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It's not enough for government to sit back and assume tax dollars are going to cover economic growth. Government needs to be active in participating in growth,
by mozumder 9y ago
It's not enough for government to sit back and assume tax dollars are going to cover economic growth. Government needs to be active in participating in growth, and that includes understanding what businesses need from their business plans and assisting them in becoming successful - from startups to large businesses.
Jobs are the goal for this competition. They're the prize.
Be thankful that governments are participating in this process. You can't make money without spending money. Don't be angry that your city paid $1 to earn $5. EVERY business has a cost-of-sales associated with it, and government is basically a really large business.
If your city wins, the local revenue from economic activity from these new employees will far exceed any costs and tax incentives given to Amazon.
Don't be the guy that thinks taxes is enough. Your own skills at business planning applies just as much to government. You got a lot of revenue via taxes, now what? How do you spend it? What causes the most tax revenue return and highest population satisfaction?
If you actually write down all of what these governments are doing in a business plan to win Amazon's headquarters, you'll find that it's as much a business plan as anything else, and that government's cost calculations are likely worth it. Business planning is never easy - it's far easier to screw it up - but nothing worthwhile is easy. Be glad that government is doing hard things, instead of easy things.
Edit: To give an idea on the kinds of business-plan data government needs to understand to determine if Amazon is worth it or not, consider that: Are Amazon R&D employees high-crime people? Do they murder other people a lot or die from opiates? Will the HQ create pollution and destroy the environment? Are there dangerous chemicals that might explode if stored unsafely? Will their operations cause birth defects?
Use this kind of data to calculate how much government services these people are going to need and to determine if their tax-incentive costs are worth it?
- OrwellianChild 9y agoI would really like to know why this is getting downvoted... The reasoning here is sound - jobs create economic growth. These governments are forgoing a portion of the tax income that currently does not exist but would be gained by Amazon's arrival in exchange for getting Amazon to come in the first place. This is not an Olympic Games or a sports stadium that benefits very few individuals economically. This is a project that will dramatically shape the city chosen for the better (economically).
- adamc 9y agoI didn't downvote it, but you omit an import issue: Amazon coming will also increase expenses for the city -- police, fire protection, sewers, etc. Tax revenue exists to pay for these things. It is not unreasonable to worry about whether the net effect of giving big tax breaks and bringing in a company like Amazon will be negative.
- ameister14 9y agoHalf of Philadelphia's General Fund revenue comes from wage taxes. That ends up being 1/6th of the budget of Philadelphia and 2/7 of the revenue for the city. While it isn't unreasonable to worry that the net effect of lowering the business income and real estate taxes applied to Amazon would result in a negative tax/expense ratio, when applied holistically and including the other taxes, it's also not unreasonable to think the city revenue will increase, particularly when you add in related businesses.
- nerfhammer 9y agopopulation of philadelphia: 1.56 million supposed HQ2 employees: 50,000 I suspect that the sewers won't overflow, new crime waves, extra fires, etc. There may be impact on transit in a few specific areas, but in terms of total population impact it's difficult to believe that it would noticeably impact the budget in any particular city service. Except for transit.
- mark-r 9y agoThe problem is that government expenses go up with Amazon's arrival as well. If we assume the taxes paid by other businesses fairly represent their load, then Amazon will be a burden overall by avoiding those taxes. That growth from other businesses will be needing services as well, and the tax from that growth won't cover everybody.
- ameister14 9y agoThat's balanced by the increase in tax base from 50,000 jobs and investment of billions in the local community.