The Bids Are In: Amazon Offered Up To $7 Billion In Tax Breaks ($140k Per Employee) For Second U.S. HQ

Tyler Durden's picture

For the past several months, cities all across the country have been competing for the opportunity to host Amazon's second headquarters which promises $5 billion in capital investment and 50,000 new jobs over a period of time.  And now that the bids are in, we have the opportunity to review some of the staggering tax subsidies offered to one of Silicon Valley's biggest companies.

New Jersey apparently 'wins' the prize for 'biggest tax cuts' after offering $7 billion in state and city tax credits, or roughly $140,000 per job promised by Amazon...which should be plenty to once again thrust Bezos to the top of the world's richest list. Per Reuters:

New Jersey proposed $7 billion in potential credits against state and city taxes if Amazon locates in Newark and sticks to hiring commitments, according to a Monday news release from the governor’s office.

 

Across the Hudson River, New York City made a proposal without incentives special for Amazon, though the state is expected to offer some, a spokesman for the city’s economic development corporation said on Wednesday.

 

And across the country, California is offering some $300 million in incentives over several years and other benefits, the governor said in an Oct. 11 letter to Amazon’s Chief Executive Jeff Bezos, published online by the Orange County Register.

Amazon

But, while dozens of cities and states have submitted proposals for Amazon's "HQ2", credit ratings and research company Moody’s has ranked Austin as the most likely to win based on its labor pool, costs of doing business and quality of life, among other criteria.

That said, here are the 9 other cities that Bloomberg says also have a good shot:

Atlanta: The southern U.S. city, home of Amazon delivery partner United Parcel Service Inc., is a major flight hub, and the greater metro area houses a dynamic population of almost 6 million, as well as the headquarters of major corporations like Coca-Cola Co. and Home Depot Inc. Still, Atlanta is a relatively suburban city, compared with the urban HQ1 of Seattle.

 

Boston:  Several Amazon executives have already advocated putting HQ2 in Boston, due to its proximity to Harvard University and Massachusetts Institute of Technology; an airport with nonstop flights to Seattle and Washington D.C.; and a lower cost of living than some other large urban areas. Amazon has ties with Boston already, having purchased local robot maker Kiva Systems Inc. for $775 million in 2012. The city also won General Electric Co.’s 2015 new headquarters bid, and has provided more than $100 million in grants, property tax relief and programs for GE – though the city has said it won’t negotiate any incentives with Amazon until Boston makes it past the first round of the selection process.

 

Chicago:  The Windy City ranks second in Anderson Economic Group’s analysis of 35 cities competing for the precious HQ2, focusing on its talent, diverse ecosystem and access to transportation in its bid. Just last month, Illinois Governor Bruce Rauner reauthorized the Economic Development for a Growing Economy (EDGE) tax-credit program, which provides special tax incentives to companies relocating to Illinois or expanding operations in the state when another state is actively competing, according to BNA. One issue? The city isn’t known as a center of technology.

 

Denver:  Denver has a busy international airport and is surrounded by a highly educated workforce. It’s also home to a surge of millennials looking for high-tech and energy jobs in Colorado, and boasts an outdoorsy lifestyle that’s an easy fit for Amazon’s quality-of-life considerations. Colorado has also chosen eight sites that meet Amazon’s requirements for HQ2. Still, other cities are offering larger tax breaks than Denver.

 

Detroit:  Detroit offers low rent and the potential for larger tax breaks, because the city and the state of Michigan are still trying to turn themselves around and diversify from manufacturing. Michigan is also home to three big universities that produce a broad pool of talent. According to Michigan State University, 70 percent of its engineering graduates remained in the state. Even so, Governor Rick Snyder has said he will not ask the state legislature to approve additional incentives just for Amazon, according to Crain's Detroit Business. The city’s mass transit system also isn’t on par with some other cities in the running, and Detroit has a smaller tech scene.

 

New York:  In its bid for HQ2, the Big Apple is pitching its diverse workforce, robust university ecosystem and access to advertising, fashion and other industries. Brooklyn is emerging as an attractive component of the bid, with its building boom and throngs of young residents. New York is so serious about HQ2 that Mayor Bill de Blasio had landmarks around the city, including the Empire State Building and One World Trade, lit up in "Amazon orange" on Wednesday night. (Neighboring Newark, New Jersey, is also jumping in to bid, offering practically the same workforce with $7 billion in potential tax credits.) The bid by the biggest U.S. city may be at a disadvantage because of limited space for construction and already-high housing costs.

NYC

Pittsburgh:  The city is home to a large labor force and well-respected research institutes like top AI and robotics university Carnegie Mellon. It’s also close to major distribution hubs and has an industrial manufacturing background that could be useful for Amazon’s warehousing projects. Yet it’s far from other major metro areas and tech hubs.

 

TorontoCanada’s biggest city is already home to 800 Amazon employees and boasts a large population of computer science, engineering and artificial intelligence graduates and programs. Municipalities in the Toronto region have teamed up to increase their chances at scoring Amazon’s HQ2, and Ontario just announced a plan to boost STEM graduates, saying that it can offer talent at 30 percent less than other big tech jurisdictions. Yet going to Canada holds political risks: Moving integral operations and workforce from the U.S. may step up tension with President Donald Trump.

 

Washington:  The U.S. capital city’s urban location, highly educated workforce and public transportation are top selling points for its HQ2 bid. Not to mention Jeff Bezos already has a strong presence there: the Amazon founder owns the Washington Post, and last year purchased the largest home in the city. Washington didn’t disclose what it may offer Amazon in financial incentives, but the district has been active in providing taxpayer dollars to corporations in the past, according to the Post. Cons include the city’s expensive housing market and limited space for building.

And while most large companies employ an army of consultants to negotiate with state and local municipalities, tax incentives are so important to the Amazon business model that the company decided to hire it's own internal army.  Per the Wall Street Journal:

While Amazon is considering many factors such as the labor pool, cultural fit and access to airports and major highways, its emphasis on taking advantage of incentives is part of the retail giant’s culture of frugality.

 

Amazon’s approach differs from most other companies, which often rely on outside consulting firms to scout locations and negotiate tax incentive deals with state and local governments. Instead, Amazon in recent years has brought those services in-house and made them the responsibility of its economic development team, a sign of the company pouring resources into new, promising initiatives.

 

Amazon’s team is led by specialists who come from different parts of the economic development world. The group finds sites for new projects and negotiates tax breaks to help fuel Amazon’s rapid expansion, acting as liaisons with local and state governments.

 

Mike Grella, who worked at PwC before joining the web giant, joined Amazon as director of economic development in 2012. He was joined by Eric Murray, who had worked in-house on real estate and economic development at Lockheed Martin Corp. , in 2014, and Holly Sullivan, who worked on economic development for local governments in Maryland and Tennessee, in 2016. Mr. Grella leads economic development for the company’s cloud-services business, while Ms. Sullivan, also a director of economic development, is responsible for the rest of the company.

Amazon has said it will announce a decision for its second campus, in addition to its Seattle headquarters, next year.

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shankster's picture

Dang..and I'm still stuck in the 99% group.

GlassHouse101's picture

If they choose the city close to me, I am moving to the MOUNTAINS.

Shitonya Serfs's picture

AMZN will probably end up choosing the location with the most Red voters (and closest margin of victory in '16). They can use this ruse, HQ2, as the cover to inject libs there. So probably Detroit, Atlanta, or Pitt.

BullyBearish's picture

guarantee that amazon will jack up prices enough to negate the tax break in a behind the scenes deal...who would know?

Phat Stax's picture

So Silicon Valley has now extended to include Seattle? 

Thought Processor's picture

 

 

I would think Atlanta has the best chance.  Boston is less likely due to the site in East Boston that the city is recommending.

 

The only upside to Detroit would be that they could conceivable take over the entire city with relative ease.  But then why would anyone want to do that?

Son of Loki's picture

Even I am amazed at how fast they deliver stuff. I ordered an office item and by the next day it was on my doorstep.

Incredible!

I'll miss going to the mall or office max where i have a good chnce of being mugged or shot by one of Obama's sons or a felon from the NFL.

swmnguy's picture

It's even crazier if you have a Prime warehouse nearby.  My son and his buddy were building a computer, and my son had ordered the wrong kind of RAM chips for the motherboard he had.  His buddy's dad had a Prime membership, so they went online and bought the correct RAM chips.  Within 45 minutes, a guy was standing on my front porch with a brown paper bag with the correct RAM chips in it.  It looked like a dope deal.  I was simply astonished how quick it was.  It would have taken longer to drive to the local computer parts store, and that's assuming they stocked that exact type of RAM chip which is no sure thing.

American Psycho's picture

As taxation is theft, I have no issues with this.  I only wish local politicians would offer such incentives to ALL companies.

jcaz's picture

Put it in Detroit.  I wanna see how long Bezos lasts cruising thru the more colorful areas in Flint.......

Dukes's picture

"Diversity is their strength"  LOL

Joe Davola's picture

http://triblive.com/x/pittsburghtrib/news/regional/s_498742.html

Hey at least Westinghouse survived, albeit barely, 10 of the 15 years of the tax breaks.  I'm sure it will be different with Amazon.

Dabooda's picture

Here's the thing about New Jersey's high bid:  New Jersey is (not coincidentally) the state with the highest unfunded government pension liabilities, of all 50 states.

Vampires looking for new blood.

Dabooda's picture

Huh, I guess someone still reads Lovecraft.  But you misspelled the name: Yog-Sothoth. 

Gonna vote for Cthulhu for President next time?  Why settle for a lesser evil?

The Count's picture

Our idiot porgressive social class does not understand that they are the first ones being reduced to

meat popsicles due to immigration. Next up the middle class, already in the sights of the NWO.

 

Stuck on Zero's picture

There's a giant Amazon warehouse/fulfillment center about 40 miles from here. Probably 200 trucks parked around it. About 20 cars. My guess is that there are only 50 employees in the whole place.

City_Of_Champyinz's picture

Probably less, and they don't make shit.  Fuck Bezos, nothing but a pathetically corrupt tax cheat.

Siamo pazzi's picture

I say we boycott them to hell in an Amazon box ! Gotta do ut. I have opted to go direct to manufacturers sites whenever possible to avoid the bastard Besos !

HowdyDoody's picture

"Fuck Bezos, nothing but a pathetically corrupt tax cheat."

The correct term is 'subsidy farming'.

Deathrips's picture

Is ISRAEL in control of America? I think so.

WHy wont insurance companies agree to pay flood claims in texas dickinson tx withlout pledging not to boycott ISRAEL? Below link to their county website.

 

Reposted from Gartmans article.

 

OT Tylers get on this.

Dickenson texas wont pay flood insurance unless you agree to support and not boycott ISRAEL!!!!

Page 2 number 11. Link to official website of dickinson TX.

http://www.ci.dickinson.tx.us/DocumentCenter/View/2016

 

Sooo.......WTF!!

 

RIPS

Cynicles II's picture

The US has been controlled by israel since the fabrication of israel. Controlled by joos prior to then.

cheech_wizard's picture

That's how I buy everything now. Direct from the manufacturer.

 

Offthebeach's picture

Mass, Ill-noise, New York and the rest of the tax rape states will make up this sucker pitch in two years.  Smart move by the political parasites.  This time we're different!

gatorengineer's picture

Ahhh goober exactly whose money are they giving to Amazon?  Its your money.  You should be passed.

American Psycho's picture

I think it is important to recognize that corporations do not pay taxes, their customers pay them via higher prices or their employees receive lower wages. 

gatorengineer's picture

What are you talking about?  Amazon is looking to build a billion dollar plus building.  Lets conservatively say that the building would pay 10 million in local property taxes here in PA, that money goes to pay for the schools that the kids of the 5000 workers in that building use.  We have a billion dollar casino that to get 1500 minimum wage jobs, we gave away 10 million a year  in property taxes annually.  So we got nothing doubled our police force, and have a ton of trashy people in the area....

If you havent looked  lately Amazon generally has NO compeition for 90 percent of what they sell, its a monopoly.  so what you have is Higher prices, and Low wage warehouse jobs....  

Your post is way off base for the present situation.....

Also note that this is a corporate headquarters think average wage probably 80K (depending upon how many H1bs they get), not a distribution center.

American Psycho's picture

I guess we can agree to disagree Gator as I feel my comment is right on the mark.  I would rather invite a company to come to my state with tax incentives thereby hiring local people, who will spend their paychecks in the community generally speaking, then to send them elsewhere to fill those jobs.  Where does that $10MM in property taxes get paid from; profits of course.  Furthermore, the idea of higher paying corporate jobs should be even a bigger selling point.  Just my $0.02

gatorengineer's picture

Those 5k employees are going to put kids in the district, consume local roads, law enforcement, etc.  It used to be that industry or corporate centers helped keep property taxes down, now its the reverse they raise them for the common person.  Depending upon the job mix and number of H1bs alot of those jobs may be 40k jobs that pay nothing to local economy and really inject nothing other than increasing section 8.  

Im in the Allentown PA area with a ton of warehousing.  Those $10 an hour jobs, just qualify you for section 8, free school lunches, and subsidized obowel care.  I would rather those warehouse jobs went elsewhere.  

Sorry my take.

Yog Soggoth's picture

Invite a company like that and you will be getting a few more cheap visa techs who bring their entire families and start having babies. You know why so many people come from India for any opportunity available? It is because India really sucks, and so do all the countries around it.

SilverRhino's picture

They will move it to Texas.   Like everyone else is.  

Ikiru's picture

Nonsense.  Corporate taxes reduce ROI and ROE.  Thus, the owners of the company, shareholders, receive less profit in the form of dividends or the reduced income is reflected in lower stock prices.  On top of that, the owners are double-taxed on dividends and capital gains.  Some of these increased costs can and will be passed on to consumers, but taxes are most certainly paid by shareholders.  This is why high corporate taxes inevitably reduce business activity, since net income and cash flow are negatively impacted.  

CJgipper's picture

How is a local company supposed to compete when their tax money is being used to subsidize their competition?

American Psycho's picture

100% agree Gipper, which is why I would like all taxes to be removed.  A similar thing happens in the film industry; production companies go where they receive the largest tax incentive. Shocking that they go to the places where the 'cost to do business' is lowest.  Why would the same phenomenon not happen in every other industry.  Lower barriers of entry and let the market decide who is offering the best product / service. 

p.s. your biography line is hilarious.

Common_Law's picture

All taxes can be removed easily. 

https://famguardian.org/Subjects/Taxes/taxes.htm

www.sedm.org

And for businesses use "trust estates as business companies" instead of corporations. There a book by that name the tells all about them. 

you enjoy myself's picture

How about individuals?  For the life of me I can't understand how "tax incentives" specific to a company are legal.  I don't see it as any different than a special tax rate for a single private citizen.

drendebe10's picture

Fuk companies, how about working U.S. citizens

RedBaron616's picture

Yes, rob the customers to buy off the stores. What a brilliant idea. Never mind that we'll have a lot less money to buy anything with.

RafterManFMJ's picture

It’s really free money from the company’s employees that are at stake.

The state gives incentives to attract the company (The Owners) that will then bring their employees (cattle, or chattel) with them.

The executives get nice payouts from ever growing stock prices and the cattle get to pay for the incentives via their state income tax, sales tax, property tax...and so on.

It really is a sweet as fuck deal and I intend to start my own company next March, run it for a year and shop it around and have another state pay me to move - to a state I wanted to move to anyway!

I’m going to manufacture semen and stool-stain resistant bed ware, market it to L.A. and D.C., and name it eBed or iBed as the cherry on top.

Look for my kickstarter in January!

DaveyJones's picture

Their Sub-Prime membership is even crazier. It takes the money out of your account before you even order

yaright's picture

It is amazing one click and 2 days later its at my door and the price is almost always great.  But i do tend to buy as much as I can from local owned shops.

rccalhoun's picture

why buy local?  they are doomed and it just prolongs the pain.   instead, buy from the lowest source and give the local guy the cash difference as a gift

SilverRhino's picture

But then why would anyone want to do that?

 

Delta City young man 

 

We're taking Detroit PRIVATE

Thought Processor's picture

 

+1 for the RoboCop reference.

 

https://www.youtube.com/watch?v=fEpjHtkttYg

 

Prophetic movie perhaps.

mstyle's picture

The end goal I believe is for Amazon to have total control of the food supply. 

(I'm typing this as I eat at Whole Foods)

Yog Soggoth's picture

Have not found the connection to this family yet. 

Aldi and Trader Joe's: Siblings? | Erica Swallow's Blog   History since Karl died, but anyone thinking ownership will just go away is not looking in the right direction.
SoDamnMad's picture

Sure, put it in Newark. 300 Amazon employees to every 300 security guards trying to prevent them from stealing all the Chinese shit.

rpboxster's picture

I hope it doesn't come to Raleigh or Durham

Michael Musashi's picture

It's coming to metro Phoenix area. I've seen the area.