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Comment by ashelmire | Hacker News Reader

Part of me would love to have a big tech / infrastructure company like Amazon in Philly. But I take serious issue with the idea of the city paying millions or billions to bring them here, promising years of tax breaks (a free ride), and the tightening of an already very tight real estate and rental market. I don't think my fellow Philadelphians should have to pay to bring a company here that's just going to hire people who are not currently residents, while increasing their expenses and utilizing the public services that their taxes have paid for, while receiving little to no tax revenue or services in return.

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Some context that might further illustrate OP concerns:

-Philadelphia already has major funding issues despite several unpopular taxes like the wage tax and soda tax

-Recently went through a huge gentrification cycle spurred in part by a 10 year tax abatement given to new construction or rehabs

-The city has already given huge tax incentives to another major corporation, Comcast.

What you have is a city that recently had to close many libraries, firehouses, and public schools due to budget issues potentially giving another gift basket to a huge corporation.

Whereas if they offered Philly a package including a Bezos Free Library system, Kindle FireHouses, and SchoolsByAmazon across the metro area, they could own the city for decades.

Do you think the city would be better off without Comcast employees there?

This is where more subtle analysis makes all the difference.

Comcast doesn't seem like it would be a high-end workforce. I doubt they do any R&D there.

While not all of Comcast's R&D is here, they do have quite a few teams in Philly doing R&D (I know people on them)

Yeah but does this actual help the people of Philly? http://h1bdata.info/index.php?em=COMCAST&job=&city=PHILADELP...

Not really a good argument to use when the overall topic is Amazon.

http://h1bdata.info/index.php?em=Amazon+Corporate+Llc&job=&c...

I do have a number of friends working as devs for Comcast, and I've recently been approached for a role doing dev work there as well. This is the HQ, so this is where I'd expect the bulk of technical work to happen.

Thanks for providing the context. I can see how people in Philly would be lukewarm on the idea of paying to bring Amazon to town.

I believe that it's completely reasonable for governments to invest massively into public infrastructure to facilitate the success of Amazon HQ. Things like new transit lines, complete streets, public parks etc. It should be a catalyst to invest into parts of the city that have seen substantial urban decay.

It irks me however when huge tax credits are handed out to already profitable companies to move in. It's just giving free services at the expense of everyone else.

I'd see it as cities charging more taxes than they are actually willing to collect. I.e. the city is happy collecting less % of taxes already, just that most dont have bargaining power.

In other words, they are able to bully individuals, but not corporations.

Correct.

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.

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.

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.

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.

> 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.

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.

The RFP quotes up to 50,0000 employees in 15 years. Any sane incentive package should have hooks in it to make sure most of those jobs do materialize.

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

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.

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-re...

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?

"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-...

And another article: http://gawker.com/how-amazon-swallowed-seattle-1724795265

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.

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

> Even if amazon doesn't pay taxes

I think this is being overstated. Amazon may get a very generous tax break for something like twenty years, but they will almost certainly still be paying more net tax yearly than all but the very largest employers in the area.

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.

> 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.'

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.

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.

Philly is economically vibrant and has an affordable housing shortage (although with the number of units currently being built, this might change in a year). The closer you are to jobs, the less affordable. Wages here are depressed compared to other US cities, however.

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

> I don't think my fellow Philadelphians should have to pay to bring a company here that's just going to hire people who are not currently residents, while increasing their expenses and utilizing the public services that their taxes have paid for, while receiving little to no tax revenue or services in return.

If you applied these views at the federal level than you'd be anti-immigration.

It amazes me how people can be so protectionist towards their local communities for the above reasons and have totally different views at the national level

Immigrants pay taxes.

So do employees of companies: income tax and sales tax and property tax. Even if Amazon gets a fairly large tax break, but net effect is overwhelmingly positive. The main downside of increased local wealth is higher overall prices and gentrification, which isn’t an entirely bad thing as long as it’s at reasonable levels. So all these new residents come to Philly or wherever, drive up rent prices. That means the local Philadelphia landlords become wealthier. I hate high rent prices, but I feel like this is a net benefit to both local residents and newcomers who come for the job.

Sometimes new immigrants get tax breaks though

I agree with your OP, but citizens get far more tax breaks than immigrants.

Citizens don't have to pay foreigner rates for public Universities. That's a nice $50k-$100k savings for higher-education that citizens get that universities don't get, right there.

What kind of breaks do immigrants get over citizens that are worth $50k-$100k? None.

That is NOT a tax break....the immigrants and their families didn't spend years paying into the state tax base used to support the public university which the citizens presumably did and will continue to do in the future...

edit: I am using immigrant-when perhaps one should use 'international student'

A lot of public universities only have 1 year of previous in-state residency requirement to gain in-state rates.

People aren't going to pay $50k-$100k in taxes in one year to cover this benefit that citizens receive.

Because they lived in another state in the same country basically, and in theory people could just as easily move in the opposite direction.

But you're right that in practice it is taken advantage of with people renting an apartment for a year and doing the minimum necessarily to register as residents.

So overall you're still incorrect about it being a foreigner tax, implying perhaps they just hate non Americans and want to punish them.

Also same full tuition applies to non residents from other states.

Universities often base tuition on residency status that they determine.

So a foreigner living in a state could get in state tuition.

(and a citizen that only recently moved to a state might get out of state tuition)

That is incorrect. You need to be a permanent resident or citizen to be considered for in-state tuition.

For example:

https://www.suny.edu/smarttrack/residency/

Non-resident students, including undocumented students, who attend for at least two years and graduate from a New York high school may be eligible for resident tuition. See the campus Student Accounts Office (Bursar) for details and to apply for resident tuition.

https://admissions.tc.umn.edu/PDFs/ResidencyReciprocity.pdf

Nonimmigrants residing in this country or state under a temporary visa that bars them from establishing domicile in the U.S. (visas B, F, H [H4 visa holders who have graduated from a Minnesota high school should contact the Resident Classification Office on campus about their resident status.], J, O, and M) shall be classified as nonresidents. Nonimmigrants holding a valid temporary visa that does not bar them from establishing domicile in the U.S. (visas A, E, G, I or L) may be considered for residency, assuming they otherwise meet the Basic Definition of Resident Status.

An then many states seem to recognize refugee and asylum visas, which aren't the same as permanent residence (but that is more of a technicality compared to the above).

Do you have an example?

The fact of the matter is that cities in the U.S., with respect to each other, are in a race to the bottom. There is nothing they can do about it: the Constitution mandates an unrestricted internal market with no barriers to the free flow of goods and capital between states. That means that companies will go wherever they can get the best deal, and there is no way for state and local governments to restrict that movement.

Cities that aren't named New York or San Francisco can either get with the program, as the southern states have been doing, and benefit from the growth, or they can resign themselves to moribund economies and irrelevancy. If they're smart, they'll do what places like Ireland and Switzerland have done, which is offer low corporate taxes and recover the difference with higher taxes on individuals.

That's incorrect about the Constitution. While it does not lay down specifics, it does give Congress the power to regulate interstate commerce. Known as the Commerce Clause, it's Article I, Section 8, Clause 3: "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;"

The Commerce Clause precludes states from erecting trade barriers between each other. While Congress could in theory do so, (1) it's never to my knowledge ever used its Commerce Clause powers in that way, and (2) provisions like the Privileges and Immunities Clause creates independent prohibitions on erecting barriers between states.

Yet... alcohol can not be freely moved between states. There are clearly cases where interstate trade is prohibited.

There is a narrow exception for public health, e.g. plant quarantine laws. But the usual tools countries use: tariffs, immigration controls, capital controls, etc., are unavailable.

That's just evidence the southern states suck as business locations. They can only get companies to move there by bribing them.

Contrast with San Francisco and New York City, where they have tons of taxes and no shortage of companies wanting to be there.

> That's just evidence the southern states suck as business locations

New York and San Francisco didn't do anything to be New York and San Francisco. Their market power is the product of happenstance. In any event, that's irrelevant. If you're Acer, you can't pursue the same business model that works for Apple. All you can do is internalize reality and do the best you can for your stakeholders with what you've got to work with.

Actually, they did. Times Square was not some place you wanted to take your kids to as late as the mid 80's. Cleaning up the city was a big campaign promise for several successive mayors. And San Francisco is NOT in Silicon Valley, it's 50 miles north of the actual valley. All of the major tech companies were setting up shop in the South Bay and peninsula 15-20 years ago. Successive SF mayors have lured tech companies north with various incentives.

You're saying two entirely conflicting things here. You're saying "cities in the U.S., with respect to each other, are in a race to the bottom" (not that being well-run and having low taxes is a bad thing in my opinion...), and then you said New York and San Francisco don't have to play along, presumably since they're competing on value rather than price. I think it's obvious that Amazon's not looking solely for the cheapest possible city to locate in. I suspect they were never going to choose Gary, Indiana no matter how sweet the tax incentives were.

It's like with PCs. HP/Lenovo/Dell/Acer sit between Apple on one hand, and unlabeled Chinese products on the other. But almost nothing differentiates them from each other. Customers don't necessarily want the cheapest product, but for everyone looking at the mid-range product, nobody is going to pay more for HP versus Dell. And that's reflected in these companies razor-thin profit margins.

Cities are the same way. Between New York and San Francisco on one hand, and Gary on the other, there are dozens of perfectly fine cities and the only reason to pick one versus the other is how good of a tax deal you can get. Nobody is going to pay a significant tax premium to be in Columbus versus Raleigh.

> There is nothing they can do about it: the Constitution mandates an unrestricted internal market with no barriers to the free flow of goods and capital between states. That means that companies will go wherever they can get the best deal, and there is no way for state and local governments to restrict that movement.

Sure there is--DON'T GIVE COMPANIES TAX BREAKS.

This isn't that hard. Tax breaks mean that you lose whatever benefits a company would bring to your area--so you're better off not bringing them in anyway.

Lobby to help nurture your local businesses. If you use the same resources and manage to double the employment at all your local small businesses, you've FAR exceeded anything a big company tax credit will do.

Besides, Amazon's HQ2 just isn't going to employ that many people and is going to be the political rejects unless Bezos actually moves there. Anybody with real ambition knows that they're going to have to go to Seattle, anyway.

It's just going to be an outpost of software slaves where they try to suppress the wages they're having to pay on the West Coast.

As such, this thing is going into where software wages are cheapest and they can extract a big tax break. I would posit Pittsburgh/Columbus/Nashville/Indianapolis. Everything else is a smoke screen.

Interestingly, I'm starting to see resistance mounting against tax breaks in Pittsburgh. Good on them.

The idea that Amazon is contemplating anything in a populated East Coast city near the Boston-Washington corridor is laughable.

That's oversimplistic. It is also depends on the quality of the city. Companies want to locate their best people in cities that are safe, have good airports, good schools, and reliable transportation where people want to live. This requires investment by the city, which must be paid for somehow.

Your comment reminds me sports stadiums being built millions spent for rich professional sports teams. I'm not into sports at all it seems unusual to build what to me seems like a church for worshippers of team X.

I'm all for being active but professional sports these days seems like they are a religion.

Agreed. My thing is, if a sports stadium is gonna be built with public money, it should belong to the public and the team owner should have to pay rent and/or revenue share. Otherwise, why should a billionaire (or group of wealthy people) get a taxpayer-funded stadium for them to print money with?

Stadiums generate a lot of construction jobs, a lot of billable attorney hours, operational revenue to the locality and state/federal dollars for infrastructure.

At worst, political people and relatives are members of LLCs that are owning real estate.

Basically, it lets politicians be gold-givers. That means political capital, which is as important as cash is to a billionaire.

Oh come on, Philadelphia has plenty of other projects like roads and schools that it can spend that money on that also generate those jobs.

Stadium subsidies have repeatedly been shown to be one of the worst development deals local governments can make. Or get snookered into. While deals tend to vary, with some being less bad than others, local governments almost always lose in the long run: subsidies stadiums don't generate the expected economic gains, and the opportunity cost means subsidy funds can't be spent on infrastructure investments that would have a stronger, more immediate economic benefit. The perceived rational for stadium subsidies tends to focus on two main benefits: construction jobs, and a multiplier effect that's tied to tourism as well as local sports spending. One analysis, for example:

> In our forthcoming Brookings book, Sports, Jobs, and Taxes, we and 15 collaborators examine the local economic development argument from all angles: case studies of the effect of specific facilities, as well as comparisons among cities and even neighborhoods that have and have not sunk hundreds of millions of dollars into sports development. In every case, the conclusions are the same. A new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment. No recent facility appears to have earned anything approaching a reasonable return on investment. No recent facility has been self-financing in terms of its impact on net tax revenues. Regardless of whether the unit of analysis is a local neighborhood, a city, or an entire metropolitan area, the economic benefits of sports facilities are de minimus.[0]

Multiple surveys of economists have shown a strong consensus against stadium and professional sports subsidies: one survey indicated that 86 percent agreed "local and state governments in the U.S. should eliminate subsidies to professional sports franchises" while another from 2017 showed "Providing state and local subsidies to build stadiums for professional sports teams is likely to cost the relevant taxpayers more than any local economic benefits that are generated."[1][2] Michael Leeds, a sports economist, put it this way: "If every sports team in Chicago were to suddenly disappear, the impact on the Chicago economy would be a fraction of 1 percent...A baseball team has about the same impact on a community as a midsize department store."[3]

But people love their teams, and the simple threat of moving is often more than enough to push subsidy deals past any roadblocks even when a move is highly unlikely. Plus, they're stuck with an old, empty stadium afterwards: when Rams left St. Louis for LA, the city was still carrying >$100 million in bonds from the old stadium's construction in 1995.[4] Plus another ~$17 million spent on developing a new stadium plan in the two years before the move. No wonder the city tried to sue.

Stadium subsidies are bad deals sold with irrational projections with fans' emotions used to grease the deal the rest of the way. The only thing worse than a city declaring victory with a stadium deal is a city actually winning an Olympic bid.[5] Apologies for the length; I got a bit carried away :).

0. https://www.brookings.edu/articles/sports-jobs-taxes-are-new...

1. https://research.stlouisfed.org/publications/page1-econ/2017...

2. https://people.uwec.edu/jamelsem/fte/fte/efl/teacher_stuff/a...

3. https://www.marketplace.org/2015/03/19/business/are-pro-spor...

4. https://www.huffingtonpost.com/entry/rams-los-angeles-st-lou...

5. https://astro.temple.edu/~mleeds/documents/CEP.pdf

Why do you think they wouldn't hire current residents? Isn't this supposed to be a whole new HQ? I thought they had said it would be 50,000 NEW jobs.

Philadelphia has a 6% unemployment rate. Don't you think HQ2 might drive that down some?

Here in Dallas, there has been a stream of companies moving headquarters in from out of state. Even though they are bringing their people with them, they wind up scouring the landscape for new workers. Toyota relocated and brought 3200 people along but they are still hiring 1000 locals.

Philly doesn't have 50,000 skilled, but unemployed, residents waiting around for Amazon.

Sure, some locals will quit their jobs and work for Amazon. And some may come off the unemployment list. But, the majority will need to be brought into the area, which causes congestion, drives up real estate values and rent, etc.

It also increases the money available for restaurants and entertainment, local purchases and shopping - creating local jobs for less skilled and unemployed people.

> Philadelphia has a 6% unemployment rate. Don't you think HQ2 might drive that down some?

It might drive it up, if the tax incentives and other provisions required to secure it mean it's not paying for it's fair share of shared infrastructure, so that either overall infrastructure crumbles or is paid for by others (through higher overall taxes), either of which can drive other businesses away.

I'm sorry, but this is economically faulty reasoning... Intensification of development creates external growth. More people making more money on new jobs and spending it into the economy boosts everyone else.

You are conflating concerns about infrastructure (which is a government expenditure) with job growth. HQ2 in Philly (or anywhere else) would add to government coffers, both directly (from wage tax, etc.) and indirectly (from property taxes, wage tax from non-Amazon business growth, etc.). The only way infrastructure would "crumble" is if the government doesn't properly direct some of its windfall towards maintaining it.

> HQ2 in Philly (or anywhere else) would add to government coffers

Only necessarily true if you assume there are no government costs in attracting it; but, yes, it's probably at least a slight net gain in tax revenue because the incentives alone probably don't directly outweigh the revenue.

They might, however, when you add in the induced capital (for utility extensions, roads, etc.) and maintenance (for both the new and existing facilities induced by increased utilization from the HQ).

And if that's the case, there are either reduced expenditures relative to the level of need or increased taxes as a result of the incentives to Amazon, and those absolutely can drive away other businesses.

If you think that attracting high numbers of highly educated and wealthy people into a moribound city is not going to increase property taxes and the existing tax base, I don't know what to say, especially since you (or anybody outside of Philly or Amazon) know what the concessions are, I don't know what to say.

If the concession was only to take 1% off the tax bill for Amazon, it'd definitely be a good idea. If it was to rescind taxes in all perpetuity and give massive development credits, it would probably be a bad idea. Now it's all down to negotiation.

In the spirit of a constructive dialog, why is this getting downvoted? @jimmywanger is making good points that address the real, positive impacts of attracting an HQ2-level project.

Creating jobs that don't exist for people who currently aren't residents (or don't yet exist) is the very definition of economic progress. If you don't want that then you just want nothing but the status the status quo unchanged forever. You can't have it both ways.

The OP has clearly stated that their concerns are corporate welfare going to a company that most certainly doesn't need a handout and a further disruption to an existing housing problem.

And you have decided to reframe their concerns as being "against progress"?

Also please point me to this formal definition of "economic progress" you are stating.

I can absolutely expect a company not to need massive tax breaks to come to my city, and to have a plan for housing. If Amazon were to come to the Northeast part of the city and with a plan for development of housing and supporting services, that would be great. But in all likelihood, they will just crowd our downtown and popular areas even further.

I'd agree with you if you removed "for people who currently aren't residents (or don't yet exist)" from the sentence, but leaving it in there means creating more inequality than economic progress.

I totally see your point here. On the other hand, I left Philly in 2014 after getting laid off from a remote job. I could not get a job in town that utilized my skill set and paid me enough to maintain my family's costs.

From my perspective, there were only 2 games in town for people with specialized tech skills - Penn or Comcast. I'm sure that's not entirely true. But that's what it looked like to me.

The only place I could get hired (and maintain income) - Google. But Google doesn't do remote work, so here I am in the Bay Area. If Amazon comes to Philly, short term there will be costs if the city doesn't negotiate things properly. But long term, Amazon being here will mean other tech companies will come to poach labor. It's what happens in Seattle, Boston, the Bay Area in general.

It's not enough for government to sit back and assume tax dollars are going to cover economic growth. Government needs to be active in participating in growth, and that includes understanding what businesses need from their business plans and assisting them in becoming successful - from startups to large businesses.

Jobs are the goal for this competition. They're the prize.

Be thankful that governments are participating in this process. You can't make money without spending money. Don't be angry that your city paid $1 to earn $5. EVERY business has a cost-of-sales associated with it, and government is basically a really large business.

If your city wins, the local revenue from economic activity from these new employees will far exceed any costs and tax incentives given to Amazon.

Don't be the guy that thinks taxes is enough. Your own skills at business planning applies just as much to government. You got a lot of revenue via taxes, now what? How do you spend it? What causes the most tax revenue return and highest population satisfaction?

If you actually write down all of what these governments are doing in a business plan to win Amazon's headquarters, you'll find that it's as much a business plan as anything else, and that government's cost calculations are likely worth it. Business planning is never easy - it's far easier to screw it up - but nothing worthwhile is easy. Be glad that government is doing hard things, instead of easy things.

Edit: To give an idea on the kinds of business-plan data government needs to understand to determine if Amazon is worth it or not, consider that: Are Amazon R&D employees high-crime people? Do they murder other people a lot or die from opiates? Will the HQ create pollution and destroy the environment? Are there dangerous chemicals that might explode if stored unsafely? Will their operations cause birth defects?

Use this kind of data to calculate how much government services these people are going to need and to determine if their tax-incentive costs are worth it?

I would really like to know why this is getting downvoted... The reasoning here is sound - jobs create economic growth. These governments are forgoing a portion of the tax income that currently does not exist but would be gained by Amazon's arrival in exchange for getting Amazon to come in the first place. This is not an Olympic Games or a sports stadium that benefits very few individuals economically. This is a project that will dramatically shape the city chosen for the better (economically).

I didn't downvote it, but you omit an import issue: Amazon coming will also increase expenses for the city -- police, fire protection, sewers, etc. Tax revenue exists to pay for these things. It is not unreasonable to worry about whether the net effect of giving big tax breaks and bringing in a company like Amazon will be negative.

Half of Philadelphia's General Fund revenue comes from wage taxes. That ends up being 1/6th of the budget of Philadelphia and 2/7 of the revenue for the city.

While it isn't unreasonable to worry that the net effect of lowering the business income and real estate taxes applied to Amazon would result in a negative tax/expense ratio, when applied holistically and including the other taxes, it's also not unreasonable to think the city revenue will increase, particularly when you add in related businesses.

population of philadelphia: 1.56 million

supposed HQ2 employees: 50,000

I suspect that the sewers won't overflow, new crime waves, extra fires, etc. There may be impact on transit in a few specific areas, but in terms of total population impact it's difficult to believe that it would noticeably impact the budget in any particular city service. Except for transit.

The problem is that government expenses go up with Amazon's arrival as well. If we assume the taxes paid by other businesses fairly represent their load, then Amazon will be a burden overall by avoiding those taxes. That growth from other businesses will be needing services as well, and the tax from that growth won't cover everybody.

That's balanced by the increase in tax base from 50,000 jobs and investment of billions in the local community.

No it's not balanced, that was my whole point. Yes there will be an increase in tax base, but it won't cover the increase in expenses. If it does then it implies that the current businesses are overtaxed.

It will cover any increase in expense. Not all jobs are equal, and Amazon R&D jobs are the most rewarding. They don’t have crime like non-college working class, they don’t die of opiuates like restaurant and other service workers. They don’t have cancer or birth defects like factory workers.

Not if the average salary and usage taxes per Amazon employee are higher than normal for the city, which seems likely.

>If it does then it implies that the current businesses are overtaxed.

The "implication" is not obvious to the casual observer.

> while receiving little to no tax revenue or services in return.

Does Pennsylvania have no income, property or sales tax?

the whole point of the amazon bidding process is to induce competition between cities to give amazon exemptions and tax breaks-Philadelphia/Pennsylvania will probably benefit on the whole if they were chosen...but the size of that benefit would depend substantially on the terms they offer amazon.

Philadelphia is a deeply corrupt city. It doesn't matter how much money it is given, it will never be enough.

I moved from Philly to Seattle last year. I would also like to see a bigger tech firm in Philly. There is a great startup scene. The meetup scene is great, and the techie awards of best places to work were awesome. With University City providing good graduates. I mean Drexel, Upenn, Temple, Villanova, and just south University of Delaware. Then transit there was amazing. Philadelphia really feels like it has all the tools to be a great tech hub.

http://www.techinmotionevents.com/blog/post/2017/05/04/the-2...

That being said, I do not like what Amazon has done to Seattle. The culture, infrastructure housing, etc, etc. I have been hoping that they don't end up in Philadelphia. I feel one other big player, then more startups would be good. I guess put another way some new blood. As the east coast feels a bit old blood at times.

As noted with the tax breaks to Comcast the other resident tech giant. The city needs more investment, not more tax cuts. There were issues with septa, schooling, public services, etc.

I did a few stints at Comcast. It was a good place to work, but they weren't pushing the boundaries generally. There were some internal teams that were pushing tech. Contributions to OpenStack was very large. Some video encoding stuff, but I think that team was largely located elsewhere. To get to the more technically advanced stuff you needed several rounds there.

Comcast in the meetup scene though was great. A number of directors and seniors presented at software as craft, devops, various code katas. I also knew a number of comcast employees going to the open philly code meetups. See for the cities open source stuff.

https://github.com/CityOfPhiladelphia

There was a definite real estate boon when I left. With a number of areas being built up. But there was also gentrification issue as well. I lived down in Grey's Ferry area for a bit. The post office had been closed, and the local grocery store I think path mark as well. It went from a nice little area to a bunch of bodegas and boarded up houses. It was very hostile trying to force the people to leave to make room for improvement/rebuilding. I think something was going on around temple university. With subsidies being ended or modified.

The city has it's problems for sure, but it's still a great place.

> That being said, I do not like what Amazon has done to Seattle. The culture, infrastructure housing, etc, etc.

I'm a Seattle transplant and I've heard this point before. Can you elaborate a bit more on what you mean by the culture changes brought by tech transplants?

I would love to see Philly land it but let's be honest: They are going to put it in a better run city with less inherent corruption.

ok, using corruption as a premise, lets see who that eliminates. New York Chicago Newark Philadelphia Washington DC for sure Miami LA?

I agree with your assessment, yes.

Seattle native who feels the exact same way about Seattle as you do about Philadelphia.

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