Cities Offer Huge Incentives to Amazon for New HQ

November 30, 2017

Although many retailers enjoyed a sales boost during Thanksgiving Weekend, no other company can rival Amazon’s stellar start to the holiday season. The e-commerce outlet brought in 45 percent of all online purchases on Thanksgiving along with nearly 55 percent of Black Friday’s total Internet transactions. Plus, Amazon announced that Cyber Monday was the company’s biggest sales day ever, boasting that customers had purchased “hundreds of millions of products” throughout the weekend.

Along with putting Amazon’s huge influence with customers on display, this post-Thanksgiving sales bonanza also shows the company’s massive potential for continued growth. That’s why last month Amazon announced it would be building a second headquarters somewhere in the U.S. to handle its ever-expanding operations. The company quickly received 238 offers for the proposed “HQ2” that would house more than 50,000 employees. Of the 30 proposals that have been made available to the public, many present the same incentives that cities would offer to any big company. In other cases, though, critics say that local governments are giving up way too much in order to woo the new HQ.

For instance, the town of Chula, California, has offered the company 85 acres of free land with no property taxes for 30 years. While this $400 million proposal is certainly substantial, it’s a pittance compared to Chicago’s offer to let Amazon keep $1.32 billion in income taxes paid by its employees. “The result is that workers are, in effect, paying taxes to their boss,” said a report from the think tank Good Jobs First. The California city of Fresno offered an even more radical proposal: 85 percent of taxes earned by the company would go into a special fund that would be partly overseen by Amazon. “Rather than the money disappearing into a civic black hole, Amazon would have a say on where it will go,” said Fresno’s director of economic development. “Not for the fire department on the fringe of town, but to enhance their own investment in Fresno.” And while Amazon executives might like the sound of that, it’s probably not such good news for people who live on Fresno’s fringes.

Questions:

  1. Why are cities offering such enormous incentives to Amazon for its new HQ? 
  2. Do you think the proposals offered by Chicago and Fresno are ethical? Why or why not?

 

Sources: Kaya Yurieff, “Amazon’s Cyber Monday Was Its Biggest Sales Day Ever,” CNN, November 29, 2017; Stephanie Pandolph, “Amazon Dominates Thanksgiving and Black Friday Online Sales,” Business Insider, November 29, 2017; Danny Westneat, “This City Hall, Brought to You by Amazon,” The Seattle Times, November 24, 2017. Photo by Robert Scoble.

Leave a Reply