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.

Comments

Unelected Officials Usually Not Authorized to Act

[brian.stinar]

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.

Pathetic

[fastAlan]

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!

Re:Pathetic

[MightyMartian]

Shopping around for factory sites has been going on for a long time. Obviously it's in commercial concerns' best interests to extract the best deal they can get. Heck, Ireland was pulling the same stunt with the entire country, using its status as a member state of the EU and coupling it with a low corporate tax rate, giving big tech firms the EU headquarters they needed along with a willing partner in laundering profits made in the Common Market through what amounted to a nation-wide tax haven. Obviously this went against the spirit of the Common Market, and the EU has shut it down and ordered Ireland to collect the taxes it should have been all along, but sadly such mechanisms don't exist everywhere. It certainly happens in the US and Canada, where pressure is put on state/provincial and municipal governments to drop the tax revenues down, and of course, governments will extract these commitments to do blah blah blah for lots of years, but when it becomes convenient to pull up stakes and move to another jurisdictions even more willing to whore themselves in the race to the bottom, they'll walk anyways.

Re:Pathetic

[youngone]

That's exactly Hollywood's business model. They've been screwing California out of taxes for generations.
They have also bilked my country out of something like $375 million (local dollars) over the last 15 years or so, even though nobody can actually determine that we get any sort of return on that "investment".
The last time Warner Bros. threatened to take a movie away from us, our government gave them $50 million extra and altered the employment laws to prevent local workers from taking industrial action if they didn't like the work conditions.
Apparently there are "jobs" involved.

What else does it promise to bring?

[Anonymous Coward]

...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.

Re: Unelected Officials Usually Not Authorized to

[rtb61]

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.

race to the bottom

[liquid_schwartz]

This race to the bottom will only be stopped by Federal laws against special exemptions. Amazon is big enough without special perks thank you.

Re:I doubt they'd bother

[lgw]

in America due to a Supreme Court ruling (Citizens United) political corruption is explicitly legal. Money is speech here

You should actually read the decision, rather than repeating falsehoods. Citizens United said nothing like that. I don't know how that sad meme got started, but it just makes you look foolish to repeat it.

The Citizens United ruling said that closely held corporations have the same rights as partnerships - if a small group of people want to pool their money to engage in political advocacy, it doesn't matter whether they incorporate or not. The First Amendment is pretty clear about the right of the people peaceably to assemble, and to petition the government.

Nothing at all to do with public corporations.

And have you really thought through your "money is speech" rant? Jeff Bezos can buy the Washington Post if he wants his voice to be heard. You can buy an ad in the Post. Do you really want it to be legal for Bezos, but illegal for you? You think that will help?

A Bad Deal for the Community

[Amigori]

If I were running a small to mid-size community, there is NO way I would have bid for HQ2. Why?

1. That's alot of tax dollars in one corporate basket. They will do anything and everything to reduce that as close to zero as possible.
2. Infrastructure costs. Sure the initial construction boom in roads, utilities, housing, and shops is a boon to the community. But long-term costs are never included, and the negotiated tax breaks/incentives will reduce any available cash down the road. Especially when $company packs up and moves one town over for a new round of tax breaks.
3. City Government costs. An influx of 50k people will up the amount of government workers. Fire, Police, Parks, all have overhead costs that are direct costs to the tax-payer. Again, long-term costs.
4. Lower Tier suppliers. Around Detroit and the automotive and manufacturing areas, there is a large manufacturing base of Tier 1, 2, 3, etc. companies. They make components, subcomponents, and tooling, along with maintenance, transportation, and logistics. And that doesn't even include all the service and support companies that workers rely on, i.e. restaurants, gas stations, grocery stores, and so on. A 50k employee HQ2 compound doesn't come close to the same economic impact. Why?
5. The lower Tier companies just aren't there. Some services, janitorial, food prep, etc. Sure there's transport and logistics around Amazon's warehouses, but that's not what we're talking about here.
6. Who buys more groceries, gasoline, autos, housing, household goods, clothing, etc.: 1, $200k salary single person; or 4, $50k salary families?
7. Corporate cafeterias: As noted in a recent Article, local eateries lose business to the Company Store. And potentially any other stores the worker may walk by at lunch.
8. Plus, the usual subjects: traffic, real estate, urban sprawl, schools

I'm certainly not against economic development, but don't become a serf to corporatism.

The Washington, DC way of doing it

[raymorris]

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.

Re:I doubt they'd bother

[pots]

The relevant line from Citizen's United is: “independent expenditures do not lead to, or create the appearance of, quid pro quo corruption.” By this, the court was indicating that quid pro quo corruption was the only kind of corruption which qualified as corruption. The fact that the decision was not really about this, but was rather about yadda yadda doesn't matter. This sets the standard for what corrupt acts are prosecutable in court within the United States.