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Unless money is being funneled into private politicians’ hands, it’s not corruption. The choice is between amazon + tax breaks and nothing. These cities clearl

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.

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.