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Cities' Offers For Amazon Base Are Secrets Even To Many City Leaders (nytimes.com)
The location for Amazon's second headquarters is shrouded in secrecy, so much so that many city leaders are unaware of the financial incentives their cities used to entice Amazon (Warning: source may be paywalled; alternative source). The New York Times reports: Across the country, the search for HQ2, as the project has been nicknamed, is shrouded in secrecy. Even civic leaders can't find out what sort of tax credits and other inducements have been promised to Amazon. And there is a growing legal push to find out, because taxpayers could get saddled with a huge bill and have little chance to stop it. A primary reason for the information blackout is that, in many cases, the bids were handled by local private Chamber of Commerce affiliates or economic development groups that aren't required to make their negotiations public. Many of the groups are also not covered by Freedom of Information Act or state open-records requests.
But another reason is gamesmanship. Some cities say they want their Amazon proposals to remain confidential to avoid showing their hand to rivals. And Amazon required the finalists to sign nondisclosure agreements that forbid the local groups to release proprietary information about the company. With so much secrecy -- and bids like Austin's that involve unelected officials making promises -- there is the risk that taxpayers and their civic leaders will be forced to accept the proposed terms or live with turning down an enormously lucrative opportunity. Amazon, which is expected to make $235 billion in revenue this year, promises to bring the winning location up to 50,000 high-paying jobs and a $5 billion investment in construction.
But another reason is gamesmanship. Some cities say they want their Amazon proposals to remain confidential to avoid showing their hand to rivals. And Amazon required the finalists to sign nondisclosure agreements that forbid the local groups to release proprietary information about the company. With so much secrecy -- and bids like Austin's that involve unelected officials making promises -- there is the risk that taxpayers and their civic leaders will be forced to accept the proposed terms or live with turning down an enormously lucrative opportunity. Amazon, which is expected to make $235 billion in revenue this year, promises to bring the winning location up to 50,000 high-paying jobs and a $5 billion investment in construction.
In my city, different chamber of commerces can promise whatever they want. The city is not bound to respect those promises. If city officials do not want to respect those concessions, I doubt they have to. Then Amazon can move down the list to another city, which likely will.
If I were Amazon, I would accept promises from all finalists, start with the best promises, and negotiate all deals in parallel. Then, it's possible to use concessions from one party against another party, even out of context. This is probably what Amazon is going to do, since they have people that have studied game theory more than I have working for them.
This is pathetic, we live in a society where we need to beg corporations to open offices and employee us! What a privilege it must be to have a job! To have the opportunity to trade our most precious commodity, time, for money!
The whole scenario has become very much like the selection process for cities to host the Olympic Games. I'm sure there are similar promises of cash, drugs, whores, and other illicit items behind those closed doors too. It's sad because though a city might "win," it sure looks like its taxpayers will get fucked for a long time.
...promises to bring the winning location up to 50,000 high-paying jobs and a $5 billion investment in construction.
50,000 additional drivers adding to congestion on the streets and freeways? 50,000 jobs that perhaps need 50,000 more units of housing stock that don't exist yet, and which will drive up housing prices until the gap is closed. You can't build 50,000 houses and apartments overnight.
Hey, don't get me wrong. I'm all for the idea that jobs adding lanes to the freeways will be created. And other jobs building those houses and apartments. And if I lived there I'd love the idea that the value of the home I already own going up (even though it's not worth anything until someone else buys it.) But don't think that all those good things don't come without a lot of bad, or at best neutral, things.
Personally I'm pretty glad that "my city" dropped out of this race to the bottom. If the winning city gives tax concessions that result in the locals paying for all the infrastructure improvements while Amazon and Bezos laugh all the way to the bank then they have my sympathy on one hand, but also my disdain on the other for being so stupid.
If you ask me, the smartest thing all these cities could do would be to walk away, en mass. Let Amazon pick a city based on what it needs and the individual merits of the candidate city. And then the city that "wins" will have the power to say "Okay Amazon, here's what you're going to need to do if you're going to bring 50,000 new jobs into this city.
But they won't.
Right. If anything of substance happens and I can't get the records then a call is going in to the AG to enforce the FOIA. Everything the government does that produces records is due to me on request.
I object to power without constructive purpose. --Spock
in America due to a Supreme Court ruling (Citizens United) political corruption is explicitly legal. Money is speech here and virtually all campaign finance laws get shot down as a result (despite literally centuries of case law to the contrary).
Thanks to our right leaning SCOTUS we're pretty boned for at least the next 40 years. Maybe longer.
But you're right about one thing: it's exactly like the Olympics. The last thing on Earth you want to do is 'win' the right to host it. It's going to be a giant Albatross on the neck of anyone who gets stuck with it. Just like that damn Foxconn factory in Wisconsin. I like how it's not socialism when you give billions to a company in cash subsidies and tax breaks and they pass a little on to the employees (who are then mercilessly taxed).
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They do not. A binding agreement must be signed by the city's executors of course.
I object to power without constructive purpose. --Spock
How about this instead, all should be treated equally under law and that includes taxation laws. If those fuckers can get local and state tax exemptions, why the fuck can't the rest of the population get them, hardly fucking equal. I want federal laws that ban tax holidays for tax cheats that pay offshore tax haven bribes to local and state government politicians and political appointees. It should be fucking illegal under law because it treats them differently, it taxes the richest the least and the poorest the most, how fucking corrupt is that.
Laws, one in all in, all pay tax at the same rates on the same income, property tax at the same rate for the property value. No insurance subsidise for underwaterfront property, you got you sick psycho jollies from excluding the poor from the beach, now sink with it.
As for tax havens, fuck em, bankrupt them, kill their currency and ban all repatriations of cash from those locations. Force that stolen income, stolen from the taxes we have to pay, into the local valueless currency. Do no know destroying all the money in tax havens, actually makes all the money outside of tax havens worth much more. Destroy the tax havens, lets see laws with real bite.
One set of tax rules, no fucking cheating, earn more, pay more because you fucking cunts, you are getting a bigger reward from society, so you should pay more.
Chaos - everything, everywhere, everywhen
This race to the bottom will only be stopped by Federal laws against special exemptions. Amazon is big enough without special perks thank you.
Exactly, from the article.
“The only time the public may become aware if the city has promised Amazon incentives is if we win and then we need to get those incentives passed,” Mr. Evans said.
These groups can promise all they want, they don't write tax codes or spend government money. And one thing Amazon doesn't want to do is award to a city and then not have it pass.
I'm certainly not against economic development, but don't become a serf to corporatism.
"The quality of life is determined by its activites."--Aristotle
Reason TV's got this one covered.
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We'll give you the exact same deal.
You spend $5 billion developing local real estate and provide 50,000 high paying jobs here in Dallas, we'll make it easier for you to bring $5 billion here by deferring the property taxes for a few years.
I understand where you are coming from.
Like it or not, other cities WILL encourage investment and jobs by waiting on the property taxes, so unless YOUR city does the same, or is otherwise very attractive, your city won't get the 50,000 jobs. Fortunately, it ends up working out well most of the time, which is good because there is no way to make it illegal. Congress shows us why.
Congress of course passes thousands of pages of tax law. Taxes vary based on hundreds, if not thousands, of factors. The government can of course set different tax rebates and such for base load power plants than for companies who talk about one day making solar panels. Without a Constitutional amendment, it's legal to say solar power companies get a 250% tax credit. Unwise maybe, but perfectly legal. They can institute a tax on building new buildings, or a tax credit for building new facilities. Perhaps building a new factory over 100,000 square feet gets you a $500,000 tax credit.
Following that line of thought, if they can give solar panel companies a negative tax, and they can hand out a tax credit for new construction, they can of course write a tax credit for "solar panel companies who build new factories" (no actual production of solar panels required).
One could intelligently argue that it should be a flat, equal tax for everyone. That would mean deleting 99.99% of the tax code. One could also intelligently argue that the government may make the tax laws arbitrarily complex. What doesn't make sense is to say "it should be illegal for them to write various different rules, for different situations, except for all the ones I like. It should be legal to give billions to companies who have "green" or "solar" in their name, but illegal to allow natural gas companies to deduct their expenses just like every other business in the country". Make sense? Either they can make complex tax law, favoring some groups, or they can't.
Congress passed a law with special treatment for "recycling companies founded in 1913 in Kenosha, Wisconsin". Of course, there was approximately one family owning company which met those conditions. Shockingly, that family had donated a bunch of money to the Congressman who wrote the clause.
If the government can make different tax laws for different *groups* of people or companies, if they can favor any group or industry, they can combine those to favor arbitrarily small groups, down to single individuals or companies.
Either you have a flat tax where everyone pays the same rate, or you let the politicians decide who pays what. They're clever enough (or their donors lawyers are clever enough) to write the rules to benefit the particular donor if you let them write the rules at all.
The same deal doesn't mean the same tax breaks for small businesses, it means no tax breaks for anyone. In general it's good to encourage both small and large businesses to set up shop in your community, and that does mean different things for small businesses than it does for large ones, but let's have clear rules about that rather than leave it open for negotiation. Because not everyone benefits when a large company sets up shop with the help of generous tax breaks, there will always be others, large and small, who have to compete with them. Give ALL large businesses a break on property tax, and give ALL small businesses an exemption when the burden far outweighs the benefit.
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
Wait, up to 50.000 high-paying jobs? All I see are stories about how Amazon underpays their employees and how being a warehouse worker is dreadful. So, define high-paying I guess?
Why is that a problem? Amazon wouldn't be in the second or third round of negotiations without that offer so the city would be out nothing they were not prepared to lose.
Yes there is a problem with this model though. Eventually HQ moves somewhere else. Ask the folks in Wilkesboro about the impact of Lowe's moving to Moresville for example.
When you have one player representing to big a slice of your towns economy you have a recipe for implosion. Property values spike and existing owners make out until said corp leaves. Than you have a lot of people left holding property they can't sell. Nobody will buy a home in a place they can't get a job. In the mean time the town is left with large areas they need to keep under fireprotection, lots of roads, out sized school buildings etc; that they no longer have the tax base to support. So tax rates stay high putting even more downward pressure on the property values.
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They're idiots if they don't setup in Toronto. More tech workers there now than in Silicon Valley, at a fraction of the wages, with a far less litigious civil system, while being outside the reach of US law makers and the biggest fish in a relatively small pond.