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October 1st, 2017 by Marco Santarelli
Online retail giant Amazon Inc. has received multiple offers of tax breaks as a part of the company’s national competition for Amazon’s second headquarters. According to Reuters, the HQ2 competition came to an end on Thursday, October 19, and will include up to 50,000 new jobs and a $5 billion investment for the winning city. Not only that, but housing prices in the chosen land are expected to rise considerably.
The competition has been seeing increasingly unique publicity stunts and tax break offers by elected officials in an attempt to win Amazon’s favor.
Among the offers includes a potential $7 billion tax break in New Jersey should Amazon choose to locate their new headquarters in Newark. The state assembly of California also proposed Thursday, October 19 a $1 billion tax break for Amazon over the course of a decade.
Amazon stated at the beginning of the competition that the company would be seeking a headquarters in a city with more than a million people and with reliable mass transit. This wish-list has left many smaller metropolitan areas feeling left out.
“The cities I talked [to] all know they are being taken and resent it,” said Richard Florida, a professor at the University of Toronto’s Martin Prosperity Institute.
According to The Seattle Times, the most recent number of cities interested in being Amazon’s second headquarters is a total of 150. While the smaller cities of America may not have been able to make a display as bold as New York City’s Amazon-orange Empire State Building, it may be the tax breaks that get the company’s attention, Reuters reports.
“Since its beginnings as an online bookseller in 1994, Amazon has had a savvy approach to taxes,” said Reuters, “collecting no sales tax for many purchases until recent years, and now putting governments against each other to win tax breaks.”
There are three different types of tax audits in particular the IRS carries out during tax season including correspondence audits, office audits, and field audits. Of course, it’s perfectly legal for local cities and states to offer significant tax breaks to corporations like Amazon. But whether or not those tax breaks actually benefit citizens in the long run remains to be seen.
In Seattle, Amazon has created 40,000 jobs, but it’s also led to higher traffic costs and worsening traffic, per NPR. However, it’s not just Amazon jobs that tempt city mayors. A major headquarters will indirectly support thousands of other jobs, especially during the construction of the headquarters itself.
As of last year, the U.S. construction market was worth $1,162 billion. However, between 2006 and 2011, the construction industry eliminated 40% of its workforce, and many of those jobs disappeared for good. Many cities would welcome new construction jobs, especially if Amazon offers money to help finance construction and other civic improvements.
As such, the lure of new jobs and the esteem that comes with a major corporate headquarters has cities pulling out all the stops. In fact, the competition between cities has gotten so intense that many cities have been talking trash about their geographic rivals.
The city of Milwaukee suggested to Amazon that the company take residence in Milwaukee while using the Chicago workforce and amenities so as to avoid higher living costs.
“We consider Chicago one of our finest suburbs,” said Milwaukee Mayor Tom Barrett.
Applications for Amazon’s second headquarters ended Thursday, October 19. Amazon intends to announce the winner of the competition in 2018, keeping hundreds of mayors, and the world, in suspense.
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