Cities Are Competing to Give Amazon the 'Mother of All Civic Giveaways' (vice.com) 276
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.
New York Times wrote about this last week. (Score:5, Informative)
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Not mentioned in the article, but Denver is a lot more central to the rest of the country.
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They figured Denver to be the best spot https://www.nytimes.com/intera... [nytimes.com]
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 u
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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 — outdoo
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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-
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Tax bullshit (Score:5, Insightful)
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 (Score:4, Insightful)
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 (Score:5, Insightful)
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.
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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 i
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Re:Tax bullshit (Score:4, Insightful)
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.
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"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
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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.
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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 cor
It's not a positive if the cash insentives (Score:5, Insightful)
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Re:Tax bullshit (Score:5, Insightful)
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 (Score:5, Interesting)
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.
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Would you also tax corporate capital gains?
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No - it would just be "income" and I wouldn't tax corporate income. Get it on the way out.
Re:Tax bullshit (Score:5, Insightful)
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 (Score:4, Insightful)
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.
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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
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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
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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.
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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.
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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.
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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.
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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.
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Last week, 15 mod points. Today with your post, nopne. +5000 to you
Re:Tax bullshit (Score:4, Insightful)
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 [wikipedia.org] 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.
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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 i
Re:Tax bullshit (Score:5, Insightful)
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.
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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.
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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.
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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.
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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.
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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
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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 su
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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,
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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.
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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.
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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.
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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.
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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!
Where [Re:Tax bullshit] (Score:3)
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.
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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.
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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.
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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
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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 (Score:4, Informative)
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.
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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.
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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,
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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.
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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 welfar
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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.
Amazonia (Score:2)
What is the capital city of Hell? I'll bet they have a diverse population.
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Only 266 people live there [wikipedia.org], so I don't imagine it's TOO diverse. But they have a cool hearse show every year.
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What is the capital city of Hell?
I believe it's in Atlantic City, New Jersey - directly under Reckless Ted's Funland.
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Nah... That's just *ROBOT* Hell...
Race to the bottom (Score:3)
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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
Re:Race to the bottom (Score:5, Informative)
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.
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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 (Score:4, Informative)
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.
Amazon and Seattle (Score:3)
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/... [latimes.com]
Detroit, no way (Score:3)
...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.
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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.
oops (Score:5, Funny)
Just Wait (Score:3)
Mayor of Washington DC is "Bowser"? (Score:3)
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 (Score:2)
Just put it in Lebanon Kansas (Score:2)
It's equally convenient to both coasts.
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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 (Score:4, Insightful)
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.
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Did you just call me a witch?
Legal (Score:2)
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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.
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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 alt
ultimate tax dodge? (Score:4, Funny)
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.
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Pirates, I'd imagine.
First, they need a pool to draw top talent from (Score:3, Interesting)
Corporate Giveaways... (Score:4, Informative)
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 (Score:2)
Yay! A Nuclear Gentrification Bomb! (Score:2)
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. Maa
Re:hah, DC my ass. (Score:5, Interesting)
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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.
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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.