That’s right Bunsen. We all know that when States and localities offer a golden pot of tax breaks to companies who agree to re-locate, that public money has to come from somewhere and the pot is not bottomless. Maybe Washington State could manage the tax give-a-way to keep Boeing jobs in the PNW, given the wealth of Washington’s tech industry, but my guess is that the “gifts” from places like Washington, New Jersey, New York and Michigan can’t last. For goodness sake, Michigan can barely pay to provide safe drinking water to its citizens.
But is that really true in this case?
Currently the city and state receive no tax revenues from Amazon. After Amazon moves in, for a period of time that is TBD, the city and/or state receive zero or reduced tax revenues from Amazon. When Amazon starts paying full tax, they will receive a huge tax revenue bonanza.
And in the meantime, the employees will be paying taxes as well on both income and property. Seems to me the real question is what the marginal costs are for bringing and supporting those 50k emploees will be. I suspect the marginal costs are low, relative to the marginal taxes paid by the employees.
Now, if bringing in Amazon requires an upfront capital outlay, then that becomes a completely different set of calculations.
Well Seattle/Washington state do not have income tax - so they don’t make any income tax revenue from Amazon employees. Most people in Seattle rent - they live in the nearby housing which are apartments in high rises - so no property taxes paid by employees either.
The economy gets a boost from the property taxes paid by the apartment building owners and of course the increased employment to support both the construction and ongoing needs of the thousands of employees (from plumbers to restaurants to yoga studios to hair salons, etc.)
So St. Louis put in its bid-logistically it could work since it is a major transportation center.
Its pretty simple. You want productive people in your state earning income and supporting themselves and their families. If you can get an extra 50,000 of them, that seems like a good deal.
In any case, if states and cities think its a bad deal, they won’t make proposals. So far, it appears that’s not what’s happening. Taxpayers are in short supply. Tax spenders need them.
Not so sure. Some politicians would simply like to add that deal as the “crown jewel” to their resume… without any consideration of what that means for the area. “I added 50,000 jobs!” Never mind that traffic is a cluster, and teachers and firefighters cannot afford to buy a starter house…
Agreed @BunsenBurner ! For example Atlanta should not be on the list, traffic is a nightmare! They haven’t been able to convince the outlying area to even extend the Marta so I have no clue how they would handle all the traffic not to mention the housing prices are rising fast.
Where will you put those people, what roads will they drive, what bike paths, what subways? In a lot of areas, it doesn’t exist.
It’s nice to think construction related work will go up, but how many of us, our neighbors, are involved with that or the trickle down?
What bugs me about a lot of infrastructure improvements, this “employment to support both the construction and ongoing needs of the thousands of employees (from plumbers to restaurants to yoga studios to hair salons, etc,)” is it’s not improving my quality of life. Most of us don’t sell workboots or plumbing supplies, run a lunch stand or restaurant, etc. What ancillary opportunities really come for the rest of us?
You can claim tax revenues go up, but will they be spent on my neighborhood? And when the building projects are done, then what?
Not a bad way to stay in Amazon’s ear and maybe get some tourism as an added benefit. I see Philly as a top choice it will all come down on who offers the best deal out of those finalists.
^^ “Tucson tried to mail the company a 21-foot Saguaro cactus.”
I’d imagine Tucson is now out of contention after this?
Its a fair question, and harks to the earlier post about Minnesota (?) not really being in need of more productive taxpayers. Its likely, imo, that they’ll not pick the “highest bidder”, because that will come from the areas that are most in need of help. No need to step into fiscal cesspools of government dependency when you relocate.
My own guess is that Amazon will go somewhere south and west. If you take a look at this map:
https://www.mercatus.org/statefiscalrankings
I’d be very leery of entering the states that are below average on their overall funding, and would favor states that are above average. But Amazon is also interested in places that are attractive for young energetic and talented people to live, which shifts the equation quite a bit. Florida and Texas have the natural advantages of no personal income taxes, but probably suffer a bit from a quality of secondary schools and education. The northern and northeast states are constantly losing younger population to the south and west. I’d bet on those areas.
Looking at the numbers from this page:
https://taxfoundation.org/publications/state-business-tax-climate-index/
I wouldn’t be surprised at all to see North Carolina wind up in the final few. Their tax ratings seem to be fairly high, and balanced between corporate, personal, and property, and there are quite a few decent universities in the area.
NJ can offer $7billion in tax incentives because they have huge taxes. Many other states don’t see taxes that high so can’t cut them that much.
Nashville and the surrounding area as well as Greenville SC are really vibrant, attractive places-full of young people and relatively affordable.
“I’d imagine Tucson is now out of contention after this?”
ROFL!!! Definitely. I have a 2 ft tall cactus that needs repotting. I’ve been researching gloves for handling biting animals. 
If they had sent a jumping cactus… :))
LOL!!!
If I was a betting person, I’d bet $$ it won’t be SC or NC. Neither has cities that meet the criteria in the RFP, among other reasons.
How can it be NC with the political climate? Same with Texas. That’s going to be a problem for Amazon.
Nashville (my area) is severely lacking in public transportation. Our Mayor just unveiled an ambitious plan but the opposition is already screaming and it would take years to implement anyway.
Based the following assumptions:
1 - Amazon is looking for a city with an urban environment that their Seattle workforce would like to live in.
2 - The city needs to have a large talent pool of potential tech workers or be easily be able to draw those workers from surrounding regions.
3 - The West Coast cities are already saturated with high tech employers which rules out the California cities.
Boston and Chicago would be my front-runners. They meet criteria 1 in terms of being densely populated urban areas that hipsters would love to in, and they can attract and accommodate massive well-educated talent pools. Chicago pulls from all of the Big 10 and other schools in the Midwest, and Boston can do the same in the Northeast.
Dallas and Denver might also be strong contenders. The Uptown area of Dallas would be prime for an Amazon campus, but the city might not be attractive to Amazon’s hipster employee base. Denver has a downtown that could become vibrant, but Amazon would have to attract most of its employees from outside the region which can get expensive and problematic.
Other cities mentioned like Atlanta, St. Louis, etc. don’t have the vibrant urban living arraignment that Amazon says they are looking for, and cities like New York and Washington are already too crowded with other types of business.
The ad campaign is also directed at Amazon employees. The video interview mentions that employees will have an opportunity to express a preference.
https://globalnews.ca/news/3813038/calgary-launches-hey-amazon-chalk-campaign-in-seattle-ahead-of-hq2-bid/