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The thing is, those tax cuts are largely offset by income taxes that those employees bring in, along with all of the $ that having a huge corporation like Amazo

The thing is, those tax cuts are largely offset by income taxes that those employees bring in, along with all of the $ that having a huge corporation like Amazon would bring into the area. It's not corruption, it's business.

nkassis 9y ago
Has this been shown to be true? I get the logic and it seems like it would make sense but I'm sure this has been researched. This would be a bigger deal than the datacenters being built with millions in tax cuts given it would be a long term and order of magnitude more jobs. Still I wonder if the calculus really does work out.
grecy 9y ago
No. Those tax cuts should be added ON TOP of the income taxes those employees bring in. More business should be more tax revenue = better services for the citizens. >It's not corruption, it's business. When a business is able to make a deal that gets them out of paying taxes they otherwise would legally be required to pay, that's corruption. Sugar coat it all you want, it's regular citizens they are stealing from.
- kemiller 9y ago
  Unless money is being funneled into private politicians’ hands, it’s not corruption. The choice is between amazon + tax breaks and nothing. These cities clearly believe that they’re better off, net net, with Amazon and they’re probably right. This is not at all the same as accepting bribes. There are certainly bad deals out there, but mismanagement is not the same as corruption. Now if you can show that the politicians in question are getting kickbacks, that’s another matter.
  - williamsmj 9y ago
    You say "the choice is between amazon + tax breaks and nothing" like the legal and cultural framework in which these processes take place is a force of nature. The choice is between those things because Amazon says so, and government chooses not to stand up to them by refusing to cooperate country-wide, or passing federal legislation. Amazon is not an outlier here: this is how all deals of this size in the United States get done. It's a national embarrassment. It doesn't have to be that way, and it isn't in many other countries.
    - XR0CSWV3h3kZWg 9y ago
      Yeah this is a consequence of the mechanism design we currently have. Large companies can shop around for better tax breaks.
    - conanbatt 9y ago
      > is a force of nature. Taxes are not a force of nature... If you were to effectively prohibit all states from giving tax incentives to get companies to make their HQ there, you will fail in 2 important ways. The first one is that there will always be a way to bargain company-state-city wide. So even though the tax burden might be the same, the company could order for , for example,special infrastructure or whatever, to get extra value. And because the city wants to do it, its most likely going to. This result is worse than a tax break. The other failure will come if you could, somehow, prohibit any thing like the one above from happening. That means that of 2 cities with similar demographics, where one of them has some sort of disadvantage, will be forever barred from having big companies set up shop. Why? Because if there is no tax incentive, the companies will only go to the best option available. If you happen to be that city, you would hit the jackpot. The rest, however...
      - williamsmj 9y ago
        Totally agree that there are real downsides and complications. I didn't mean to diminish those. My point is that the post I was replying to (and a lot of people I talk to in the US), operate under the assumption that it has to be this way, because this is the way it is in the country we happen to live in.
  - 3pt14159 9y ago
    It's a race to the bottom. It results in one state or city that pollutes for the whole country. Governments should set things up so the whole economy benefits, sometimes that means banning defections so that game theory doesn't fuck things up for everyone.
    - kemiller 9y ago
      I'm sure that the tax benefits are not the only criterion here. There are plenty of things cities can do to attract companies that aren't tax breaks — SF and NY and others are already there. Amazon wants a place that its employees would actually want to live, too. But that doesn't mean tax breaks and other incentives shouldn't be on the table. But my point isn't even whether they're good or bad, it's that they're not prima facie evidence of corruption.
      - rdslw 9y ago
        It's good not to forget the toplevel posts, which quotes that Amazon ASKS specifically for money amount. "Please provide a summary of total incentives offered for the Project by the state/province and local community. In this summary, please provide a brief description of the incentive item, the timing of incentive payment/realization, and a calculation of the incentive amount" Read their RFP for more.
    - JBlue42 9y ago
      This is exactly what I've been saying about tax breaks people want for the film industry here in LA so they can compete w/ Atlanta and other places in the US when really they need to be competing on a national basis, if these benefits are actually useful (which hasn't really been the case for taxpayers).
    - deleted 9y ago
      [deleted]
    - prostoalex 9y ago
      Some businesses improve the business climate. A Whole Foods-headlined plaza has higher property value than a liquor store-headlined plaza. A city block with Four Seasons hotel is likely to be valued higher than a similar city block with a Motel 6. Businesses don't want to be victims of their own success, where immediately after they plunk the money down for buildout and development they're reassessed at the value they themselves added.
  - rdslw 9y ago
    > The choice is between amazon + tax breaks and nothing. You're completely wrong. Amazon WILL build HQ2. This is a zero sum game from citizens/cities perspective. No city in the US should offer such taxcut, and then, surprisingly, this money is spent by amazon on taxes and effectively given to the citizens in one of the cities. If you allow this, you put in place scenario I described here: https://news.ycombinator.com/item?id=15193611 https://news.ycombinator.com/item?id=15193611
    - kamaal 9y ago
      >>Amazon WILL build HQ2. May be somewhere in India, where its cheaper for them to operate from. Also given places like India want to attract investments, they will be more than happy to offer not only subsidies, but also provide free land and other perks like tax breaks and free electricity. This might feel like blackmail. But that is what capitalism is all about. Companies do what is profitable for them.
- eip 9y ago
  > more tax revenue = better services for the citizens Lol. "When the government is able to collect tax and seize private property without just compensation, it is an indication that the public is ripe for surrender and is consenting to enslavement and legal encroachment. A good and easily quantified indicator of harvest time is the number of public citizens who pay income tax despite an obvious lack of reciprocal or honest service from the government." --Silent Weapons for Quiet Wars
- conanbatt 9y ago
  I think you make the fundamental mistake that businesses are people that pay taxes. People pay taxes, so when amazon pays taxes, either investors, consumers or employees pay those taxes. So when amazon finds a way to lower its tax burden, either investors, employees or consumers, and most likely all of them,which are citizens, pay less taxes. Taxes are not a means to reduce profits, if that were to be your desired result.
JustAnotherPat 9y ago
Many of these incentives go beyond tax cuts. The government will build the buildings, lease it to the corp for free. It will train employees for free, handle the recruiting for free, provide money to the corp for various projects, etc. It's business, sure, but pay to play. And at the end of the day, a lot of these places wind up leaving once their benefits run out.
- rdslw 9y ago
  Yeah, yeah, Amazon is doing it because they love us. It's for sure simple mistake they specifically asks to calculate all this intangible things and reduce it to money amount they gets from citi. So how about..... NO! Quote from RFP: "Please provide a summary of total incentives offered for the Project by the state/province and local community. In this summary, please provide a brief description of the incentive item, the timing of incentive payment/realization, and a calculation of the incentive amount"
mindcrime 9y ago
Well, that's the "party line" anyway. I'm not convinced that it's usually (or even ever) true in practice though. And even if it were, it's still a case of the government distorting the market in a way that is, IMO, not a valid role for government. And there will always be unintended consequences, quite often negative ones.
spiralpolitik 9y ago
Outside of NYC, cities typically don't get a cut of employee income taxes. Payroll taxes on the other hand is one of the taxes that Amazon will looking to get a sweetheart deal on with the city in question looking to make up the shortfall and the infrastructure spending to cope with 50,000+ new residents via trickle down.
Geekette 9y ago
I've read in the past of how such deals (of factory/office X choosing to open location Y based on tax incentives) ultimately not benefiting the city involved, especially when the companies pull tactics like closing unexpectedly shortly after receiving incentives and moving elsewhere. Given this, I'm fairly sure that a wide-ranging study of such infrastructural deals would show that many (most?) communities involved are left at a net loss financially.
- lend000 9y ago
  I believe you're thinking of taxpayer funded sporting events, e.g. NFL stadiums and Olympic games. There's a big difference between that and a legitimate business.
  - Geekette 9y ago
    Nope, I was actually thinking of businesses e.g. automotive brands opening assembly/manufacturing plants.
    - deleted 9y ago
      [deleted]
- Animats 9y ago
  Most such deals are a net loss for the community. Some of the bad ones have been for data centers, which employ very few people. Neither do manufacturing plants, which just don't need that many people.
  - Pxtl 9y ago
    Warehouses employ lots of people but they're the shittiest of jobs.
    - kamaal 9y ago
      Its not realistically possible by very definition to scale high quality jobs with quantity.
lcfcjs2 9y ago
Tax Evasion is corruption, its that simple.
prostoalex 9y ago
In the US the cities don't get to collect personal income taxes, though.
- chrishacken 9y ago
  Sure they do. Philadelphia calls it a "wage tax", but it's an income tax. https://beta.phila.gov/news/department-of-revenue/city-announces-wage-tax-reduction-starting-july-1-2017/ https://beta.phila.gov/news/department-of-revenue/city-annou...

nkassis 9y ago

Has this been shown to be true? I get the logic and it seems like it would make sense but I'm sure this has been researched. This would be a bigger deal than the datacenters being built with millions in tax cuts given it would be a long term and order of magnitude more jobs. Still I wonder if the calculus really does work out.

grecy 9y ago

No. Those tax cuts should be added ON TOP of the income taxes those employees bring in. More business should be more tax revenue = better services for the citizens. >It's not corruption, it's business. When a business is able to make a deal that gets them out of paying taxes they otherwise would legally be required to pay, that's corruption. Sugar coat it all you want, it's regular citizens they are stealing from.

kemiller 9y ago
Unless money is being funneled into private politicians’ hands, it’s not corruption. The choice is between amazon + tax breaks and nothing. These cities clearly believe that they’re better off, net net, with Amazon and they’re probably right. This is not at all the same as accepting bribes. There are certainly bad deals out there, but mismanagement is not the same as corruption. Now if you can show that the politicians in question are getting kickbacks, that’s another matter.
- williamsmj 9y ago
  You say "the choice is between amazon + tax breaks and nothing" like the legal and cultural framework in which these processes take place is a force of nature. The choice is between those things because Amazon says so, and government chooses not to stand up to them by refusing to cooperate country-wide, or passing federal legislation. Amazon is not an outlier here: this is how all deals of this size in the United States get done. It's a national embarrassment. It doesn't have to be that way, and it isn't in many other countries.
  - XR0CSWV3h3kZWg 9y ago
    Yeah this is a consequence of the mechanism design we currently have. Large companies can shop around for better tax breaks.
  - conanbatt 9y ago
    > is a force of nature. Taxes are not a force of nature... If you were to effectively prohibit all states from giving tax incentives to get companies to make their HQ there, you will fail in 2 important ways. The first one is that there will always be a way to bargain company-state-city wide. So even though the tax burden might be the same, the company could order for , for example,special infrastructure or whatever, to get extra value. And because the city wants to do it, its most likely going to. This result is worse than a tax break. The other failure will come if you could, somehow, prohibit any thing like the one above from happening. That means that of 2 cities with similar demographics, where one of them has some sort of disadvantage, will be forever barred from having big companies set up shop. Why? Because if there is no tax incentive, the companies will only go to the best option available. If you happen to be that city, you would hit the jackpot. The rest, however...
    - williamsmj 9y ago
      Totally agree that there are real downsides and complications. I didn't mean to diminish those. My point is that the post I was replying to (and a lot of people I talk to in the US), operate under the assumption that it has to be this way, because this is the way it is in the country we happen to live in.
- 3pt14159 9y ago
  It's a race to the bottom. It results in one state or city that pollutes for the whole country. Governments should set things up so the whole economy benefits, sometimes that means banning defections so that game theory doesn't fuck things up for everyone.
  - kemiller 9y ago
    I'm sure that the tax benefits are not the only criterion here. There are plenty of things cities can do to attract companies that aren't tax breaks — SF and NY and others are already there. Amazon wants a place that its employees would actually want to live, too. But that doesn't mean tax breaks and other incentives shouldn't be on the table. But my point isn't even whether they're good or bad, it's that they're not prima facie evidence of corruption.
    - rdslw 9y ago
      It's good not to forget the toplevel posts, which quotes that Amazon ASKS specifically for money amount. "Please provide a summary of total incentives offered for the Project by the state/province and local community. In this summary, please provide a brief description of the incentive item, the timing of incentive payment/realization, and a calculation of the incentive amount" Read their RFP for more.
  - JBlue42 9y ago
    This is exactly what I've been saying about tax breaks people want for the film industry here in LA so they can compete w/ Atlanta and other places in the US when really they need to be competing on a national basis, if these benefits are actually useful (which hasn't really been the case for taxpayers).
  - deleted 9y ago
    [deleted]
  - prostoalex 9y ago
    Some businesses improve the business climate. A Whole Foods-headlined plaza has higher property value than a liquor store-headlined plaza. A city block with Four Seasons hotel is likely to be valued higher than a similar city block with a Motel 6. Businesses don't want to be victims of their own success, where immediately after they plunk the money down for buildout and development they're reassessed at the value they themselves added.
- rdslw 9y ago
  > The choice is between amazon + tax breaks and nothing. You're completely wrong. Amazon WILL build HQ2. This is a zero sum game from citizens/cities perspective. No city in the US should offer such taxcut, and then, surprisingly, this money is spent by amazon on taxes and effectively given to the citizens in one of the cities. If you allow this, you put in place scenario I described here: https://news.ycombinator.com/item?id=15193611 https://news.ycombinator.com/item?id=15193611
  - kamaal 9y ago
    >>Amazon WILL build HQ2. May be somewhere in India, where its cheaper for them to operate from. Also given places like India want to attract investments, they will be more than happy to offer not only subsidies, but also provide free land and other perks like tax breaks and free electricity. This might feel like blackmail. But that is what capitalism is all about. Companies do what is profitable for them.
eip 9y ago
> more tax revenue = better services for the citizens Lol. "When the government is able to collect tax and seize private property without just compensation, it is an indication that the public is ripe for surrender and is consenting to enslavement and legal encroachment. A good and easily quantified indicator of harvest time is the number of public citizens who pay income tax despite an obvious lack of reciprocal or honest service from the government." --Silent Weapons for Quiet Wars
conanbatt 9y ago
I think you make the fundamental mistake that businesses are people that pay taxes. People pay taxes, so when amazon pays taxes, either investors, consumers or employees pay those taxes. So when amazon finds a way to lower its tax burden, either investors, employees or consumers, and most likely all of them,which are citizens, pay less taxes. Taxes are not a means to reduce profits, if that were to be your desired result.

JustAnotherPat 9y ago

Many of these incentives go beyond tax cuts. The government will build the buildings, lease it to the corp for free. It will train employees for free, handle the recruiting for free, provide money to the corp for various projects, etc. It's business, sure, but pay to play. And at the end of the day, a lot of these places wind up leaving once their benefits run out.

rdslw 9y ago
Yeah, yeah, Amazon is doing it because they love us. It's for sure simple mistake they specifically asks to calculate all this intangible things and reduce it to money amount they gets from citi. So how about..... NO! Quote from RFP: "Please provide a summary of total incentives offered for the Project by the state/province and local community. In this summary, please provide a brief description of the incentive item, the timing of incentive payment/realization, and a calculation of the incentive amount"

mindcrime 9y ago

Well, that's the "party line" anyway. I'm not convinced that it's usually (or even ever) true in practice though. And even if it were, it's still a case of the government distorting the market in a way that is, IMO, not a valid role for government. And there will always be unintended consequences, quite often negative ones.

spiralpolitik 9y ago

Outside of NYC, cities typically don't get a cut of employee income taxes. Payroll taxes on the other hand is one of the taxes that Amazon will looking to get a sweetheart deal on with the city in question looking to make up the shortfall and the infrastructure spending to cope with 50,000+ new residents via trickle down.

Geekette 9y ago

I've read in the past of how such deals (of factory/office X choosing to open location Y based on tax incentives) ultimately not benefiting the city involved, especially when the companies pull tactics like closing unexpectedly shortly after receiving incentives and moving elsewhere. Given this, I'm fairly sure that a wide-ranging study of such infrastructural deals would show that many (most?) communities involved are left at a net loss financially.

lend000 9y ago
I believe you're thinking of taxpayer funded sporting events, e.g. NFL stadiums and Olympic games. There's a big difference between that and a legitimate business.
- Geekette 9y ago
  Nope, I was actually thinking of businesses e.g. automotive brands opening assembly/manufacturing plants.
  - deleted 9y ago
    [deleted]
Animats 9y ago
Most such deals are a net loss for the community. Some of the bad ones have been for data centers, which employ very few people. Neither do manufacturing plants, which just don't need that many people.
- Pxtl 9y ago
  Warehouses employ lots of people but they're the shittiest of jobs.
  - kamaal 9y ago
    Its not realistically possible by very definition to scale high quality jobs with quantity.

lcfcjs2 9y ago

Tax Evasion is corruption, its that simple.

prostoalex 9y ago

In the US the cities don't get to collect personal income taxes, though.

chrishacken 9y ago
Sure they do. Philadelphia calls it a "wage tax", but it's an income tax. https://beta.phila.gov/news/department-of-revenue/city-announces-wage-tax-reduction-starting-july-1-2017/ https://beta.phila.gov/news/department-of-revenue/city-annou...