Amazon was built upon the competitive edge of pricing devoid of state and local sales tax. Now it is soliciting tax breaks from state and local governments.
It's all about tax breaks. This is a blatant attempt by Amazon to get years of taxes abated in order to provide the increased regional economic benefit of... doing exactly what they'd do anyways if they didn't get the break. US city and state then competes against other US cities and states in a battle to provide the larger tax break.
It's an odious practice in my opinion, and I wish lawmakers would do something to curb it. But being able to tell your constituents "Hey, look at me, I got Amazon to come here!" makes for great campaigning.
It's not a net loss to the local government. It's a loss to Amazon's competitors that don't get those tax breaks. That local government is picking winners rather than provide a level playing field, and enriching themselves in the process. It's essentially bribery for favors but payed with tax revenue instead of under-the-table cash.
By all means, lower your taxes if you think it will attract jobs. But lower them for everyone.
It's a business getting a payoff - worse, it's getting government assistance and Amazon is getting unfair treatment (if they give Amazon a x% tax break, they should give that same tax break to all other businesses currently in that jurisdiction + anyone wanting to start a business there - else they're unfairly giving Amazon an advantage, which is bad for competition)
most shocking part is the NDAs with cities for the HQ2 bids require local governments adherence to dynamic pricing contracts. For one CA school district, that system would make them pay 12% more. So on top of the big and extended tax breaks cities have to give to win over Amazon, along with the exceptions to zoning restrictions that most builders have to adhere to, that's not enough. They also have to buy from amazon at inflated prices. Not a bad deal, if you're Amazon.
Amazon isn't going to the state with the most favorable existing taxes. It's staging a competition to get its own special tax breaks. I can't do that, and I don't want to move to Alaska.
Lets forget about the specifics about what it truly does to the state/town in the long term. Given the jobs it's fairly clear Amazon would have built this some place in US regardless of the tax break and would have created the jobs and tax revenue associated with that. By competing like this even if a particular city/state gains more benefit than before the country as a whole looses that tax break from it's total potential revenue right?
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.
How much tax are you going to get when Amazon shifts to HQ2? Bezos deliberately started Amazon here in Washington because there was no state tax.
I’ve been an Amazon employee and I’ve paid a lot of taxes here and have seen the government waste that money. Our property tax has gone up by hundreds of dollars a month and our schools, roads, and police forces are still in disarray. I don’t mind paying tax as long as it’s ised effectively and efficiently.
They're arguing that the states are giving away money.
What money are they giving away? If Amazon never comes, then there is no Amazon taxes and thus no tax breaks.
Right now those towns are starting out at zero. If they are smart, they structure the incentives to make sure they are net positive. If they screw that up, well that's on them.
Right, but if Amazon pre-selects from a menu of the former, then cause a competitive bidding war for tax breaks from compliant cities then that's even better from Amazon's perspective isn't it? I personally disagree with the approach, but I would guess that's why the search was publicized.
No. Not "new business". "A" new business. It's a sweetheart deal for one company in particular subsidized by the taxpayers. They're not reducing their citywide tax rate to attract Amazon, they're just giving a handout directly to Amazon.
What you're describing is nothing close to the reality. It's the prisoner's dilemma. Cities that participate in this scheme take turns screwing each other over in an attempt to get a minor benefit themselves, but compared to the scenario where nobody played the game to begin with, they all lose.
It might be morally questionable but isn't Amazon doing what you're describing? Most companies shopping around don't publically announce their plans to move in exchange for tax breaks. Amazon, OTOH, is explicitly calling this out.
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