Some back of the envelope math. Amazon is receiving $1.525 billion in incentives from NY state and city, conditional on creating 25,000 jobs (https://www.nytimes.com/2018/11/13/nyregion/amazon-long-isla...). That's $61,000 per job, paid out over 10 years.
From a purely fiscal point of view, do we expect these jobs to generate $6100 a year in additional tax revenue for the state and city? That would be the "breakeven point". This could come in the form of additional state and city income taxes, consumption that is taxed, etc. Payscale says the average Amazon software engineer makes around $109k (https://www.payscale.com/research/US/Employer=Amazon.com_Inc...).
If we believed that Amazon is actually creating 25,000 NEW jobs, as well as jobs that otherwise would not exist, it seems pretty reasonable to say that the state and city come out ahead net-net. However, I have trouble believing that the "knowledge workers" who will join Amazon would otherwise have been unemployed and underpaid. Factor in the various negative externalities of increased commercial and residential rents for others, potential traffic/congestion issues etc., and it seems like Amazon got a sweetheart deal.
Thank you for running the numbers. How can we price in the wasted time/effort of the dozens of other cities who put in bids? How about the many millions or perhaps billions of dollars of free advertising and air-time taken up by this charade? I am neutral on Amazon specifically but surely we should not allow big companies to run roughshod all over our desperate cities? Look at Foxconn and Scott Walker for another example of companies harming and exploiting a metropolis/state. It really rubs me the wrong way.
> From a purely fiscal point of view, do we expect these jobs to generate $6100 a year in additional tax revenue for the state and city? That would be the "breakeven point".
You need way more than $6,100 per employee per year to reach break-even, as those employees will have definite costs to the city in the form of expenditures on services.
Strict cost accounting isn't really the right framework to use because cities have many people who cost more in services than they earn in tax revenues. You can't get rid of them because they're "unprofitable", and it isn't a city's job to turn a profit.
There's another problem here that isn't addressed by whether its a net plus revenue to the city. The tax break isn't applied across the board to all companies which means that Amazon is getting an unfair competitive advantage.
I don't really think of a company like Amazon needing a competitive advantage.
But even if the state and city come out ahead, they could have benefited even more if cities weren't allowed to compete for these types of contracts - without these tax breaks, Amazon would still have to build a headquarters, and a similar amount of jobs and tax revenue would have been generated, without requiring any incentives. It may not have been in New York, but someone in the US is still benefiting.
More taxpayers bring additional costs so it's more net revenue we're interested in. Additionally the window to compute the total net benefit is not bound to 10 years but for many decades, as long as Amazon is there. For instance over a 24 year window (how long they've been in Seattle) the required net additional tax revenue to break even would only be ~$2500 per year. And it's not just salaries that would generate this revenue, it's also property taxes and taxes on services providing for the HQ and employees. Increased rents and property prices are actually good for local government tax revenue.
Another thing to factor in, if there were no tax incentives given to open/expand offices in the DC/NYC areas, would Amazon have expanded their presence there anyway?
Considering the two areas, it seems likely they would open additional positions there regardless of whether the areas "won" the HQ2 battle, much like they're doing in Boston (and probably other places as well).
> Factor in the various negative externalities of increased commercial and residential rents for others, potential traffic/congestion issues etc., and it seems like Amazon got a sweetheart deal.
I think it's only fair to factor in the various positive externalities. Some of those abatements you mention are for development of the spaces they are occupying, which Amazon has committed to do in the billions. Growth pains almost always exist. In places receiving large amounts of migrants (seriously, Amazon is small number compared to the influx of out-of-state employers moving to other regions) they will experience unquantifiable negatives, but we should not let this detract from the similar unquantifiable positives of economic mobility.
Moreover, the $109k is likely just base salary — there is probably additional stock and cash bonuses on top of that. Note that NY does not have a lower tax on capital gains or dividends (like the federal tax code), so they’ll be taxed like regular income. The $109k is also likely an outdated or incorrect number, as that’s too low a base salary for a Software Engieer in NYC — I expect the average SWE base at Amazon to be something closer to $130k.
Besides, I don’t think a business development tax break is unfair as long as it is being granted to all companies (and not just Amazon). That’s what people should be fighting for. In addition, a large chunk of the incentives are state tax credits (I assume non-refundable ones). This means the state is simply going to revive reduced additional revenue because Amazon is moving in — they don’t per de lose money (unless whatever business was going to be built in Amazon’s place would have not have gotten these tax breaks). The way this is being portrayed — it sounds like it’s a literal giveaway to Amazon, which I’m not sure it is (it would be, if it largely consisted of refundable tax credits and state capital grants).
I think the numbers and the philosophy are fascinating. Not just the Amazon deal--all these corporate invitation incentives.
Let's say Boeing decides to move their HQ from Seattle. Should a city like, say, Chicago, offer incentives to land the new HQ? What is the economic loss to Seattle? What is the economic gain to Chicago?
Why should Boeing or Amazon get off from paying taxes, but Bob's Sandwich Shop doesn't? One obvious answer: Bob's Shop doesn't really matter. But what if, say, McDonalds threatens to pull out of Chicago unless they get the same deal as Boeing? Does McDonalds matter? Do they employ enough people? Are they hard enough to replace? How about Walmart?
It intrigues me that municipal bidding has not spread to be leveraged by more corporations. I mean more blatantly leveraged. I mean like Boeing/Amazon-level blatant. Imagine if Carrier turned the tables on Trump. Publicly.
If Chevron threatened to pull all its stations from a city, would any city care? Is there enough competition to fill in the hole?
What do you call a corporation that exists in a space without enough competition to fill in the hole? Should you treat such companies differently? Should you let them not pay taxes? Should you impose monopoly regulation on them? Should you handcuff them? Or roll out the red carpet?
Should you punish any corporation that achieves this status? Or should should encourage the innovations that allow such creations?
But surely tax breaks vs subsidies should be calculated differently? That is, letting Amazon skip paying $2 billion in taxes over 10 years doesn't cost the city anything directly. So from your "purely fiscal point of view", then isn't it just the cost of the marginal person on the infrastructure and housing prices, etc, vs the taxes collected?
From the article, it looks like the city may actually pay up to $500 million in a "capital grant", but I'm not sure what form the rest of the subsidies are in.
That said, the article uses wording like "Ohio taxpayers sued the state after it paid the automaker DaimlerChrysler about $280 million in tax exemptions and tax credits" so my perspective might be wrong here. It just feels misleading to use the verb "paid" on tax credits to me. Like, if I bought a Tesla, and got the $7,500 tax credit, I wouldn't feel exactly like the government paid me anything. Sure it cost the government that much, in some sense, since I would have paid the government those taxes had I not been given the break, but that doesn't really apply to the Amazon case since they wouldn't have paid those taxes anyway, since they wouldn't be in that state.
The issue isn't wether or not these incentives are net positive for the location that wins.
The problem is the prisoner's dilemma of the situation, forcing jurisdiction into a race-to-the-bottom competition.
That's because Amazon would hire these people anyway. NY and DC may come out ahead. But for the country overall, it's purely a transfer for billions from taxpayers to Amazon stockholders.
>>If we believed that Amazon is actually creating 25,000 NEW jobs, as well as jobs that otherwise would not exist, it seems pretty reasonable to say that the state and city come out ahead net-net.
From NYC's perspective, many of these probably will be new jobs, because many knowledge workers who wouldn't otherwise will move to NYC because of an Amazon job.
Further, $109k/yr/employee is way too low for NYC Amazon engineers; this is likely ignoring the equity grant which is taxed as ordinary income. The average will skew much higher. It seems that each new employee will very easily generate over $6100/year in state+local tax revenue.
Further there are synergies and network effects from NYC having more tech jobs and these nth-order effects will also generate tax revenue.
You can argue that this charade wasn't good for America, but it certainly was good for NYC.
Amazon received incentives from the government, but the vendors they will provide business to did not. Amazon will likely pay out billions to build their new campus - going to construction companies that will pay taxes.
In order to calculate a breakeven you need to determine the marginal increase in government expenditures created by a new city resident, which is obviously nonzero.
> However, I have trouble believing that the "knowledge workers" who will join Amazon would otherwise have been unemployed and underpaid.
No, but they might otherwise have been employed somewhere else, like SF. It's a zero-sum game, which is part of the reason why this whole bidding for corporate headquarters business is silly from a national perspective.
Another thing: if the cost of living increases due to the HQ's presence (which it will), then that means property taxes increase. Everyone will be paying more in property taxes, so $61000 per job is incredibly easy to meet.
Also how is a smaller competitor going to be on a level playing field. For example existing NY companies paying full taxes are partially paying Amazon's subsidy.
Economic behavior has a compounding effect. Each Amazon employee who lives in a city contributes demand for local businesses that end up creating other jobs.
What Amazon did shouldn't be illegal; what the cities did to try to get Amazon to them should be.
Rather than punish Amazon, punish the public servants who thought a large tax break for years, or real estate deals, would really be big enough to draw the company in.
What Amazon did was playing the field; why not get a bonus for letting others compete; rather than taking nothing because it was already decided?
Completely disagree that it's a problem or that it needs a solution and completely disagree it should be solved at the national level. If communities want to mortgage certain parts of their cities, that is their prerogative. It's growing tiresome reading all of this non-representative nonsense about wanting to change how other peoples' communities spend their money. This is no different than saying every state should tax income or tax businesses a certain way. The same reasons in favor apply.
The real problem with articles like these is that they say something is a problem and just expect you to magically believe it is. They throw out large numbers given in tax breaks and just say "poof, this is a problem" as though the readers automatically assume paying less in taxes is a problem. There are many people that believe that in many cases money is better spent elsewhere and the taxes are too high in the first place. There are many others that believe it is ideal to give to the job creators. And many others believe companies providing disproportionate benefits deserve disproportionate concessions. Whether you believe this or not is less important than your ability to understand why others do. The absence of that understanding, and similar dissonance across other issues, aptly explains our current political spectrum. But at least, for the time being, those that disagree with this article can still have these kinds of financial choices at the community level.
So the idea that it would just be too hard to make this illegal (which I see in at least a few comments) is wrong. We could have laws at the federal level that prevent it. (I'm sure there would be constitutional challenges but that's a separate--and in my view surmountable--issue.)
Its hard to make ego illegal. Politicians pull this stunt a lot to "make their city better", but it really comes down to a desire to be seen as a builder even if the cost / benefit just isn't there. Look at all of the rhetoric politicians use when giving speeches about a new stadium. If you get to sit in a box seat and see thousands of fans, its hard not to see it as a success.
The really sucky part is that a lot of people really want the X but don't understand how much their politicians gave up for X. Its often murky and people aren't experts in finance or city budgets. But that new stadium / HQ really looks cool right?
> Why the hell are U.S. cities spending tens of billions of dollars to steal jobs from one another in the first place?
First, US, at this point doesn't have a shortage of jobs, it has a shortage of good jobs. In case of Amazon, it creates good jobs, then it is a demand and supply problem.
The author wants to prevent a race to the bottom on taxes. A race to the bottom would be bad if taxes are fair or already too low. But if taxes were too high, a race to the bottom (or just the threat of one) would be a good thing, as it could keep unreasonable tax rates in check.
To put it differently: if companies and individual workers were not able to shop around for the tax regimes they prefer, what would prevent cities and states from raising taxes to unreasonably high levels? Taxes are kept in check by the threat of companies and high-earning taxpayers moving somewhere else.
I would rather live world where taxation is subject to a race to the bottom than in a world where nothing prevents unfairly high tax rates. The latter is definitely worse.
I'm fine with jurisdictions competing on taxes, but you have to lower them for everyone. No special tax breaks for individual companies. Provide a level playing field for everyone.
Taxes are kept in check by voters not electing politicians that support too high tax rates. In a democratic society, there is no need for that kind of competition.
Ads, assuming ads based on the status that was popping up in the bottom left, constantly refreshing should be illegal. I got to the point of trying to hover over the link about the people not having standing to sue Ohio to see the URL and couldn't read it because yet another thing was being pulled down after 5 or so minutes on the page. I sat there for a little bit to see how long it'd take to trigger again and the answer is "not long."
As for the topic at hand: I'm against the practice. I'm also against the practice of cities paying for stadiums to lure (or keep) sports teams to their city. And in a lot of cases, it isn't even owned by the city at that stage, but rather the team owner. It is nuts. Quite frankly, as great as it is to get an expansion team to come to your big city for revenue reasons (hopefully. Marlins don't appear to be doing much for Miami, for example), it is also advantageous for the team to move to a bigger city as it increases the pool of potential fans buying tickets, memorabilia, etc. Also, I'd hope that a city I lived in would not pay for the bid to host the Olympics or similar event (tons of money goes into building the stadium and hosting, revenue comes in but not enough to offset, and then you hope you can do something with the building after but in a lot of cases, you can't. Montreal springing to mind here). Also reminded of Curt Schilling's company and Rhode Island. Though honestly, I'm not really all that mad at the companies for engaging in it, so much as cities for taking part in it.
Ok, assume city A offers Amazon one million dollars in tax breaks. If Amazon moves to city A, city A will not receive one million tax dollars from Amazon. If instead Amazon turns down city A and moves to city B, then city A will STILL not receive one million tax dollars from Amazon. City A will NEVER receive one million tax dollars from Amazon, no matter what Amazon decides to do. What am I missing?
Having read the very interesting and thoughtful debate arguments being made in the comments here, I have nothing more to add than to state that this isn't anything new, even if the exact means employed and the parties involved are.
It's a textbook "tragedy of the commons" where, as @konschubert said, the USA los{es,n} out for every dollar spent. But this was never about maximizing revenue/growth/benefit for America, it was cities trying to edge out one another for their own local maxima.
This is also a textbook bidding process, with players holding the cards close to their chest and trying to give up as little as they can while undercutting the competition by as small a margin as they could. The only way to win in a prisoner's dilemma is to collectively not play, something that numerous psychological studies have found to be something humans just aren't good at.
The only part of this that should be illegal (and probably is) is the reveal that there are two HQ2.5s.
the game of local governments competing to lure big corps with handouts deserves most of the blame. However it is interesting that this game is a result of a prisoners-dilemma phenomenon: although all local governments would be better off if they collectively agreed or otherwise cooperated to NOT entice big corps with special handouts (as the big corps will build in one of them anyway without any subsidy), however all it takes is for one major local government to start waving some incentives for the rest to give in to the game. CNN did a good video on this phenomena: https://www.cnn.com/videos/cnnmoney/2018/03/13/amazon-hq2-or...
I learned years ago that most RFPs are a massive waste of time and effort. But why should the process be illegal? If cities want to compete, so be it. If the citizens don't like it, then vote out the city council. Corruption is illegal... This headline and article are link bait, at best.
> the Supreme Court avoided a final judgment on the matter by finding unanimously that the plaintiffs did not have standing to bring the suit.
Perhaps existing businesses have a standing to bring a suit by arguing that they already provide jobs. Maybe they already receive a proportional tax benefit?
Why federal government (that's article's argument) should be in the business of deciding what kind of agreement local government and private company had reached?
Whenever feds post RFPs for their projects, they put a lot of conditions that company must comply with in order to even be considered. How is this different from what Amazon does?
Amazon has fiduciary duty to their shareholders; local governments have responsibility to their constituents. If both are aligned - why anybody else should have a say in the matter?
You may like or dislike the contract, but as long as both parties are not coerced into the contract (surprise: the city can opt out from bidding!), who cares? The last thing this country needs is more fed involvement.
This happened in Scotland a few years ago. Scottish Enterprise and the embryonic Scottish Parliament enticed Hyundai's semi-conductor business to set up shop in Dunfermline. Millions were spent on inducements on Hydundai for them to then pull out of the deal and go somewhere cheaper.
Ironically the building is now occupied by one of Amazon's distribution centres, no doubt funded by more public money and employing staff on zero hour contracts with terrible conditions (which the Scottish press reported on).
I wonder why we can't spend these vast sums of money nurturing local indigenous SME's and startups (and I don't mean the sort that involve glorified ToDo lists).
> Congress should institute a federal tax of 100 percent” on corporate subsidies, Jack Markell, a former governor of Delaware, wrote in The New York Times. “This would not include investments in public infrastructure, work force development or other investments that can attract employers while also providing a significant long-term benefit to taxpayers
That's an awfully ill-defined criteria. And anyways contractors for building roads or towing cars, for example are incredibly corrupt too.
Amazon is going after the federal market in a major way, they MUST expand in the Virginia market. They really have little choice if they plan to support the federal government. They would have moved into the area regardless, crystal city is right next to the pentagon and close to dc. So I think they would have picked that area regardless knowing they prefer urban areas for office locations.
[+] [-] cepth|7 years ago|reply
From a purely fiscal point of view, do we expect these jobs to generate $6100 a year in additional tax revenue for the state and city? That would be the "breakeven point". This could come in the form of additional state and city income taxes, consumption that is taxed, etc. Payscale says the average Amazon software engineer makes around $109k (https://www.payscale.com/research/US/Employer=Amazon.com_Inc...).
If we believed that Amazon is actually creating 25,000 NEW jobs, as well as jobs that otherwise would not exist, it seems pretty reasonable to say that the state and city come out ahead net-net. However, I have trouble believing that the "knowledge workers" who will join Amazon would otherwise have been unemployed and underpaid. Factor in the various negative externalities of increased commercial and residential rents for others, potential traffic/congestion issues etc., and it seems like Amazon got a sweetheart deal.
[+] [-] WhompingWindows|7 years ago|reply
[+] [-] CydeWeys|7 years ago|reply
You need way more than $6,100 per employee per year to reach break-even, as those employees will have definite costs to the city in the form of expenditures on services.
Strict cost accounting isn't really the right framework to use because cities have many people who cost more in services than they earn in tax revenues. You can't get rid of them because they're "unprofitable", and it isn't a city's job to turn a profit.
[+] [-] mrbgty|7 years ago|reply
I don't really think of a company like Amazon needing a competitive advantage.
[+] [-] GhostVII|7 years ago|reply
[+] [-] nyokodo|7 years ago|reply
[+] [-] nck4222|7 years ago|reply
Considering the two areas, it seems likely they would open additional positions there regardless of whether the areas "won" the HQ2 battle, much like they're doing in Boston (and probably other places as well).
This makes tax incentives even less worthwhile.
[+] [-] kodablah|7 years ago|reply
I think it's only fair to factor in the various positive externalities. Some of those abatements you mention are for development of the spaces they are occupying, which Amazon has committed to do in the billions. Growth pains almost always exist. In places receiving large amounts of migrants (seriously, Amazon is small number compared to the influx of out-of-state employers moving to other regions) they will experience unquantifiable negatives, but we should not let this detract from the similar unquantifiable positives of economic mobility.
[+] [-] reaperducer|7 years ago|reply
The math is more complicated than any of us understand.
[+] [-] pasbesoin|7 years ago|reply
If you're big enough to "break the rules", arguably you're a monopoly or close enough to this to merit great suspicion and corresponding oversight.
[+] [-] winter_blue|7 years ago|reply
Moreover, the $109k is likely just base salary — there is probably additional stock and cash bonuses on top of that. Note that NY does not have a lower tax on capital gains or dividends (like the federal tax code), so they’ll be taxed like regular income. The $109k is also likely an outdated or incorrect number, as that’s too low a base salary for a Software Engieer in NYC — I expect the average SWE base at Amazon to be something closer to $130k.
Besides, I don’t think a business development tax break is unfair as long as it is being granted to all companies (and not just Amazon). That’s what people should be fighting for. In addition, a large chunk of the incentives are state tax credits (I assume non-refundable ones). This means the state is simply going to revive reduced additional revenue because Amazon is moving in — they don’t per de lose money (unless whatever business was going to be built in Amazon’s place would have not have gotten these tax breaks). The way this is being portrayed — it sounds like it’s a literal giveaway to Amazon, which I’m not sure it is (it would be, if it largely consisted of refundable tax credits and state capital grants).
[+] [-] freeopinion|7 years ago|reply
Let's say Boeing decides to move their HQ from Seattle. Should a city like, say, Chicago, offer incentives to land the new HQ? What is the economic loss to Seattle? What is the economic gain to Chicago?
Why should Boeing or Amazon get off from paying taxes, but Bob's Sandwich Shop doesn't? One obvious answer: Bob's Shop doesn't really matter. But what if, say, McDonalds threatens to pull out of Chicago unless they get the same deal as Boeing? Does McDonalds matter? Do they employ enough people? Are they hard enough to replace? How about Walmart?
It intrigues me that municipal bidding has not spread to be leveraged by more corporations. I mean more blatantly leveraged. I mean like Boeing/Amazon-level blatant. Imagine if Carrier turned the tables on Trump. Publicly.
If Chevron threatened to pull all its stations from a city, would any city care? Is there enough competition to fill in the hole?
What do you call a corporation that exists in a space without enough competition to fill in the hole? Should you treat such companies differently? Should you let them not pay taxes? Should you impose monopoly regulation on them? Should you handcuff them? Or roll out the red carpet?
Should you punish any corporation that achieves this status? Or should should encourage the innovations that allow such creations?
[+] [-] konschubert|7 years ago|reply
So every dollar spent is a dollar lost for the US.
[+] [-] losvedir|7 years ago|reply
From the article, it looks like the city may actually pay up to $500 million in a "capital grant", but I'm not sure what form the rest of the subsidies are in.
That said, the article uses wording like "Ohio taxpayers sued the state after it paid the automaker DaimlerChrysler about $280 million in tax exemptions and tax credits" so my perspective might be wrong here. It just feels misleading to use the verb "paid" on tax credits to me. Like, if I bought a Tesla, and got the $7,500 tax credit, I wouldn't feel exactly like the government paid me anything. Sure it cost the government that much, in some sense, since I would have paid the government those taxes had I not been given the break, but that doesn't really apply to the Amazon case since they wouldn't have paid those taxes anyway, since they wouldn't be in that state.
[+] [-] matt4077|7 years ago|reply
The problem is the prisoner's dilemma of the situation, forcing jurisdiction into a race-to-the-bottom competition.
That's because Amazon would hire these people anyway. NY and DC may come out ahead. But for the country overall, it's purely a transfer for billions from taxpayers to Amazon stockholders.
[+] [-] sjg007|7 years ago|reply
[+] [-] quantdev|7 years ago|reply
From NYC's perspective, many of these probably will be new jobs, because many knowledge workers who wouldn't otherwise will move to NYC because of an Amazon job.
Further, $109k/yr/employee is way too low for NYC Amazon engineers; this is likely ignoring the equity grant which is taxed as ordinary income. The average will skew much higher. It seems that each new employee will very easily generate over $6100/year in state+local tax revenue.
Further there are synergies and network effects from NYC having more tech jobs and these nth-order effects will also generate tax revenue.
You can argue that this charade wasn't good for America, but it certainly was good for NYC.
[+] [-] skookumchuck|7 years ago|reply
[+] [-] CPLX|7 years ago|reply
In order to calculate a breakeven you need to determine the marginal increase in government expenditures created by a new city resident, which is obviously nonzero.
[+] [-] throwaway5752|7 years ago|reply
[+] [-] mactrey|7 years ago|reply
No, but they might otherwise have been employed somewhere else, like SF. It's a zero-sum game, which is part of the reason why this whole bidding for corporate headquarters business is silly from a national perspective.
[+] [-] sdinsn|7 years ago|reply
[+] [-] rtkwe|7 years ago|reply
The answer is probably not. Most state income taxes are pretty low and property taxes aren't much better for the city/county level kickbacks.
[+] [-] taurath|7 years ago|reply
[+] [-] JudasGoat|7 years ago|reply
[+] [-] philwelch|7 years ago|reply
[+] [-] ApolloFortyNine|7 years ago|reply
[+] [-] tekno45|7 years ago|reply
How can we find out if these jobs will pay that much?
[+] [-] microcolonel|7 years ago|reply
[deleted]
[+] [-] cremp|7 years ago|reply
Rather than punish Amazon, punish the public servants who thought a large tax break for years, or real estate deals, would really be big enough to draw the company in.
What Amazon did was playing the field; why not get a bonus for letting others compete; rather than taking nothing because it was already decided?
[+] [-] kodablah|7 years ago|reply
The real problem with articles like these is that they say something is a problem and just expect you to magically believe it is. They throw out large numbers given in tax breaks and just say "poof, this is a problem" as though the readers automatically assume paying less in taxes is a problem. There are many people that believe that in many cases money is better spent elsewhere and the taxes are too high in the first place. There are many others that believe it is ideal to give to the job creators. And many others believe companies providing disproportionate benefits deserve disproportionate concessions. Whether you believe this or not is less important than your ability to understand why others do. The absence of that understanding, and similar dissonance across other issues, aptly explains our current political spectrum. But at least, for the time being, those that disagree with this article can still have these kinds of financial choices at the community level.
[+] [-] asr|7 years ago|reply
So the idea that it would just be too hard to make this illegal (which I see in at least a few comments) is wrong. We could have laws at the federal level that prevent it. (I'm sure there would be constitutional challenges but that's a separate--and in my view surmountable--issue.)
[+] [-] protomyth|7 years ago|reply
The really sucky part is that a lot of people really want the X but don't understand how much their politicians gave up for X. Its often murky and people aren't experts in finance or city budgets. But that new stadium / HQ really looks cool right?
[+] [-] tanilama|7 years ago|reply
First, US, at this point doesn't have a shortage of jobs, it has a shortage of good jobs. In case of Amazon, it creates good jobs, then it is a demand and supply problem.
[+] [-] twblalock|7 years ago|reply
To put it differently: if companies and individual workers were not able to shop around for the tax regimes they prefer, what would prevent cities and states from raising taxes to unreasonably high levels? Taxes are kept in check by the threat of companies and high-earning taxpayers moving somewhere else.
I would rather live world where taxation is subject to a race to the bottom than in a world where nothing prevents unfairly high tax rates. The latter is definitely worse.
[+] [-] sparky_z|7 years ago|reply
[+] [-] anoncake|7 years ago|reply
[+] [-] jsgo|7 years ago|reply
As for the topic at hand: I'm against the practice. I'm also against the practice of cities paying for stadiums to lure (or keep) sports teams to their city. And in a lot of cases, it isn't even owned by the city at that stage, but rather the team owner. It is nuts. Quite frankly, as great as it is to get an expansion team to come to your big city for revenue reasons (hopefully. Marlins don't appear to be doing much for Miami, for example), it is also advantageous for the team to move to a bigger city as it increases the pool of potential fans buying tickets, memorabilia, etc. Also, I'd hope that a city I lived in would not pay for the bid to host the Olympics or similar event (tons of money goes into building the stadium and hosting, revenue comes in but not enough to offset, and then you hope you can do something with the building after but in a lot of cases, you can't. Montreal springing to mind here). Also reminded of Curt Schilling's company and Rhode Island. Though honestly, I'm not really all that mad at the companies for engaging in it, so much as cities for taking part in it.
[+] [-] tkdc926|7 years ago|reply
[+] [-] ComputerGuru|7 years ago|reply
It's a textbook "tragedy of the commons" where, as @konschubert said, the USA los{es,n} out for every dollar spent. But this was never about maximizing revenue/growth/benefit for America, it was cities trying to edge out one another for their own local maxima.
This is also a textbook bidding process, with players holding the cards close to their chest and trying to give up as little as they can while undercutting the competition by as small a margin as they could. The only way to win in a prisoner's dilemma is to collectively not play, something that numerous psychological studies have found to be something humans just aren't good at.
The only part of this that should be illegal (and probably is) is the reveal that there are two HQ2.5s.
[+] [-] em3rgent0rdr|7 years ago|reply
[+] [-] pauldprice|7 years ago|reply
[+] [-] enturn|7 years ago|reply
Perhaps existing businesses have a standing to bring a suit by arguing that they already provide jobs. Maybe they already receive a proportional tax benefit?
[+] [-] jimbobimbo|7 years ago|reply
Whenever feds post RFPs for their projects, they put a lot of conditions that company must comply with in order to even be considered. How is this different from what Amazon does?
Amazon has fiduciary duty to their shareholders; local governments have responsibility to their constituents. If both are aligned - why anybody else should have a say in the matter?
You may like or dislike the contract, but as long as both parties are not coerced into the contract (surprise: the city can opt out from bidding!), who cares? The last thing this country needs is more fed involvement.
[+] [-] teh_klev|7 years ago|reply
Ironically the building is now occupied by one of Amazon's distribution centres, no doubt funded by more public money and employing staff on zero hour contracts with terrible conditions (which the Scottish press reported on).
I wonder why we can't spend these vast sums of money nurturing local indigenous SME's and startups (and I don't mean the sort that involve glorified ToDo lists).
[+] [-] dnautics|7 years ago|reply
That's an awfully ill-defined criteria. And anyways contractors for building roads or towing cars, for example are incredibly corrupt too.
[+] [-] joewee|7 years ago|reply
[+] [-] unknown|7 years ago|reply
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[+] [-] unknown|7 years ago|reply
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[+] [-] nusq|7 years ago|reply