the history of the minimum wage.

https://takingnote.blogs.nytim...
Quotes from Roosevelt who was instrumental in the enacting of the minimum wage.

“By living wages, I mean more than a bare subsistence level — I mean the wages of a decent living.” (1933, Statement on National Industrial Recovery Act)"

“No business which depends for existence on paying less than living wages to its workers has any right to continue in this country.”

It's awesome you want to believe a conservative myth but the reality is different.

Re: Tax bullshit

[stealth_finger]

Sure, because no existing employees will move to this new tax free business from old taxed businesses....

Or spend their untaxed money in places that do pay tax.

Re:Tax bullshit

[king neckbeard]

GP making absurd claims doesn't mean your claims are not absurd. His claims were hyperbolic, but yours are just naive. You are assuming that jobs in that area will not exist at all without Amazon, hence why you are assuming a $15k gain per person per year. You might as well be reading from Amazon's corporate propaganda. Hell, they probably aren't as brazen enough to make such a ridiculous claim, and at least assume that SOME of the jobs are going to be moving from other employers.

Are these "lawyers and accountants" the ones they're replacing with robots after hiring them for a year?

No, they are the ones that make sure that they get away with paying even less taxes than they agreed to, and that they aren't compelled to actually provide 50,000 jobs. So, they'll have 10,000 full time minimum wage jobs, 7,000 part time jobs, and if you even think about holding them responsible for what they've agreed to, they'll pack up and go home.

Re:Tax bullshit

[king neckbeard]

How is City A "compelled" to offer incentives to a private business any more than Best Buy is "compelled" to price match Walmart's prices?

I'm not claiming that cities are MORE compelled than corporations to compete. I'm claiming that corporations competing is a good thing, while governments competing is a bad thing.

If the Federal Government were to try to "fix" this (non)problem, it would be an action by an even smaller percentage of well connected people forcing their judgement on individual communities.

No it would be a government that is not directly controlled by this issue solving a classic game theory problem (prisoner's dilemma) by changing the rules to have a less destructive game.

Yes, the people making that decision would be a highly privileged group, but ANYTHING the federal government does is the same. Stopping companies from selling tainted drugs would fit that bill as well, but we generally aren't whining that the FDA prevents corporations from poisoning their customers (other problems, sure, but that's largely due to the fact that we allow so much money in our political system).

Your claims of elite control are facetious. Among people who are aware of how these things pan out in practice, corporate welfare is very unpopular. In fact, if you correctly call it "corporate welfare" instead of that "job creator" garbage, the general public is strongly against it.

Re:Tax bullshit

[king neckbeard]

Okay, call it "corporate financial handjobs." Far less innuendo than calling it welfare.

Re:Tax bullshit

[king neckbeard]

Worse yet, those people don't even have consistency. States are the least specialized form of government in our system. The premise of decentralized control is good, but states are at the middle. Thus, if Republicans really believed in local government, they would side with counties and municipalities over states. But no, they just always support the state-level government, because it's just right for maintaining a corporate fiefdom.

Re:Tax bullshit

[king neckbeard]

People aren't decrying democracies, they are decrying prisoner's dilemmas. Where democracy comes in is in public support for getting rid of prisoner's dilemmas, and when idiots like you stop spewing Ronald Reagan's brand of bullshit propaganda, public support for those better policies rises. Hence why we are calling you out for your idiotic stances.

Re:Tax bullshit

[uncqual]

No it would be a government that is not directly controlled by this issue solving a classic game theory problem (prisoner's dilemma) by changing the rules to have a less destructive game.

For wealthy areas, the new game might be less "destructive" in some sense, but the new game would likely tend to condemn less wealthy areas to eternal poverty. The new game may also advantage the elite rather than the middle class and below in wealthy areas more than the current game.

A struggling city with high unemployment yet plenty of vacant (and perhaps even non revenue generating but revenue consuming abandoned and blighted land owned by the city/county due to tax liens) land has relatively few options to attract new business to allow the multiplier effect to return the area to prosperity. One of those options is to give preferential tax treatment to businesses who take a high risk by building a facility that provides jobs and, ultimately, more tax revenue. The decision to select this option is really up to the voters in the city/county/state just as it is up to them to set property, sales, business, and income taxes in the first place. Take that option away and it's more likely the city will wither away and die. This is great for real estate developers and land owners in the big cities as demand for their product increases because businesses have fewer incentives to expand in other areas. However as the cost of living as well as congestion rise faster in these big cities as a result, the middle class and below will be more likely to be hurt than helped.

Under a system where preferential tax treatment was not allowed, would a city also be banned from using general revenue to build a new sewer treatment plant and extending water, electricity, sewers, transportation and telecommunication infrastructure to an area in hopes of attracting businesses to the area with "shovel ready building pads" as that's as much of a subsidy as waiving property taxes for ten years for any company building a facility on that same land. Would California's expenditures on "High Speed Rail" count as a subsidy to new business and be banned -- after all, one of its selling points was to encourage higher value growth in the Central Valley so it would seem to be a subsidy to companies that then build new facilities in the Central Valley?

Attempting to restrict incentives such as state and local tax breaks would likely set off a scenario far more litigious and full of tricks than we see in trade wars between countries right now. If the regulations are light, they will simply be routed around. If they are heavy, the resulting issues will be decided by courts and constantly changing Federal legislation driven by lobbyists which will add uncertainty. After a few decades, the Federal regulations in this area could make the tax code look simple.

Re:Tax bullshit

[MightyYar]

OK, but that is a not a loophole unique to my proposal - it is happening currently. Don't hold it to an impossible standard.

Re:Tax bullshit

[MightyYar]

You can't win that battle. Corporations can afford massive finance organizations that will outmaneuver any government. The tax rate for corporations in the US is 34-35%. The EFFECTIVE tax rate in the US is 13-14%. Put it in the individual domain where an entire division of every corporation is not working against you. The only reason we allow corporations is efficiency - don't use that efficiency against yourself.

Re:Tax bullshit

[uncqual]

Idiots like you

A very compelling case you make there and here

bullshit propaganda

and here

idiotic stances

One knows that they have won the argument when the other party resorts to techniques such as ad hominem attacks. Of course, such a retreat is to be expected from one who thinks repeating "prisoner's dilemma" over and over rather than addressing real economic issues is a winning strategy. Have a nice day.

Re:Tax bullshit

[king neckbeard]

Ad hominem is only a fallacy if there is not a substantial argument to accompany it. I can and will undermine your argument and call you a cunt in the same post, and that's perfectly valid reasoning. Perhaps not polite, but politeness doesn't belong in political discussion, which by its very nature involves forces operating on an abominable scale.

Plus, you are merely repeating the ridiculous rhetoric of "job creators" that both parties have used to prop up an oligarchy in this country for the past few decades. I don't think it's necessary to write a doctoral thesis on why corporate welfare is bad, because tomes have already been written on the subject, and both conservatives and liberals are against such policies in the abstract (although the ideologically impure are okay with it in specific cases if it is in their personal interest). If corporate welfare is a good idea, sell the idea on corporate welfare. But that framing is incredibly unpopular, and for good reason. This is, without a doubt, an instance of corporate welfare, and if you support it, you support corporate welfare. That's why I insult your position, on top of briefly explaining the problems with it.

You and other keep asking why, and the answer is quite simple. This dynamic almost perfectly models a prisoner's dilemma, where cooperation is the most productive, mutual defection is the least productive, but mutual defection is the strategy that is at Nash Equilibrium. I'm sorry that this discussion isn't especially riveting, but its the game that applies best, it's the go-to example of the shortcomings of simple rational self-interest, and it's been established that the only winning move is not play. Since we have that move at our disposal, I support the obvious course of action that we use that move.

Re:Tax bullshit

[king neckbeard]

Take that option away and it's more likely the city will wither away and die. This is great for real estate developers and land owners in the big cities as demand for their product increases because businesses have fewer incentives to expand in other areas. However as the cost of living as well as congestion rise faster in these big cities as a result, the middle class and below will be more likely to be hurt than helped.

You just made my argument for me. Without these incentives, big cities can only expand so much before the cost becomes prohibitive. That's precisely why Amazon is building outside of Seattle. The cost of the land is going to be a factor, just as the tax incentives are, and the limited supply of land means that big cities can't maintain a grip other than having vastly superior infrastructure that overrides the costs of high population density.

Under a system where preferential tax treatment was not allowed, would a city also be banned from using general revenue to build a new sewer treatment plant and extending water, electricity, sewers, transportation and telecommunication infrastructure to an area in hopes of attracting businesses to the area with "shovel ready building pads" as that's as much of a subsidy as waiving property taxes for ten years for any company building a facility on that same land.

No, because unlike tax incentives, infrastructure spending typically does not have significant negative externalities. I'll be upset if my children don't have textbooks because our tax revenue has dried up, I'm not going to be upset that my streets are filled with sewage.

Re:Tax bullshit

[networkBoy]

It can't be zero unless you're actively subsidizing them out of tax revenues collected exclusively from people who have no connection to the new employer.

Which is what they do, whilst making the assumption that those funds are a "loan" that will be repaid by the employees of the company when they pay taxes. It's a game of three card monty, where the dealer has palmed the ace before even pulling the cards out.

Re:Tax bullshit

[vux984]

I think he's saying that beyond that 30k in cash, the value of the house above and beyond your "nominal" payments also qualifies as a taxable benefit.

There are lots of games.

When you own 'one house' it's a taxable benefit to live there on the company dime, but when you own several houses you still only need to pay taxes on one, and if you own your primary one outright, you don't even need much income to keep that one going (just utilities, maintenance, and property taxes). The rest can be owned by the corporation and structured as legitimate travel expenses paid for by the corporation, and not necessarily a taxable benefit when you stay in them. Especially if you put up other executives in the places from time time, or host visiting business partners, etc...

Re:Tax bullshit

[david_thornley]

I don't pay taxes so my local government can hand them over to a sport franchise.

I do. It's what killed my last enthusiasm for spectator sports. In one case, the Legislature passed a special law to allow the taxes to go forward without the normally mandatory popular vote.

Re:Tax bullshit

[david_thornley]

Depends on whether you're talking about "pro-business" in the sense of benefiting the business community, or "pro-business" in the sense of benefiting one particular business. Unfortunately, that distinction tends to get blurred.

Re:Tax bullshit

[david_thornley]

Nope. Business taxes are on profits, so instead of setting prices to maximize profit they set prices to maximize 0.7*profit (or whatever number). Since this is a linear relation, what maximizes profit maximizes 0.7*profit, so there is no effect on the customer. The taxes can't push a business into debt, because they reduce profit rather than impose debt.

Taxes on business operations rather than profit can result in increased prices, but corporate income taxes do not.

The people who ultimately pay the corporate income tax are the stockholders.

Re:Tax bullshit

[david_thornley]

The government provides a large array of services I use and depend on, and these services cost money. If some people don't pay taxes, then either other people pay more taxes or the government provides fewer and/or lower quality services. (This is completely independent of any question of government waste, which is usually immediately brought up by people fond of being jerking knees of the right wing.)

Re:Tax bullshit

[KingBenny]

sadly in business like in battle, there is now law ... you don't get to be the richest f-ck on the planet by being charitable and humane i'm afraid. In europe they have a different take. Companies flock to Ireland, then the union sues them for back-taxes while Ireland itself says "why ? we have no problem with it ...."
cf. Apple ... the difference between the paper union and the united lobbies as blatant as it gets

Amazonia

[PopeRatzo]

What is the capital city of Hell? I'll bet they have a diverse population.

Re:Amazonia

[halivar]

Only 266 people live there, so I don't imagine it's TOO diverse. But they have a cool hearse show every year.

Re:Amazonia

[93 Escort Wagon]

What is the capital city of Hell?

I believe it's in Atlantic City, New Jersey - directly under Reckless Ted's Funland.

Re:Amazonia

[sconeu]

Nah... That's just *ROBOT* Hell...

Race to the bottom

[rsilvergun]

Marx talked about this in his books but all anyone ever seems to remember about him is Stalin & Mao put his name on their Pamphlets... Not saying he was right about everything, but I think this one's a given.

Re:Race to the bottom

[alvinrod]

Any competition results in a race towards the bottom, or stated in a less judgmental way, a strategy that produces the best outcomes. You can't get around this unless you grant a monopoly to some entity and prohibit anyone from competing against them, but that has potential consequences of its own. See arguments against patents (software or otherwise), for example.

You probably don't or wouldn't complain about how this race to the bottom has enabled cheap computers, cellular phones, or any number of other goods and services that you're able to afford because individuals and companies are competing for your business.

Re:Race to the bottom

[Anonymous Coward]

> Any competition results in a race towards the bottom

No. There are two generic strategies: differentiation, and low cost.

You only race to the bottom in the latter.

Re:Race to the bottom

[ShanghaiBill]

Marx talked about this in his books

Karl also (correctly) predicted that it would become more common as interest rates fell toward zero. As the return on capital fades away, capitalists turn to rent seeking at the expense of the taxpayers.

but all anyone ever seems to remember about him is Stalin & Mao put his name on their Pamphlets...

Clearly Stalin and Mao are not what Marx intended, but they were the inevitable result of his ideology. His belief that the dictatorship of the proletariat would remain uncorrupted and "fade away" was completely absurd. Human nature doesn't work that way.

Re:Race to the bottom

[Luthair]

Clearly Stalin and Mao are not what Marx intended, but they were the inevitable result of his ideology. His belief that the dictatorship of the proletariat would remain uncorrupted and "fade away" was completely absurd. Human nature doesn't work that way.

You could make the same argument about democracy, its only worked in a handful of countries.

I think there is a fair argument that dictators didn't come out of Marx.

Re:Race to the bottom

[Shotgun]

How is low cost NOT a differentiator?

Re:Race to the bottom

[ShanghaiBill]

You could make the same argument about democracy, its only worked in a handful of countries.

Many dozens of countries economically improved after becoming democratic. Far fewer regressed.

I think there is a fair argument that dictators didn't come out of Marx.

Dictatorships can arise under almost any economic system. Hitler, Mussolini, and Pinochet all got along with capitalists. But capitalism can also thrive in free societies. There is no examples of Marxism doing that. In every instance, it has led to dictatorship, usually reinforced with personality cults.

Re:Race to the bottom

[ShanghaiBill]

Most communist regimes have come to power in revolutions

Most countries have had a revolution at some point in the past, and while most of them lead to dictatorships, those dictatorships often reform into democracies. But Marxist dictatorships have only been able to reform by disposing of the Marxism along with the dictator.

(Kerala's state government being the only example I know of)

There are three places that have fascinated Economists: Japan, Argentina, and ... Kerala.

Japan was the first non-Western country to because a 1st World economy, and it did so much faster than had ever happened before.

Argentina is the only 1st World country that has descended to the 3rd World. It moved backwards into poverty while the rest of the world was going up.

Kerala is just weird. It has high literacy, high education levels, low population growth, low infant mortality, clean government, and all the hallmarks of a rich and prosperous economy ... yet it is poor. Much of this may be due to a predilection for socialist policies, but even that doesn't really explain the economic underperformance. In recent years, Kerala has been doing better, and is now above the average for Indian states, but still far below what the economic indicators predict.
 

Re:Race to the bottom

[hai_Priesty]

None of the communist regimes achieved power through non-violent means, if I remember correctly. And almost all Communist regimes, if they do not significantly deviate from their original ideals (like market reforms post-Mao) run into big existential problems caused by basic resource allocation failure within 2 decades, some much faster, even before the almost inevitable corruption of the ruling elite that is caused by absolute power with no oversight. For that, hit-and-miss results of Democracy has been miles better than 0% hit by communism in the past century.

Re:Race to the bottom

[ebvwfbw]

Argentina did that because of the rise of Fascists, Didn't it? The Perone's (play AL Webber's Evita music).
BTW, What are you doing knowing what you're talking about on /.?

Re:Race to the bottom

[david_thornley]

Hence my saying that Karl Marx was half right. Many of the demands in the Communist Manifesto are routinely satisfied, at least in part, by most or all first world governments. However, the only Marxism I can support is the Groucho variety.

Amazon and Seattle

[Hylandr]

Pass Stupid Tax Laws, Win stupid Prizes.

With the new tax laws specifically targeting the wealthy this was not a surprise. It's more about clueless young people 'sticking it' to the men and women with the jobs and motivation to build much-needed infrastructure. I can't imagine a better example of cutting off your hand to spite your your fingers.

http://www.latimes.com/nation/...

Second HQ? Why?

[Anonymous Coward]

I think this is the first step in getting out of Seattle. There is no reason to have a second headquarters - it doesn't make any sense.

Detroit, no way

[Bruinwar]

...a million people, a diverse population, and excellent schools, yes Detroit has all that & then some.

But "among other qualifications" includes a good mass transit system... not even close. A proposal to pay for it went down in flames just recently.

Re:Detroit, no way

[Maser]

The current proposal may be a joint proposal with Windsor Canada which makes a lot of sense to have a better "international" border.

But yeah, I can see the lack of mass transit potentially killing this even though Detroit is on a rebound, etc...

Re:Detroit, no way

[Bruinwar]

Detroit (Proper) does not have a million people

Correct! But Metro Detroit has almost 4 million. Plus a full sized airport. Ann Arbor is commuting distance. No mass transit. But Bezos might not care.

Re:Detroit, no way

[Bruinwar]

Metro Detroit, of course.

oops

[supernova87a]

Too bad Wisconsin already blew its load on attracting factory jobs that require manual labor and will never earn more than $50,000 per year. (minus the $7,000 they pay every year per job)

Government as beggars.. pitiful

[fustakrakich]

It's more dehumanizing than applying for a job.

Mayor of Washington DC is "Bowser"?

[xxxJonBoyxxx]

>> mayor of Washington D.C., Muriel Bowser

The current mayor of Washington DC is "Bowser"? After Marion Barry, I don't think anyone is sure whether the leaders of the city or the voters are kidding anymore.

Just say no

[boudie2]

Given what we all know about amazon, who would want to work for them? And if you wouldn't want to work for them, why would you want to buy anything from them? They're too big already.

Just put it in Lebanon Kansas

[fustakrakich]

It's equally convenient to both coasts.

Re:Just put it in Lebanon Kansas

[OrangeTide]

Being maximally inconvenient to either coast doesn't mean it is convenient. Seriously have you ever tried to get fresh seafood in Kansas? It's no where near the coast. (freshwater trout is plentiful though, but that's not going to make good sushi)

Re:Just put it in Lebanon Kansas

[OrangeTide]

Did you just call me a witch?

Re:Just put it in Lebanon Kansas

[nitehawk214]

One of the criteria was that it was near an airport with a non-stop flight to Seattle. Which really makes no sense, why move if you are going to be shuttling back and forth all the time.

My guess is this is a first step in moving the entire company to a cheaper location. A city that is so desperate that they will get to be entirely tax free for the company.

Legal

[itamblyn]

How is this legal? Shouldn't WTO or trade agreements make this kind of government subsidy impossible these days?

Re:Legal

[cayenne8]

How is this legal? Shouldn't WTO or trade agreements make this kind of government subsidy impossible these days?

WTF should the WTO or external to the US body have anything to say about what business happens within a country's borders? They have nothing to stay about what happens within a US state and a private entity.

Re:Legal

[hipp5]

How is this legal? Shouldn't WTO or trade agreements make this kind of government subsidy impossible these days?

WTF should the WTO or external to the US body have anything to say about what business happens within a country's borders? They have nothing to stay about what happens within a US state and a private entity.

Except its effects go beyond state borders and the private entity. When you make a deal with a corporation like this, you are subsidizing them, which alters their competitiveness with other companies in countries with whom you have trade agreements. And many trade agreements frown upon this.

In my province the regulated power utility cut a deal with the pulp mill to sell them cut-rate power, because the utility knew discounting their power was better than them going bankrupt and losing them as a customer altogether. Mills in Maine complained to the NAFTA tribunal. Now there's a big tariff on products from that pulp mill.

Re: Legal

[itamblyn]

If only that were true. Modern trade agreements have lots of rules about "internal" issues

Re:Legal

[david_thornley]

The WTO is concerned with government subsidies or tax breaks to businesses, considering them unfair. The distinction between state and federal law doesn't matter outside the US.

Where [Re:Tax bullshit]

[Geoffrey.landis]

[...] there should be federal law banning the practice outright.

Where in the Constitution is Congress granted the power to set state and local tax policy?

Since this is about interstate commerce, that would be Article I, Section 8, Clause 3.

Re:Where [Re:Tax bullshit]

[bhcompy]

If that was the case local tax rates would be illegal(including differences like some states having no property tax, sales tax, etc), Delaware wouldn't be a corporate liability haven, and East Texas wouldn't be an IP troll haven. Congress has no power to enforce what you are talking about.

Re:Where [Re:Tax bullshit]

[deKernel]

That is to regulate the commerce, that has nothing to do with telling state/local entities how it wishes to tax such item. The Commerce Clause has been so abused through the years it it has become the catch-all for the Federal government to get it's fingers into areas where they should not be involved.

Re:Where [Re:Tax bullshit]

[vux984]

Not really.

There is a big difference between tax incentives to a specific entity to lure it from state A to state B, and the overall tax regime universally applied within a state.

It would be easy to target one while not touching the other.

Re:Where [Re:Tax bullshit]

[MountainLogic]

While having a zero chance of passing, congress could tax as income these local shakedowns/giveaways as to make them ineffective.

Re:Where [Re:Tax bullshit]

[deKernel]

But there is nothing illegal about the movement...PERIOD so why do the Feds need to be involved. If a state/local governments want the business, then let them make the deal if it makes sense to them. It doesn't matter if it is a farmer that wants to sell a single bushel or a billion dollar company.....size of the transaction does not matter.

Re:Where [Re:Tax bullshit]

[deKernel]

And where is the justification other than you feel is it OK to "screw the business" because they are shopping around. Let me guess, when you go to buy something substantial like a car or a house, you just take the first offer as-is and don't compare shop. If you do, then you are a fool and if you don't, then why don't business's have the same right?

Re:Where [Re:Tax bullshit]

[that this is not und]

Because government is supposed to regulate things. Even if it isn't practical to regulate them, the framework needs to be there, to satisfy the kind of people who think government needs to regulate everything. In case government feels like it later on.

Re: Where [Re:Tax bullshit]

[ArmoredDragon]

A state has the right to set its own tax code, and that includes granting special exemptions to industries, people, companies, etc. Congress absolutely cannot touch this, and it's foolish to think otherwise.

Re:Where [Re:Tax bullshit]

[deKernel]

No, it is not "suppose" to. I has some granted powers but this goes above and beyond the very vagueness of the statement. Just because they can doesn't mean they should. There is no harm being done here. It is a state negotiating with a business to do business in that state.

Re:Where [Re:Tax bullshit]

[uncqual]

Is Amazon shipping their HQ across state lines? I doubt it. If they are producing headquarters in one state and shipping the assembled headquarters to other states for sale to consumers or independent third parties, I stand corrected as I didn't see that in Amazon's statements.

Of course, the reality is that the Federal Government in the past 100 years has stepped way over the boundaries of what they have the power to do according to the United States Constitution.

In 1920, less than 100 years ago, the Eighteenth Amendment to the United States Constitution was passed to implement prohibition. That's downright quaint by today's standards where the Congress could simply ban alcohol production (possibly the FDA could do it without the help of Congress depending on the exact wording of the statutory law creating and "empowering" the FDA and on the luck of the draw of which judges end up interpreting those statutes).

Re:Where [Re:Tax bullshit]

[Euler]

And at least that was an amendment, which by definition is constitutional.

Re:Where [Re:Tax bullshit]

[uncqual]

Yep - and that's what should have been required for much of what the Federal government now has taken control over.

Re: Where [Re:Tax bullshit]

[king neckbeard]

While I'm not a fan of it, we've already got a precedent of "do what we want or we'll deny you important federal funds.' So, if states try to have a subsidy race-to-the-bottom and unfair taxation practices, then no money for roads. That's completely legal under current case law, so now the conversation is whether or not we should. A prisoner's dilemma creates a vicious cycle, so we should stop it, one way or another.

Re:Where [Re:Tax bullshit]

[king neckbeard]

Circular logic. It's legal precisely because the government hasn't done anything. If the government makes those deals illegal, it's not legal anymore. As for why, it's because it represents a well known game with a strongly negative Nash equilibrium. All players gain a net benefit by removing the option to defect. This is precisely the kind of thing that government or rules are actually useful for.

Re:Where [Re:Tax bullshit]

[king neckbeard]

Because it prevents a prisoner's dilemma, benefiting all players. Same reason that sports professionals aren't allowed to take steroids, even though they otherwise maintain autonomous control of their own bodies. Also, the same reason that tobacco companies are limited in their advertising (something the industry lobbied for).

Re: Where [Re:Tax bullshit]

[ichimunki]

There is no legal obstacle to Congress passing such a law. It would stand just as easily as drug prohibition and a host of other freedom-limiting federal laws. The Commerce clause can be used to nullify just about anything a state wants to do. And if that doesn't work, there's always the millions of other strings the Feds could pull to accomplish the same goal. The only foolish thing to think here is that Congress would actually care about this enough to try making a law. There isn't a single state in the Union that wants to be prohibited from bribing big business into (re)locating there. Even in places where companies should be begging for the chance to locate, the people fall for this scam over and over again. Politicians on both sides of the aisle want to feel and look important by bringing jobs to the area. People living in an area perceive their job market more positively if there are a number of large employers with posh campuses around.

Re:Where [Re:Tax bullshit]

[MountainLogic]

Perhaps I was not as clear as I should have been: if a business negotiates a custom sweet-heart deal just for their business that other business at that locality do not have access to then yes that should be seen as income and taxed. If on the other hand a company chooses to move to a low services/low tax location and is taxed at the same rate as other businesses at that location then good luck to them. They'll need it finding qualified workers.

Re:Where [Re:Tax bullshit]

[david_thornley]

If I have a corporation pay for my house or car, that's counted as personal income to me, and I pay taxes. Tax breaks to businesses could be seen as income to the business, and the business would be taxed accordingly.

Re:hah, DC my ass.

[wired_parrot]

Given that Jeff Bezos owns the biggest house in Washington, as well as the biggest newspaper in DC, clearly the CEO of Amazon wants to be in Washington, DC. And his personal preference may well be the most important opinion in the relocation committee.

Amazon's next HQ should be in HELL

[MyrddinBach]

http://splinternews.com/amazon...

Montreal would be best choice

[McCaskill]

Very low electricity bills ( like 4 cents per kwh), many universities, close to an almost unused international airport (Mirabel). This airport is dedicated to cargo traffic, etc...

Re:Montreal would be best choice

[Obfuscant]

And every package going to the US subject to US customs inspection and confiscation, and potential tariffs ... it's a win/win!

Re:Montreal would be best choice

[Luthair]

Fortunately HQ2 will deal in packets and ideas, not packages.

Re:Montreal would be best choice

[nitehawk214]

This is their corporate offices, not a warehouse.

But its the same problem, executives and employees moving between their 2 headquarters would have to go through international flights. And some percentage would be moving to the new location. I doubt any amount of government subsidies would make that worthwhile.

Just Wait

[jsrjsr]

Wisconsin GOP will find a way to spend even more money on corporate welfare -- and I think the Dems are mad they didn't get to do it.

ultimate tax dodge?

[rogoshen1]

What would stop a company the size and scope of amazon from building a platform in international waters, and use that as their headquarters?

Seems like it would be the next step in corporate evolution.

Re:ultimate tax dodge?

[sexconker]

Pirates, I'd imagine.

Re:ultimate tax dodge?

[Anonymous Coward]

Pirates. In international waters you're not under the national security of any government. As such, no military is obligated to help you. You'd be responsible for your own defense, and this can become quite expensive.

Toss in all the other infrastructure and plus keeping it floating during a storm and it becomes very difficult. Also, I imagine staffing it would be quite difficult. Oil rigs aren't exactly known for their wonderful quality of life, I don't see how this would be better.

Re:ultimate tax dodge?

[dmatos]

Probably the isolation pay they'd need to shell out in order to get people to work on that platform.

Re:ultimate tax dodge?

[notea42]

Yeah, that would be a terrible commute - >12 miles by ferry each way, every day. Admittedly, there's often less traffic to deal with, but you don't tend to get seasick on the Interstate on a regular basis. It's probably not worth doing until you can virtualize most of your workforce and make them telecommute. Even then, it leaves you reliant on a network and power bridge to the mainland, which is not cheap. It does fix your cooling problem somewhat - the ocean is a decent heat-sink.

Re:ultimate tax dodge?

[rogoshen1]

Your post made me think..

The thought of having his warehouse workers semi trapped on an island in the middle of nowhere would probably give Bezos such a frighteningly powerful erection that he could launch his blue origin rockets by simply unzipping his pants.

Doesn't help much with the office drones though.

First, they need a pool to draw top talent from

[bwanagary]

That means great colleges.   It will likely need to be on, or close to, the east coast.  It will have to be corporate tax friendly.  It will need to be easily accessible domestically and internationally - great airports.  They won't want to fish in the same pond as Google, Microsoft etc. for talent - drives up their labor costs.  It will need great communications infrastructure (networking, roads, power ...).

Corporate Giveaways...

[rnturn]

Like they need them.

Wisconsin gave a multi-Billion incentive to Foxconn to locate there. That doesn't include the pass they'll receive in environmental regulations so the vicinity can expect some local pollution. Sweet deal. For Foxconn.

What will Amazon be demanding once they select some sucker^Wcity to be their second headquarters?

if Amazon is not more careful as to who

[FudRucker]

it allows to sell products through its Amazon.com web portal it could become as untrustworthy as ebay, i notice a lot of crap products on amazon the last couple of years, and it is gradually getting worse,

Yay! A Nuclear Gentrification Bomb!

[GameboyRMH]

The vast majority of whichever city is saddled with Amazon's new campus is going to be worse off for it, as they'll be getting the shitty end of the gentrification stick. Wealthy workers don't tend to patronize average local businesses, they aren't fancy enough. They shop from high-end local businesses (this very much includes small artisan shops) or order from distant ones, worsening inequality further.

Also I predict that Amazon won't stray from the usual list of tech hotspots - NY, Austin. Boston, SF. Maayybe Toronto. Don't expect any surprises that might act to relieve this damaging concentration of tech jobs.

Re:Yay! A Nuclear Gentrification Bomb!

[Shotgun]

Bwhahahaha!!! Well, boo-fuggin-hoo!

Well, maybe the people working at the new high-end shops can buy from the average local shops, but I'm among what would be considered one of these "wealthy workers" and I still price hunt like a hound dog.

Re:Stay away from Montreal please

[ceoyoyo]

Don't worry, if Amazon moved 50,000 employees to Montreal, they would all have to speak French (at work at least).

Also, they would have to change their name to Amazon: La Librarie.

Re:hah, DC my ass.

[Macdude]

Given Jeff's "offices" are in Seattle and he just bought a home in DC -- I don't think he cares values living close to work.

Detroit? ha ha

[ewhenn]

"The tech giant is searching for a locale with at least a million people ..... and excellent schools...."

Yes, when I think Detroit I think excellent schools, bwahahahahaha.

Re:Detroit? ha ha

[Tempest_2084]

The city of Detroit? Yeah not so much (they seriously couldn't get much worse). The surrounding Metro Detroit area where the population actually lives? Very much so.

It's not a positive if the cash insentives

[rsilvergun]

are more or even the same as the employees salaries. At that point all you've really done is have your city borrow a few billion dollars and give it to a corporation. Heck, it's worse than that, since they got labor on top of that. That's exactly what's going down with Wisconson's Foxconn deal. The question is will another city/state do the same (and stick the tax payer with the bill for their business expenses, which will eventually have to be paid when the bonds come due).

Re:It's not a positive if the cash insentives

[RightwingNutjob]

I really don't understand how you can refer to hiring locals in exchange for wages and salaries as "being given labor." I might add that in the case of mid-skill jobs in Wisconsin, Foxconn might actually be taking people off of state benefits, even if they pay no taxes.

Private companies create wealth. Making widgets where there were none before creates wealth. Making software where there was none before creates wealth. How hard is that to understand?

Re:It's not a positive if the cash insentives

[king neckbeard]

Private companies hire employees because they get more benefits from them than the cost of hiring them. Thus, there is no need to incentivize these companies, because they are engaging in theoretically mutually beneficial deals. Thus, anything that is given to them to entice them is an unnecessary wasting of a resource, and efficient allocation of resources is the bulk of the argument for capitalism.

Re:It's not a positive if the cash insentives

[ichimunki]

Perhaps if you stop substituting your political rhetoric for actual analysis you will understand what many of the people you're responding to are saying.

San Diego

[ravnous]

I'm guessing the hepatitis outbreak isn't helping our cause

Amazons taxes do not matter.

[Dishevel]

Who gives a fuck.
The thing is if you can create 50k jobs in your area, you are doing well.

50,000 people paying income tax, property tax, sales taxes.
All that money being spent needs new and expanded local businesses to spend it at.

If I owned ran a city, I would all Amazon to build a headquarters there and employ 50,000 people and pay zero property tax for their entire existence.

Northern Virginia/College Park MD

[Isaac-Lew]

Northern VA meets most of the requirements: large & diverse population, public transportation, proximity to 2 major airports (3 if you include BWI), good schools, large talent pool to draw upon, lots of other big companies (Mars, Nestle USA) and organizations (Consumer Electronics Association,Grocery Manufacturers Association).

The downsides: the cost of living in general, and housing in particular. Also, you can forget building a sizable facility anywhere close to DC in that part of Virginia at a reasonable cost.

There are some articles saying that College Park, Maryland is putting forth a proposal. It's cheaper to live there, the demographic is younger & there's room to build & expand a headquarters, but the school system sucks (unless your child(ren) is/are in a private or magnet school).

I hope they pick LA...

[Nicolas Cage]

I fucking hate LA.

Three things to consider

[WillAffleckUW]

1. Having a Canadian city means if they have H1-B or other visa problems, they can work in North America in the interim. Unlike the FamilyIsEverything USA, Canada prioritizes highly educated English and French capable people for visas, so it's not a big deal. This would mean Vancouver, Calgary, Toronto, Montreal and Gatwick are all prime locations.

2. Seattle itself could easily handle the growth. For example, you could just upzone Crown Hill in Ballard to be 40-100 story MFH (apartment/condo) buildings and allow commercial arterials to go 40-100 story as well, provided you fast track an E-W light rail link from Northgate (where the light rail ends in 2021) and maybe extend the monorail from Seattle Center to Crown Hill via a switch bridge. Most employees who get options won't be paying any local Seattle income tax, unless they're really stupid.

3. Whatever city other than these is included will need a high speed rail link. Not Accela, a real high speed rail like Vietnam, China, Japan, and the EU have. So anyone planning to get Amazon II will need to bash their legislature into order fast. Nobody cares what your excuses are, just what you can deliver.

No chance it will be a Red state

[erp_consultant]

Bezos hates Trump. Trump hates Bezos. So you can immediately discount Arizona, Wyoming, and Alabama. Florida is out - too many natural disasters. Same goes for Louisiana. In the Northeast the taxes are too high and land is expensive, although they have a highly educated population. Lots of tech companies in Minnesota but brutal weather and high taxes.

My guess is that it ends up in Austin. Conservative state (well, Purple State) but a liberal city and that suits Bezos' politics. Low taxes. They can poach potential employees from Dell. Relatively low cost of living. Abundant amounts of cheap land. A state government that is friendly towards business.

If they end up in Texas it will be Austin - bet on it.

Re:No chance it will be a Red state

[will_die]

Austin has already been discounted by the people following this because the traffic is worse than seattle, public bus system is bad and lack of a good international airport

Miami or Los Angeles

[Reverend Green]

How about a city with warm weather and nice beaches, like Miami or Los Angeles? That would make working for Amazon a lot more appealing.

Amazon HQ2 in St. Louis?

[eric_harris_76]

Recent (and currently on-going) civil unrest over the legal system's failure to punish a cop for treating his badge like a hunting license may cost the St. Louis metro area the Amazon "second headquarters.

Good.

Times two.

When governments tax existing small and medium-sized businesses more to grant tax breaks to big firms to locate in (or not move out of) a state or city, it's not good for the local economy. http://duckduckgo.com/?q=the.s... The jobs "created" or "saved" are conspicuous. The jobs at smaller employers that are lost or never created in the first place are not.

That's one. And the second reason?

If those who are upset about how people react to cops misbehaving as usual get upset enough, maybe they'll do something constructive about it -- like having someone other than cops and prosecutors investigate and prosecute incidents where cops kill people.

"We investigated ourselves and found we did nothing wrong." is a bad idea even when it turns out to be true. It diminishes the credibility of the decision even when it's correct.