Perhaps. Markets where the price discovery mechanism isn’t very transparent tend to break down. Would you also subsidize Walmart to open in town? Or is it specific to an employer like Amazon?
Possibly, if the economic case is solid. Amazon is vastly different though. Amazon workers won’t crowd out local businesses, they will be higher educated and highly paid ($150k+), and they will create a positive externality (hype, coolness of tech industry). The upsides are overwhelming, and the downsides are few - increasing labor cost for current local companies, higher property costs. Even those cost negatives will result in net positive asset gains for local investors and more tax revenue for the city.
All these cities lined up for Amazon to bttfck them. It’s not (just) because the mayors want a boy scout badge. It’s also because of the huge benefits to the cities. The simple explanation is sometimes the most true.
Home prices already gaining. It depends on the company for sure. If WMT moved its headquarters to a town I’m sure they’d get a break. If you’re talking about subsidizing and actual Wal-Mart probably not so much. Its a combination of the type of labor it brings and the type of other follow on corporate activity. For instance a WMT HQ probably brings a stronger presence from financial institutions, suppliers, start ups, etc that all support that company. Because RE supply is slow to respond, your home prices move up quickly which raises your whole property tax base beyond just the wages. You also secure as Ohai said, long term relevance for your city. Cities are constantly on the rise and fall these type of events are huge for increasing your status.
Can we merge this thread with the “rent control” thread? I figure the people that will really make out like bandits are those who can illegally sublet their $100/month apartment in NYC for $5000/month.
MLA HOW YOU NOT EVEN GONNA ACKNOWLEDGE YOU OWE ME CASH MONEY?
There are actually tech firms with hqs in New York already, none of which received a subsidy. So quite funny people mentioned the what if scenario.
How many employees we talking?
DC is gonna be the next east coast tech hub. Huge surge in hiring around these areas and companies other than Amazon Opening offices.
https://www.wsj.com/articles/google-plans-large-new-york-city-expansion-1541636579
not sure about FB but probably same
Those are fractions of Amazon HQ2 numbers. SAD! That said, I’m sure they get a tax incentive, its pretty standard. Even GE got one when they moved HQ to Boston.
Good time to be a software engineer
But the difference is google buying existing buildings and just upgrading. I think amazon is an actual construction.
Also it’s 20k for google vs 25k for amazon. Plus there is a high likelihood that google will expand it before amazon completes their new hq.
The difference between Google’s project and Amazon’s is scale and commitment. Amazon promised to go balls deep right away, in a way that will create major and immediate economic transformation. Google made incremental steps and could have stopped hiring or pulled out at any time. Amazon cannot withdraw in the middle of their buildup without major financial consequences. So, it is rational for the city to help mitigate some of Amazon’s risk in return for their commitment.
In Nery’s language, Amazon was willing to “put a ring on it” so they got the cherry.
hmmm
should you still carry plan b if you have no intention of pulling out?
I meant a regular Walmart, not a HQ. I think municipalities should compete based on generous regulations and tax incentives for all companies, not specific deals for specific companies.
Some companies bring growth, some slow the local economy. Some bring support roles and high value jobs, some don’t. These breaks represent investments by the municipalities in the economy. Saying they should blindly support all companies is like saying they should blindly buy all stocks. Comparing it to indexing however is flawed because the portfolios in many cases are more concentrated and communities don’t get equal representative access to the broad cross section of the economy. Bringing a WMT to town usually kills local activity and reduces paying jobs, for example.
In my system, you’d make the incentives for HQs and not retail locations. It seems easier to determine the impact of aggregate decisions than isolated ones. The assumptions to know what the actual return of amazon specific tax breaks seems much more difficult than everyone being treated the same
Not that I disagree in principle about those corporate incentives. However, the practical fact is that when some company comes in and offers 50k jobs, you have to give them special consideration. Imagine you run a shoe store or something. If someone comes in with a huge order that will materially influence your business outlook, you don’t want to just charge them retail prices.
I’m sure a deep economic analysis has been done about this. Amazon is projected to bring $30 billion in tax revenue to the city over 25 years. NYC got a great deal by only paying $2 billion for this. Consider that other cities, like Newark, were offering $7 billion or more in incentives.