Amazon HQ2 RFP

[DominusNovus]

Source? My understanding is that there are plenty of black politicians in the south but they're in heavily gerrymandered districts that are like 70%+ black. I'd be curious to see if there are plenty of districts that are 50%+ white that have elected black politicians.

Tim Scott, US Senator (so no gerrymandering) from South Carolina, Republican, won a speical election and a normal election after being appointed by Nikki Haley (who is Indian, not to draw an equivalence).

I have a slightly more partisan formulation of your theory, but we’re already so far off track here.

 

[DominusNovus]

Because Amazon can go anywhere... local businesses don't have that option.

And how does that justify making the local small guys pay more? I don’t want to assume you’re just saying “because we can make them” but thats not an unreasonable reading of your post.

 

[jklo]

And how does that justify making the local small guys pay more? I don’t want to assume you’re just sayung “because we can make them” but thats not an inreasonable reading of your post.

Because Amazon has leverage. You're right that it's not fair that Amazon would get these kinds of breaks and local business don't but if you want the jobs you don't have much choice.

 

[DominusNovus]

Because Amazon has leverage. You're right that it's not fair that Amazon would get these kinds of breaks and local business don't but if you want the jobs you don't have much choice.

Well, like I said, we could lower the rates across the board. That said, I’m not opposed to offering occasional targeted tax breaks like this, but I think its a subpar solution.

 

[shmessy]

And how does that justify making the local small guys pay more? I don’t want to assume you’re just saying “because we can make them” but thats not an unreasonable reading of your post.

Because the local bakery/shoe store/tech startup/services company is not bringing in 50,000 jobs from other states averaging 140K per head.

Economics. Think.

Don't cry for the local shoe store/bakery/tech startup/services company - they benefit greatly from the larger, more affluent market of 50,000 high income workers and their families relocating to Massachusetts.

You don't think it's in most of their best interests for Massachusetts to dangle something to get Amazon here?

The difference is the act of entering versus just staying and benefitting from the party who is entering.

Get them to enter. The key is to give as little as possible to Amazon to get them to come. $10 million over 15 years for 4,000 jobs is laughably inexpensive. Anyone complaining about this latest small tax development is probably upset about paying more than a nickel for a loaf of bread.

 

[DominusNovus]

Because the local bakery/shoe store/tech startup/services company is not bringing in 50,000 jobs from other states averaging 140K per head.

Economics. Think.

Don't cry for the local shoe store/bakery/tech startup/services company - they benefit greatly from the larger, more affluent market of 50,000 high income workers and their families relocating to Massachusetts.

You don't think it's in most of their best interests for Massachusetts to dangle something to get Amazon here?

The difference is the act of entering versus just staying and benefitting from the party who is entering.

Get them to enter. The key is to give as little as possible to Amazon to get them to come. $10 million over 15 years for 4,000 jobs is laughably inexpensive. Anyone complaining about this latest small tax development is probably upset about paying more than a nickel for a loaf of bread.

Like I siad before, I don’t oppose offering Amazon this sort of thing, I do see the benefits. But, in aggregate, this is not an ideal situation, and the government is not the best way to pick winners and losers. This is one way in which we see how government intervention can favor the alreay gigantic corporations instead of being a level playing field.

I’m bot going to tilt at windmills here and asking the state to not do what they can to get Amazon here, I just think it would be better to be more equitable.

 

[shmessy]

Like I siad before, I don’t oppose offering Amazon this sort of thing, I do see the benefits. But, in aggregate, this is not an ideal situation, and the government is not the best way to pick winners and losers.

I’m bot going to tilt at windmills here, I just think it would be better to be more equitable.

It depends on your definition of "equitable". There is the social definition and then there is the economic definition.

You seem to be using the social definition of dollar per breathing human. "Every kid gets a trophy".

I (and most non-Marxist economists) define it as dollar per economically productive unit. If Amazon is going to cause a significant rise in tax revenue, then it would be UN-equitable not to incent that with tax breaks.

 

[stellarfun]

50,000 HQ2 workers with an average taxable income of $80,000 = $4 billion of taxable income. $4 billion of taxable income at a tax rate of 4 percent would yield $160 million in state income tax revenue.
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5,000 new Amazon workers (Seaport area) with similar taxable income taxed at the same state income tax rate would yield $16 million in state income tax revenue.

For the latter group of Amazon workers, toss in an employment multiplier of 1.5, generating 7,500 non-Amazon employees with an average taxable income of $30,000, taxed at a 4 percent state income tax rate would yield $9 million in income tax revenue. Total state income tax revenue from the 12,500 new workers would be $25 million, annually.

Toss in property taxes, business income taxes, and sales taxes, and the tax revenue increases even more.

The tax incentives make much less sense if the state has no state income tax, and most of the workers live in local jurisdictions outside of the jurisdiction where they work. E.g., an Amazon complex in Portsmouth NH, where most of the workers live in Maine or Massachusetts.

 

[TheRifleman]

50,000 HQ2 workers with an average taxable income of $80,000 = $4 billion of taxable income. $4 billion of taxable income at a tax rate of 4 percent would yield $160 million in state income tax revenue.
_____________________________________
5,000 new Amazon workers (Seaport area) with similar taxable income taxed at the same state income tax rate would yield $16 million in state income tax revenue.

For the latter group of Amazon workers, toss in an employment multiplier of 1.5, generating 7,500 non-Amazon employees with an average taxable income of $30,000, taxed at a 4 percent state income tax rate would yield $9 million in income tax revenue. Total state income tax revenue from the 12,500 new workers would be $25 million, annually.

Toss in property taxes, business income taxes, and sales taxes, and the tax revenue increases even more.

The tax incentives make much less sense if the state has no state income tax, and most of the workers live in local jurisdictions outside of the jurisdiction where they work. E.g., an Amazon complex in Portsmouth NH, where most of the workers live in Maine or Massachusetts.

Chiofaro/pru are looking to knock down harbor garage and build a billion dollar development on the greenway why hasn’t our local govt officials offered to give that group tax incentives? If it’s all about tax revenue and jobs?
How about just work with them to help create jobs and make the city better instead of making excuses for the last 10 years then claim that the city wants to generate tax revenue and jobs and have to give tax incentives to Amazon.


Nothing but hypocrites. It’s all one sided

 

[stellarfun]

Chiofaro/pru are looking to knock down harbor garage and build a billion dollar development on the greenway why hasn’t our local govt officials offered to give that group tax incentives? If it’s all about tax revenue and jobs?

How about just work with them to help create jobs and make the city better instead of making excuses for the last 10 years then claim that the city wants to generate tax revenue and jobs and have to give tax incentives to Amazon.

Nothing but hypocrites. It’s all one sided

You should be able to answer your own question.

Has Chiofaro spoken even a syllable about having a prospective tenant who would be bringing x number of new jobs to Boston?

When Don announces that his project will be the home of company x who will bring 1500 new jobs to Boston, then he can come knocking on the city's door with his hand outstretched.

BTW, the city does not give tax breaks for a building with condos for the 0.01 percent. At one point, some years ago, he was boasting that the condo part of his once-upon-a-time pair of towers would feature the most expensive condos ever offered in Boston.
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And how exactly should the city of Boston go about 'creating jobs? What does that entail? Be specific.

 

[TheRifleman]

You should be able to answer your own question.

BTW, the city does not give tax breaks for a building with condos for the 0.01 percent. .
.

Really---- what is the Millennium tower built for public housing?

https://www.bostonglobe.com/busines...te-downtown/6SMPxyscMGzrXtMFJPysdK/story.html

You just proved my point.

 

[stellarfun]

Really---- what is the Millennium tower built for public housing?

https://www.bostonglobe.com/busines...te-downtown/6SMPxyscMGzrXtMFJPysdK/story.html

You just proved my point.

Didn't prove anything. The tax break, $600,000 a year for 13 years, was for retail / office, not for the residential.

 

[TheRifleman]

Didn't prove anything. The tax break, $600,000 a year for 13 years, was for retail / office, not for the residential.

Isn't that what Chiofaro/Pru proposed in the beginning?
Overall 1 Million Square Foot development with both Residential, Retail/Office to knock down a garage that blocks 90% of the waterfront.

How much tax revenue would that have brought into the city tax coffers.
#1 Real Estate taxes 18Million annually- on both residential/corporations
#2 1500+ Union jobs---
#3 Linkage Payments--
#4 Perfect for Transit--Garage is central located on MBTA lines which would decrease traffic vs building 1,000,000 square feet in another location in the city.
#5 Perspective tenants that would relocate to this location from other parts of the world.
(I don't believe Chiofaro/Pru would have a tough time finding a tenant not willing to relocate on this prime real estate)

If developments are going to create jobs and future tax revenue then why wouldn't the leaders of this state GIVE tax breaks to all development that offer a NET+PLUS in Tax revenue and job creation?

 

[stellarfun]

A bit more on Amazon's venturing into health tech.

https://www.cnbc.com/2018/03/16/amazon-hiring-taha-kass-hout-former-fda-cto.html

IF health tech will be a significant part of HQ2, that puts some of the finalist cities at a disadvantage.

 

[DominusNovus]

It depends on your definition of "equitable". There is the social definition and then there is the economic definition.

You seem to be using the social definition of dollar per breathing human. "Every kid gets a trophy".

I (and most non-Marxist economists) define it as dollar per economically productive unit. If Amazon is going to cause a significant rise in tax revenue, then it would be UN-equitable not to incent that with tax breaks.

I don’t disagree with your basic premise. I think that incentivizing business growth is an excellent political philosophy.

 

[KentXie]

Cause Boston is an angel with regards to race relations . But every city has some race problems, I don't think it would a dividing factor.

In fact I don't think that the red state blue state thing will have much of an affect on Amazon's decision.

I never said Boston is an angel or has no issue with race relations and I never said every city is race issue free. In fact, I leaned towards the opposite and say racial issue exists everywhere so quite putting words in my mouth.

In my opinion, which I can't definitively say all PoC share but wouldn't be surprised if many do, there are people out there that don't want people like me or people who aren't white here and given the recent circumstances in Austin where residents may be bombed because of their skin colors, that would give PoC a pause into whether they would like to move to Austin. Do I think it would factor into Amazon's decision? Maybe, I don't know but it would probably factor into some in the labor pool that they draw from's decision on whether they would like to move to Austin with them. The recent terrorism in Austin has already put me off from visiting the city, especially after another possible bombing tonight.

https://www.nytimes.com/2018/03/18/us/austin-bombings-police-motive.html

 

[tysmith95]

Chiofaro/pru are looking to knock down harbor garage and build a billion dollar development on the greenway why hasn’t our local govt officials offered to give that group tax incentives? If it’s all about tax revenue and jobs?
How about just work with them to help create jobs and make the city better instead of making excuses for the last 10 years then claim that the city wants to generate tax revenue and jobs and have to give tax incentives to Amazon.

Nothing but hypocrites. It’s all one sided

The residential tax rate in Boston is $10.48 per thousand dollars of assessed value. The Commercial tax rate is $25.20 per thousand of assessed value.

I'd argue that condos already receive a sizable tax break compared to commercial properties.

I think a better solution if you want so spur development would be to raise the taxes on parking garages and structures.

 

[shmessy]

The residential tax rate in Boston is $10.48 per thousand dollars of assessed value. The Commercial tax rate is $25.20 per thousand of assessed value.

I'd argue that condos already receive a sizable tax break compared to commercial properties.

I think a better solution if you want so spur development would be to raise the taxes on parking garages and structures.

That's a great temporary idea.

However in a decade or so, when no one physically parks a car in any city, (they will just dial up their subscription service for the automated carpod which will drop them off, do more runs and then warehouse in Taunton overnight), there will be no urban parking garages or structures to tax.

 

[SeamusMcFly]

People have high hopes on whatever these car pods are.....
Hybrids have been on the market for almost 20 years at this point, and they have grabbed a whopping 3% of new car sales as far as market share.
I have a hard time thinking we're going to see drastic shifts in personal choices in half the time to a currently non-existent transportation mode.

50 years, ok. A decade, there will be plenty of parking structure in the city still, and people will still be filling them and paying ridiculous rates. The expansion of Massport parking is testament to this. They ain't building them for the next 10 years. Those are 50 year structures.

As long as we keep getting cheap oil, we'll keep driving cars in the USA. And, next time the oil prices rocket, there is viable options now to keep people in their SOV's. Tesla has shown the electric car is more viable than previously believed, and hybrids will surge if/when it happens.

Your pods and hyperloops, are real and coming, but not in a short period of time.

You're right in it being a temp solution, but 50 years is temporary in the grand scheme.

 

[tangent]

If developments are going to create jobs and future tax revenue then why wouldn't the leaders of this state GIVE tax breaks to all development that offer a NET+PLUS in Tax revenue and job creation?

I agree. However, I think the criteria in determining whether there is a net benefit should be where the revenue to support those jobs is coming from not how much direct tax revenue is generated.

If the money to pay for those Massachusetts jobs is coming from revenue largely earned out of state then it is well worth the tax incentives.

If it is a Target or Walmart then the jobs "created" actually represent a net loss to the state in terms of revenue going to out of state owners to buy products made in China.

Likewise if the company has payroll equal to the revenue from Massachusetts based customers then there is no net benefit to the state economy regardless of how much taxes are siphoned off. No net loss either if we are just moving capital around to get people to do stuff.

If the Massachusetts payroll exceeds the revenue generated from Massachusetts customers then I think any company that meets that criteria should get the same per employee tax incentives as any other.

If that was made a law rather than something negotiated ad hoc with every prospective out of state company then the Massachusetts economy would see a net benefit or at least be more competitive.

Information on how much sales revenue Amazon makes in Massachusetts is hard to estimate (unless you are the state and Amazon is giving you that data). Amazon is hopefully in that category where the revenue generated from Massachusetts customers wouldn't usually support 50,000 or anything close to that number of jobs so there will be a net benefit to the Massachusetts economy if they locate tens of thousands of jobs here. Although, without hard numbers from the department of revenue it is likely that the state wouldn't see a net economic benefit for the first few thousand jobs located here... but at least we wouldn't see a loss on those jobs if they went elsewhere.