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.

[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."

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

[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

[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

[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

[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

[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

[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.

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)

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: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.

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.

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?

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: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.

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.