5 ms·

Unless Amazon is going to be paying $0 in tax or will be given tax credits in excess of any tax it will pay, neither of which I gather is the case, then how wou

Unless Amazon is going to be paying $0 in tax or will be given tax credits in excess of any tax it will pay, neither of which I gather is the case, then how would this fail to deliver a net increase in tax revenue for the city? The 1000s of employees are not getting any tax breaks either so that'd also have to factor into the calculation. I don't think cities are acting against their own self interest in these negotiations.

jzymbaluk 9y ago
Not to mention, those thousands of highly paid employees are going to be buying houses, renting apartments, buying cars, groceries, haircuts, etc
- vkou 9y ago
  Which will drive up the cost of life for people who currently live in Philadelphia and won't work for Amazon. It will, however, vastly enrich their landlords.
  - aaronbrethorst 9y ago
    I'm not sure why you're getting downvoted. This is exactly what's happened to Seattle. http://www.seattlepi.com/seattlenews/article/What-does-it-really-cost-to-live-in-Seattle-in-10970605.php http://www.seattlepi.com/seattlenews/article/What-does-it-re...
    - bulldoa 9y ago
      This is an interesting position that I am quite conflicted about. From the conclusion of the original post it seems like he/she would prefer company that brings in high salary jobs not to relocate to the area if the company itself would not be employing people that originated from the area for those high salary jobs. This is because he/she perceived that there is no benefit to the economy since the local does not get those salary, and the local would have to suffer the consequence of rising living cost. But my concern would be how would a city ever improve its living condition if it lack funds to maintain schools and community and the resident themselves are unwilling to bring in these company? Even if amazon doesn't pay taxes, the employees that work there will (through buying stuff and living there), doesn't that give the city an opportunity to reinvigorate the city with new tax revenue and potentially provide a better community and education for the next generation?
      - aaronbrethorst 9y ago
        "The Times reported in July that 74 projects were under construction in downtown Seattle. Two-thirds of the buildings will be residential towers, with most being apartments for rent, not condos...Seattle has gone from one of the most affordable West Coast cities to one of the least, Aaron Terrazas, a senior economist at Zillow, told CNN Money. The city and developers have tried to alleviate that by building tons of apartments. Downtown has added 20,000 units in the past decade, with another 27,000 on the way...But nearly all the buildings are considered luxury real estate, with rents 40% higher than in older buildings. The dueling 41-story Insignia towers include amenities like a "sky retreat," an indoor lap pool and sauna, and a screening room...From 2005 to 2015, Seattle's median rent jumped by three times as much as the national figure did. In downtown Seattle, average rent has climbed to $2,400 a month, meaning you'd need to make about $96,000 to afford it." http://www.businessinsider.com/amazon-hq-photo-tour-seattle-make-any-city-wary-of-amazon-hq2-2017-12/#but-nearly-all-the-buildings-are-considered-luxury-real-estatewith-rents-40-higher-than-in-older-buildings-the-dueling-41-story-insignia-towers-include-amenities-like-a-sky-retreat-an-indoor-lap-pool-and-sauna-and-a-screening-room-16 http://www.businessinsider.com/amazon-hq-photo-tour-seattle-... And another article: http://gawker.com/how-amazon-swallowed-seattle-1724795265 http://gawker.com/how-amazon-swallowed-seattle-1724795265
        bulldoa 9y ago
        I acknowledge the problem, but at the same time I am not sure what is the solution. Should Amazon relocate to a brand new city where it is not possible to gentrified people or should amazon just relocate to other country and cause problem there? I would think both is not optimal since Amazon does provide a net positive impact on the local economy. And I would even argue that the city could take advantage of this new tax source to improve education and perhaps output engineer talents that is much in demand now and in the foreseeable future
        cthalupa 9y ago
        The problem is that average rent increasing isn't actually a good metric on how it is affecting the cost of living for people that previously lived there. This sounds unintuitive at first, but turns out to be fairly simple. The first thing to consider is that the density on new construction for these is significantly higher - a lot of land that had 80 units before might now have now have an additional 640. Most of these apartment buildings downtown are building up significantly higher than previous places. Going from 4 stories to 30+. Some seriously tall high rises. And then it's a good thing that these are targeted as luxury accommodations, because they're making the high income newcomers their targets - that means there are fewer of these newcomers targeting the existing housing increasing that price. Now, you have luxury housing that exists in much higher quantities than the previous housing - this has a disproportionate impact on the city average, but doesn't say anything about the impact on the majority of existing housing outside of these new constructions. That isn't to say it hasn't gone up as well, but you have to look at how much the supply of this existing housing has contracted and if that contraction has pushed the demand up enough that those prices have significantly increased as well. This isn't captured in looking at the average rent price of the city.
  - nyokodo 9y ago
    That's the cost of being economically successful. That's because there is more competition for workers which drives up salaries, and for living spaces which drives up their cost. So even if you don't work for Amazon you're likely to benefit from the more competitive marketplace.
    - vkou 9y ago
      > That's the cost of being economically successful. This is a cost disproportionately borne by low-income renters currently living in a city. If they have a choice, why should they pay it? > That's because there is more competition for workers which drives up salaries, and for living spaces which drives up their cost. Amazon workers will always outbid locals for housing. Unless 50,000 housing units will be built in the next few years (Contrary to the interests of property owners), this will reduce the quality of life for people not working for Amazon. They'll get to enjoy higher rents, longer commutes, and smaller disposable incomes. People getting gentrified out where they live rarely benefit from the more competitive marketplace, or from coffee shops selling $14 avocado toast. Adding jobs to an economically depressed area, with a surplus of housing benefits most people living in it. Adding jobs to an economically vibrant area, with a shortage of housing harms most people living in it. An Amazon office in Detroit would be great for the city. An Amazon office in San Francisco... Not so much. Disclaimer: I don't live in Philadelphia, so I don't know where it is on the spectrii of 'economically vibrant' and 'housing shortage.'
      - benwilber0 9y ago
        I'm not seeing the point that you're trying to make. Are you suggesting that Philadelphia (or any major metropolis) would not benefit from the sudden windfall infusion of 50,000+ high-paying jobs? I think every small business owner in Philly is probably drooling at the prospect of Amazon dumping tens of thousands of people with disposable incomes at their front door.
        KidComputer 9y ago
        Small business owners are definitely not drooling at that prospect. They usually have very slim margins and their rent will sky rocket as the landlords get greedy. Only a select few will remain usually due to being hip local places that already have high foot traffic that can successful raise the prices of their 'famous' cheesesteaks or opening the property. But for the average small business owner running the typical depressed looking establishment they'll see their repeat customers disappear one by one. They won't have the necessary capital to reinvigorate their image or pay their tremendously higher rent when the landlord decides they want to attract Starbucks to that location. Look at Bleeker street, the lower east side, Chinatown, the east village all in NYC. All places I've seen personally change rapidly over the years. I've talked to many owners, the story is always the same, we're being forced out of our lease. Being in tech I'm certainly part of the problem. And to be honest most of the new places that come in, particularly restaurants, are often better than what was there before. But let's not say the existing small business owners are drooling, they're almost certainly filled with dread at the prospect.
Retric 9y ago
Amazon and those workers will still consume city services. City's don't make a profit on average, so while those workers may make above average wages it's unlikely to make up for the overall lost revenue. Picturing 1000's of workers is overblown. Amazon does employ a lot of people, but in a highly distributed fashion and their expansion is not going to be huge. On top of that these are all large city's where +/- a few thousand workers is not that big a deal.
- neilc 9y ago
  > Amazon and those workers will still consume city services. City's don't make a profit on average I'd be very surprised if an Amazon worker making, say, $160k consumes more in government services than the sales/property/income taxes they are paying.
  - ashelmire 9y ago
    Amazon workers in Philly aren't going to make 160k. Tech salaries are much lower here than on the west coast, much lower than NY and Boston as well.
- nyokodo 9y ago
  If +/- a few thousand workers isn't a big deal then why is it being made a big deal by all these comments? Obviously it's going to make an impact. My point is that the corporation and workers and associated economic multipliers will be adding a net positive to city revenue. If it wasn't going to do that I doubt hundreds of cities would be competing for it.
  - dragonwriter 9y ago
    Direct employment numbers are direct revenues are easily, concretely associated with the deal, indirect infrastructure impacts are less in peoples minds, harder to concretely attribute and easier to cloud, and take a longer time to be palpable. Politicians overweight the former kind of measured (because they have more effect on political careers) and devalue the latter (for the opposite reason.) Cities aren't actors, they are just abstractions; politicians are the actors pursuing Amazon.
Angostura 9y ago
Would be better if there was national coordination and the cities had all simply said 'No - you want to come here, you pay tax'.

jzymbaluk 9y ago

Not to mention, those thousands of highly paid employees are going to be buying houses, renting apartments, buying cars, groceries, haircuts, etc

vkou 9y ago
Which will drive up the cost of life for people who currently live in Philadelphia and won't work for Amazon. It will, however, vastly enrich their landlords.
- aaronbrethorst 9y ago
  I'm not sure why you're getting downvoted. This is exactly what's happened to Seattle. http://www.seattlepi.com/seattlenews/article/What-does-it-really-cost-to-live-in-Seattle-in-10970605.php http://www.seattlepi.com/seattlenews/article/What-does-it-re...
  - bulldoa 9y ago
    This is an interesting position that I am quite conflicted about. From the conclusion of the original post it seems like he/she would prefer company that brings in high salary jobs not to relocate to the area if the company itself would not be employing people that originated from the area for those high salary jobs. This is because he/she perceived that there is no benefit to the economy since the local does not get those salary, and the local would have to suffer the consequence of rising living cost. But my concern would be how would a city ever improve its living condition if it lack funds to maintain schools and community and the resident themselves are unwilling to bring in these company? Even if amazon doesn't pay taxes, the employees that work there will (through buying stuff and living there), doesn't that give the city an opportunity to reinvigorate the city with new tax revenue and potentially provide a better community and education for the next generation?
    - aaronbrethorst 9y ago
      "The Times reported in July that 74 projects were under construction in downtown Seattle. Two-thirds of the buildings will be residential towers, with most being apartments for rent, not condos...Seattle has gone from one of the most affordable West Coast cities to one of the least, Aaron Terrazas, a senior economist at Zillow, told CNN Money. The city and developers have tried to alleviate that by building tons of apartments. Downtown has added 20,000 units in the past decade, with another 27,000 on the way...But nearly all the buildings are considered luxury real estate, with rents 40% higher than in older buildings. The dueling 41-story Insignia towers include amenities like a "sky retreat," an indoor lap pool and sauna, and a screening room...From 2005 to 2015, Seattle's median rent jumped by three times as much as the national figure did. In downtown Seattle, average rent has climbed to $2,400 a month, meaning you'd need to make about $96,000 to afford it." http://www.businessinsider.com/amazon-hq-photo-tour-seattle-make-any-city-wary-of-amazon-hq2-2017-12/#but-nearly-all-the-buildings-are-considered-luxury-real-estatewith-rents-40-higher-than-in-older-buildings-the-dueling-41-story-insignia-towers-include-amenities-like-a-sky-retreat-an-indoor-lap-pool-and-sauna-and-a-screening-room-16 http://www.businessinsider.com/amazon-hq-photo-tour-seattle-... And another article: http://gawker.com/how-amazon-swallowed-seattle-1724795265 http://gawker.com/how-amazon-swallowed-seattle-1724795265
      - bulldoa 9y ago
        I acknowledge the problem, but at the same time I am not sure what is the solution. Should Amazon relocate to a brand new city where it is not possible to gentrified people or should amazon just relocate to other country and cause problem there? I would think both is not optimal since Amazon does provide a net positive impact on the local economy. And I would even argue that the city could take advantage of this new tax source to improve education and perhaps output engineer talents that is much in demand now and in the foreseeable future
      - cthalupa 9y ago
        The problem is that average rent increasing isn't actually a good metric on how it is affecting the cost of living for people that previously lived there. This sounds unintuitive at first, but turns out to be fairly simple. The first thing to consider is that the density on new construction for these is significantly higher - a lot of land that had 80 units before might now have now have an additional 640. Most of these apartment buildings downtown are building up significantly higher than previous places. Going from 4 stories to 30+. Some seriously tall high rises. And then it's a good thing that these are targeted as luxury accommodations, because they're making the high income newcomers their targets - that means there are fewer of these newcomers targeting the existing housing increasing that price. Now, you have luxury housing that exists in much higher quantities than the previous housing - this has a disproportionate impact on the city average, but doesn't say anything about the impact on the majority of existing housing outside of these new constructions. That isn't to say it hasn't gone up as well, but you have to look at how much the supply of this existing housing has contracted and if that contraction has pushed the demand up enough that those prices have significantly increased as well. This isn't captured in looking at the average rent price of the city.
- nyokodo 9y ago
  That's the cost of being economically successful. That's because there is more competition for workers which drives up salaries, and for living spaces which drives up their cost. So even if you don't work for Amazon you're likely to benefit from the more competitive marketplace.
  - vkou 9y ago
    > That's the cost of being economically successful. This is a cost disproportionately borne by low-income renters currently living in a city. If they have a choice, why should they pay it? > That's because there is more competition for workers which drives up salaries, and for living spaces which drives up their cost. Amazon workers will always outbid locals for housing. Unless 50,000 housing units will be built in the next few years (Contrary to the interests of property owners), this will reduce the quality of life for people not working for Amazon. They'll get to enjoy higher rents, longer commutes, and smaller disposable incomes. People getting gentrified out where they live rarely benefit from the more competitive marketplace, or from coffee shops selling $14 avocado toast. Adding jobs to an economically depressed area, with a surplus of housing benefits most people living in it. Adding jobs to an economically vibrant area, with a shortage of housing harms most people living in it. An Amazon office in Detroit would be great for the city. An Amazon office in San Francisco... Not so much. Disclaimer: I don't live in Philadelphia, so I don't know where it is on the spectrii of 'economically vibrant' and 'housing shortage.'
    - benwilber0 9y ago
      I'm not seeing the point that you're trying to make. Are you suggesting that Philadelphia (or any major metropolis) would not benefit from the sudden windfall infusion of 50,000+ high-paying jobs? I think every small business owner in Philly is probably drooling at the prospect of Amazon dumping tens of thousands of people with disposable incomes at their front door.
      - KidComputer 9y ago
        Small business owners are definitely not drooling at that prospect. They usually have very slim margins and their rent will sky rocket as the landlords get greedy. Only a select few will remain usually due to being hip local places that already have high foot traffic that can successful raise the prices of their 'famous' cheesesteaks or opening the property. But for the average small business owner running the typical depressed looking establishment they'll see their repeat customers disappear one by one. They won't have the necessary capital to reinvigorate their image or pay their tremendously higher rent when the landlord decides they want to attract Starbucks to that location. Look at Bleeker street, the lower east side, Chinatown, the east village all in NYC. All places I've seen personally change rapidly over the years. I've talked to many owners, the story is always the same, we're being forced out of our lease. Being in tech I'm certainly part of the problem. And to be honest most of the new places that come in, particularly restaurants, are often better than what was there before. But let's not say the existing small business owners are drooling, they're almost certainly filled with dread at the prospect.

Retric 9y ago

Amazon and those workers will still consume city services. City's don't make a profit on average, so while those workers may make above average wages it's unlikely to make up for the overall lost revenue. Picturing 1000's of workers is overblown. Amazon does employ a lot of people, but in a highly distributed fashion and their expansion is not going to be huge. On top of that these are all large city's where +/- a few thousand workers is not that big a deal.

neilc 9y ago
> Amazon and those workers will still consume city services. City's don't make a profit on average I'd be very surprised if an Amazon worker making, say, $160k consumes more in government services than the sales/property/income taxes they are paying.
- ashelmire 9y ago
  Amazon workers in Philly aren't going to make 160k. Tech salaries are much lower here than on the west coast, much lower than NY and Boston as well.
nyokodo 9y ago
If +/- a few thousand workers isn't a big deal then why is it being made a big deal by all these comments? Obviously it's going to make an impact. My point is that the corporation and workers and associated economic multipliers will be adding a net positive to city revenue. If it wasn't going to do that I doubt hundreds of cities would be competing for it.
- dragonwriter 9y ago
  Direct employment numbers are direct revenues are easily, concretely associated with the deal, indirect infrastructure impacts are less in peoples minds, harder to concretely attribute and easier to cloud, and take a longer time to be palpable. Politicians overweight the former kind of measured (because they have more effect on political careers) and devalue the latter (for the opposite reason.) Cities aren't actors, they are just abstractions; politicians are the actors pursuing Amazon.

Angostura 9y ago

Would be better if there was national coordination and the cities had all simply said 'No - you want to come here, you pay tax'.