It's not though. You purposefully used examples of public or non-profit groups to make it sound like a benefit. But it's not. A more fair comparison would read:
It's like someone came to your town and I said, "I want to build a $20m McDonalds, Mobile Gas Station, WalMart and a Best Buy". I would hope your town says "good luck with that" and not "that's amazing, how should we corrupt the local market to make it easier for you to do that". Amazon is no different in any way except scale.
In a sane world, Amazon HQ2 would terrify cities, who will need to ensure they have extra taxes in place for Amazon, to ensure the city can handle the massive pollutions Amazon HQ2 will generate in the local housing markets, local economy, and local infrastructure.
> We’ve proven that this public/private partnership is basically the most effective growth engine we’ve got
Proven? Can you cite some examples? I've only seen "Public/private partnerships" used as a label to mask corruption and theft; as a way to socialize any losses but privatize any gains.
I couldn't have said it better.
I got a bit excited and should add more detail: we're in a time when taxes are being shifted more and more away from those who have (rich & corporations) to those who have not. A public/private partnership seems insane to people because it is. The private companies have all the resources and need to leverage further their wealth from the public sector. They can easily front this by themselves and still be printing money without a care in the world. Didn't the corporate tax rate in the USA just get reduced from 35% to 21%? Private top-tier income tax was something like 96% during WWII and now it's down to what, half of that? So not only do you blatantly and overtly go out of your way to avoid contributing to the public fund but then also get politicians to give you deals and project-specific loans out of that exact same reduced, exhausted public purse? OOkay. Then you tell us that we should be thanking you because you're providing jobs... what kind of jobs and to whom?
I'm always skeptical of these things to say the least. Then to claim that there's proof... umm.... are you referencing Atlas Shrugged?
Actually the exact opposite is happening. The top quintile is pay a bigger share of taxes than before.[1] In 1960, the top quintile paid 56.5% of all federal tax revenue. In 2005 it was 69%.
Care to revise your position based on that?
[1]http://www.nbcnews.com/id/29861648/ns/politics-capitol_hill/... (table on right)
You're mistaken and given your responses elsewhere I think you're either confused or arguing in bad faith.
The mean tax rate paid by the top 0.1% of earners in 1979 was just over 40%. This fell to about 25% in 2010.[1] Marginal rates followed a similar trend. Meanwhile the US Gini coefficient rose from .415 in 1979 to .476 in 2012.[2] This implies that the top quintile pays a greater share of Federal taxes because they're proportionally richer than the other quintiles. The poor don't pay much Federal tax because you can't get blood from a stone.
[1] http://online.wsj.com/public/resources/documents/r42729_0917..., page 3
[2] https://www.citylab.com/life/2014/05/mapping-three-decades-i...
Second your graph shows rates for the top .1% and .01%. I was talking top quintile which you seemed to have forgotten plus you didn't challenge the data I provided.
[1] https://www.census.gov/data/tables/time-series/demo/income-p...
Income growth can definitely explain the increase in tax burden, but my point still stands, no? The tax burden is not shifting from the wealthy to the poor.
And if you look at the bottom quintile, their tax burden has fallen, even though income continues to rise.
Should think of the marginal utility of their funds. If a $20,000 a year person pays $5,000 - it's much worse than a $10,000,000 paying $100,000.
Top quintile pays an effective rate of over 30%.
To those who have much, more will be given...
How should I interpret that chart, considering things like wealth versus income? There's some sort of transition between those -- I would guess more wealth was held in non-taxed trusts or investments back then, compared to now? Does the estate tax change behavior?
I think the point is to look at how much of the government is paid for by the top quintile than the others, over time, compared to each group's wealth. Is that correct?
(I am not an economist, just have an amateur interest in complex systems.)
Companies that compete for talent will be pissed, but for lots of others it's a huge win. The only way I see it as a "bad" thing is if you are in a small city that wants to remain small.
It's absolutely nothing like building a McDonalds.
Well, not in the case of Chicago http://www.independent.co.uk/news/business/news/amazon-hq2-c...
> strengthening the housing market
Like the strong SF housing market which nobody can afford?
Talk to anyone who grew up in Seattle or SF pre-tech boom and you might find a different perspective. I think it's worth considering that while it's great for us in tech it's not like it's a net-win for everyone else.
If you work in an industry outside of tech(or a part of tech that doesn't track payscales like the game industry) you may get pushed out of a city/metro just by nature of the impact tech has.
I think I'd rather live in a city that's so popular that infrastructure can't keep up than to live in a city where entire neighborhoods are empty and are razed due to neglect and criminal activities.
Or they can hit the "Amazon lottery", bringing in billions of dollars of investment and 50,000 high paid jobs (plus all of the ancillary jobs to support these high paid workers).
So a community could very well face a binary choice.
Er, “as many as 50,000 high-paying jobs” is what Amazon claims HQ2 is planned to grow to over an unspecified time horizon. “As many as...” is marketing weasel words for “for some number definitely not exceeding, and probably much smaller than...”; it sets an upper bound, but counts on people treating it as an expected level.
That's overly hopeful. I doubt Amazon will seriously consider a dying ex-company town that needs the investment. My bet it's going to pick someplace that's already doing pretty well, overall.
Which is a unmitigated benefit only to some current real estate property owners and an almost-entirely unmitigated cost to everyone else.
Other than code for "making everything much more unaffordable", what does this mean?
And yeah, it's pollution for those who don't have high paying tech jobs. There are more people living in those cities than Amazon employees; their interests and needs need to be taking into consideration as well.
Owning a house has been a part of the post-WW2 American dream for good reason, and it should remain so. And people buying homes should want their property to retain value
Shouldn't this have played out just like that in SF then?
Back in 2004 when I was working at Microsoft, I remember sitting in a bar in downtown Redmond and tossing back some local brew IPAs. This guy sitting next to me was an older dude and longtime fisherman. He was going on and on about how in the 80's, the eastside (the collective suburbs i.e. Redmond, Bellevue, etc) was just farmland, and that Seattle's main industries were fishing and logging. He was both lamenting and boasting how Microsoft came in and transformed Seattle and surrounding area into the tech mecca it is today.
So you are right. All it takes is one anchor company to totally transform an entire city. Too bad they chose cities with established infrastructures and talent pools, and not a city like Milwaukee or San Antonio that would have had the same dramatic transformation as 80's Seattle.
But, let's turn it around. Why would Amazon want to go to San Antonio, instead of a city like Atlanta?
The next best thing is they set up HQ in southern Austin or northern Chicago (both shortlisted cities), and those cities benefit from residual investment.
Plus, SA has already played this game. It got them Rackspace. Which, uh, could maybe be going better.
I've thought for a while that commuter rail lines:
Along the freeways: 35, 10, 281, 151
Between big retail spots: Downtown, Quarry, Rim, Stone Oak, 1604/Bandera, Forum
Big Business: Rackspace, USAA, Downtown (again), Amazon, Lackland AFB, Kelly AFB, Brooks
And new parking areas near big residential centers: Bandera/Tezel, Helotes, Boerne, Stone Oak, Great Northwest, Brooks City Base
Along with parks renovation, school improvements on the South Side and small business incentives would make San Antonio the best place to live in the country.
There's a lot of potential here.
Personally, I wouldn't move back without massive densification of the "urban" core. Right now the place is a massive suburb where getting by without a car is impossible.
I won't argue with your qualms on local government.
In practical terms, it would have been workable if my office had been along the Riverwalk. Otherwise, not really. SA's public transit isn't usable for white-collar professionals in most cases.
Besides Rackspace they have a bunch of defense contractors and USAA, but little else I believe.
It could be argued that UTSA is starting to count as a major university, with recent expansion and investments. But the CS program has yet to really prove itself.
Shreveport suffered quite a bit after the GM plant closure and drop in oil prices -- being so aligned to one sector was not in Shreveport's best interests.
I think the idea is that cities definitely should compete to provide the best services for the commercial enterprises, but that those service should not include breaks on taxes or land giveaways. If building a new transit station, boosting spending on public schools that the Amazon engineers would want, and restructuring building and zoning codes to increase the housing supply will make your city more attractive to Amazon, by all means go ahead, since those should redound to everyone, regardless of whether they work for Amazon. But Amazon seems rich enough to me that they would be just fine even without tax breaks on construction materials or payroll taxes.
Part of the problem here is the people negotiating don't really have much skin in the game. It's easy to negotiate with other people's money. There's virtually no recourse for their poor decisions. See: suburbia.
> At the 50-75 year timeframe we are talking about at least hundreds of billions of dollars of economic value, if not trillions
We're projecting what a theoretical second campus of a 23 year old company will be 50 and 75 years out? Please. Did we learn nothing from the nearly homogeneous business cities like Detroit and "coal country" today? Cities built around one industry or one company will fail.
> Of course city governments should be working hard to bring this kind of value creation and massive economic engine to their constituents
Amazon developed out of an existing city. Cities should invest their efforts to nurture their own businesses that one day may grow and provide jobs. Importing an existing business is a rather short-sighted proposition akin to a get rich quick scheme.
> Personally I think the cities that only have tax incentives to offer will not come out the winner. Amazon cares a lot more about the surrounding infrastructure and ecosystem than a short term $1 Billion.
Agreed. Amazon is going to go where they're going to go. Cities should stop clamoring over themselves to give bigger tax breaks to one of the biggest businesses on the planet.
Nothing. We exist to support our tax-paying residents and local businesses, and so you will have to work with everyone that's already here if you want something in particular. You can probably expect a new bus line, an extension of the road, sewer, and water system, one new police station, one new firehouse, two new elementary schools, half a middle school, and a new wing of classrooms at the nearest high school. The quality of all that will depend on how much your company improves the local tax base, so don't get too stingy, or the local news will have no problem airing all the dirty laundry for Amazontown a couple years down the road. The zoning board will be busy changing colors on their map so that your people can eventually spend money on drive-through coffee and dog-walkers without having to go all the way downtown.
Amazon needs to come to the table with the attitude "We're going to increase your tax base by $X. What's your plan for spending it?" The ideal city just has to blow the dust off the growth plan they already have and write new names and dates in all the blanks.
Any city that says, "we're going to give you a tax discount" is basically saying "we would rather you send your money off to Wall Street than actually spend it to improve the community that you intend to join here."
I suppose a city could also offer a bureaucrat dedicated to expediting issues related to the new HQ, like building permits and inspections and NIMBY lawsuits, if they wanted to pay the cost of that person's salary as a donation to the city. I just never quite understood the concept of offering discounts to rich people.
No one has proven this. There is plenty of evidence pointing to the opposite conclusion.
> It’s completely irrational anti-capitalistic knee jerking to whine that cities shouldn’t be working hard to support HQ2 in their backyard.
On the contrary, it is 100% rational for cities to want to get HQ2 and give away absolutely nothing, and possibly even get some concessions from Amazon itself.
They have to have another headquarters, and there are less than twenty cities that make any degree of sense for them to move to. I would bet that there are only two or three serious contenders, and the only way they're not going to go with whatever first choice they have currently would be a truly enormous handout. The whole bidding war going on here is, in my opinion, to try to get a sweeter deal from whoever they've already picked.
It's possible that Amazon will be a drain on a region.
The cost of housing goes up for everyone.
The best and the brightest of the region get sucked back to HQ1
The startup ecosystem in the region gets drained to work at/for Amazon
Now, we could reform our policies so that the landless get a fair shot, but realistically, what are the chances of this happening?
And if that happens to an extreme degree where it becomes unsustainable, maybe an HQ3 would be in order?
Anyone wanting to live in Nashville (just to pick one city from the list) who's capable of working for Amazon is also capable of working for someone in Nashville today. And generally, the economics of being tech talent outside these hotbed markets like SV and Seattle are vastly favorable.
That is to say, you're probably better off buying the cheap house in a smaller market on the salary you can command in that market than you are buying a very expensive house on the salary that the very expensive market offers you. Google would pay me more than my current job, but my cost of living would go up by more than my salary -- massively so.
But you can only sell a house once so it's the rising tide isn't really raising their boat like it is for the tech workers. It's more akin to winning a scratch ticket that also forces you to move and maybe get a new job.
Well then you just pass something like Prop 13. Oh wait...
So what? My taxes go up and so do the costs of all the other houses nearby, so I don't net any more if I sell and buy a new house.
The local government represents the current residents, not future ones. Raising house prices could be a windfall for current homeowners, but it could negative for the broader group of local residents, which will likely have a lot of renters.
Heavily inflated house prices could also be bad for the current homeowners, who may get stuck in their current home because they could no longer afford the price difference for a needed upgrade. Their kids may be forced to move away because they can't find homes.
Take games workshop in nottingham there is now a large number of spinoff games and mini companies formed by ex GW alumni
This sounds very similar to the Garden Bridge project in London. It was eventually canned because it was going to take huge amounts of public funds and provide not a lot of benefit.
When the incentives cross the line from tax breaks to free stuff, it's capitalism, all right - crony capitalism. Not the type I and other libertarians care to see.
Never thought I'd see the day where I'd be nodding along to a Keith Ellison tweet.
They're arguing that the states are giving away money. Not that they aren't providing services.
And nobody thinks Amazon moving to their town will create a silicon valley 2. Plenty of cities host huge employers. They don't become magnets for that industry. They just get fat tax breaks.
Many cities actually get worse with these giant companies throwing their weight around. Under Armor is single handedly reshaping southeast Baltimore, which of course is not only upsetting neighborhoods but pushing people out, not to mention small businesses replaced by national chains.
Finally Amazon has hundreds of billions. They do not need a handout from a poor city.
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.
Giving the incentives is the screw up. Not how they implement it. Even though they often implement stupid policies and ignore the things they actually need to pay for. In many cases, states and local governments lose hundreds of millions, if not billions, trying to attract investment which doesn't pay off.
Kansas City lost 331 million in tax revenue due to horrible policies that incentivized moving jobs a mile across a river to a different state. https://www.npr.org/sections/money/2016/05/04/476799218/epis... http://www.kansascity.com/news/local/article183014956.html (video embedded, pls 2 watch)
Kentucky gave tens of millions in tax breaks to build a Noah's Ark theme park. http://www.cnn.com/2016/07/07/us/noahs-ark-kentucky/index.ht...
New Jersey wants to give Amazon $7 Billion in tax breaks. It still has not invested money in fixing its broken public transit system. https://www.wsj.com/articles/newark-offers-7-billion-in-ince...
In other words, construct a hypothetical move for a hypothetical corporation to some example town, and I'm sure that town could come up with an incentive package that would be beneficial to its citizens in place of having the company not move there. Do you disagree?
I'm claiming your argument is suspicious because it seems to only really apply to organizations of Amazon's size. Maybe you disagree, but it sure doesn't seem like any cities or towns are interested in luring an Amazons worth of businesses and tax-payers that aren't a single organization. The argument seems pretty agnostic; why is no one else?
Moreover, there only seem to be three such zones in the entire state: parts of upper Manhattan, parts of the south of the Bronx, and some parts of Yonkers.
It's completely capitalist loyalty to business above community to dismiss every concern about selling the farm to Amazon as "whining".
Doing things better and cheaper is the reason why our standard of living keeps increasing.
I for one would love to live in a city that said "we need to do more with the money we currently have."
I'm trying to understand why when a company like Amazon decides to create jobs in a city, suddenly they are to blame for everything wrong (homelessness, high housing prices, etc). It's absurd.
And they're blamed because they are largely a cause of exacerbating those problems. It's not just a pure good for them to come. Like I said, they cause housing prices to skyrocket. That's on them, and the increased homelessness that would result would be on them, too.
Amazon doesn't control the zoning laws, the city does. If housing prices increase, it's the city's fault.
People act like Amazon is some all-powerful entity that can railroad an entity like a city council that has the power to change laws.
Amazon absolutely shares some blame with all of those. You cannot condemn one entity for not having "personal responsibility" and ignore the responsibility the other entities have in contributing to the situation.
Will you refuse to take the $100?
What are you talking about? Put those numbers back where they came from - your ass.
>Personally I think the cities that only have tax incentives to offer will not come out the winner. Amazon cares a lot more about the surrounding infrastructure and ecosystem than a short term $1 Billion.
Agree but that's not the point. Amazon isn't really considering twenty cities, they're considering maybe three but they really want these cities to think they're on even ground so they can extract as much tax breaks as possible from one of the cities they would choose regardless. It's about maximum short-term extraction from their existing long-term choice.
>It’s completely irrational anti-capitalistic knee jerking to whine that cities shouldn’t be working hard to support HQ2 in their backyard. We are watching capitalism at its finest here folks
Let's not use 'irrational' this way, it's perfectly rational to be against this but...
You're right, this is exemplar of capitalism, it's also why I lot of people are turning their noses up at it. HQ2 really illustrates we've moved from seeing markets as a tool which are sometimes useful and sometimes not to being a market society which sees markets as the outsourcing of morality. No ideas have to be considered, the market will decide (and it's always right), it's a strange faith.
>and market efficiency driving negotiation and competition is creating significantly better outcomes than the “fuck Amazon they don’t need handouts” crowd would arrive at.
What is that outcome? That Amazon locates where it would have located regardless but with enough tax concessions that it's benefit to the community is substantially reduced? That Amazon's size allows it to pit cities against each other to lower costs, achieving economies of scale that upstarts just won't be able to match and further entrenching it? That Amazon shareholders get a nice dividend next year, funded directly from the concessions that Toronto or Atlanta gives them?
>If someone came to your town and said, I want to build a $20m community arts center with a theater, coworking space, parks, gardens, and playground — would you want your town to say “good luck with that” or would you want them to say “that’s amazing what do you need from us to make that happen?!”
If someone came to your town and said, I want to build a $20m sports stadium — would you want your town to say “good luck with that” or would you want them to say “that’s amazing what do you need from us to make that happen?!” Just because Amazon happens to be for-profit, their presence in your city is an extraordinary asset and it makes perfect sense to entice them to come.
Giving a bunch of concessions to Amazon isn't going to benefit the average Atlantan. Lots more people but without the corresponding taxes to keep public services up. Just like stadiums, this isn't a company working to benefit the surrounding community in the best way possible like some PR might tell you, it's Amazon trying to save as much money as possible, nothing else. Benefits to the surrounding community is a side-effect, a leakage and Amazon has every incentive to plug that leak wherever possible, here it happens to be taxes.
>In fact, you can’t even consider building at anywhere near HQ2 scale without an intimate partnership with the host city which is, in one form or another, going to require somewhere on the order of dollar-for-dollar public investment to match the private investment.
This is just sick, it's corporate welfare. If I'm paying for Amazon, then I want part of the profit.
>We’ve proven that this public/private partnership is basically the most effective growth engine we’ve got.
It's also a significant contributor to our inequality problem. Growth at all costs isn't the answer so neither is making Amazon's costs public but allowing it's profit to remain private.
Whoa. That kind of thing will get you banned here, as you're surely aware. Please post civilly and substantively, or not at all.
I believe you and would like to learn more. Do you have some sources I can look into?
Maybe a good place to start;
https://pppknowledgelab.org/guide/sections/83-what-is-the-pp...
At the 50-75 year timeframe we are talking about at least hundreds of billions of dollars of economic value, if not trillions. The clustering effect of becoming Silicon Valley 2 cannot be overstated.
My personal opinion is cities should be talking about the Billions they will be committing to supporting infrastructure improvements rather than the billions in tax cuts. HQ2 needs a fuck ton of support systems, akin to building an Olympic City which never shuts down.
Of course city governments should be working hard to bring this kind of value creation and massive economic engine to their constituents. Of course Amazon should be asking tough questions of cities akin to “and what are you going to do to support me” before spending $5 billion building a new campus.
Personally I think the cities that only have tax incentives to offer will not come out the winner. Amazon cares a lot more about the surrounding infrastructure and ecosystem than a short term $1 Billion.
It’s completely irrational anti-capitalistic knee jerking to whine that cities shouldn’t be working hard to support HQ2 in their backyard. We are watching capitalism at its finest here folks - and market efficiency driving negotiation and competition is creating significantly better outcomes than the “fuck Amazon they don’t need handouts” crowd would arrive at.
If someone came to your town and said, I want to build a $20m community arts center with a theater, coworking space, parks, gardens, and playground — would you want your town to say “good luck with that” or would you want them to say “that’s amazing what do you need from us to make that happen?!” Just because Amazon happens to be for-profit, their presence in your city is an extraordinary asset and it makes perfect sense to entice them to come.
In fact, you can’t even consider building at anywhere near HQ2 scale without an intimate partnership with the host city which is, in one form or another, going to require somewhere on the order of dollar-for-dollar public investment to match the private investment. We’ve proven that this public/private partnership is basically the most effective growth engine we’ve got. I certainly hope my city would do everything possible to roll out the red carpet. It’s the most effective dollars they could possibly spend, because it’s effectively corporate matching of public funds.