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Comment by winningcontinue | Hacker News Reader

most shocking part is the NDAs with cities for the HQ2 bids require local governments adherence to dynamic pricing contracts. For one CA school district, that system would make them pay 12% more. So on top of the big and extended tax breaks cities have to give to win over Amazon, along with the exceptions to zoning restrictions that most builders have to adhere to, that's not enough. They also have to buy from amazon at inflated prices. Not a bad deal, if you're Amazon.

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My general thought on this: why allow tax reductions for giants like Amazon at all?

The idea is that by offering tax breaks, you get them to build in your city and provide tax-paying jobs to locals. Hopefully the net result is more taxes coming in (and better employment).

Of course, what I think you are probably saying is why allow it anywhere -- if there is a general legal prohibition on giving any specific company preferential tax treatment, then that puts all potential headquarters locations on equal footing.

Because how else can a city compete? Look at the number of Caribbean islands which are known to be “tax havens”. Besides offering virgin beaches and piña coladas (which other places can also offer), they can also advertise favorable taxes and rule of law to lure foreign capital in.

tldr: “better to have a smaller % of something than 100% of nothing”.

Would Amazon really risk offshoring HQ2 to the Caribbean? I doubt it. And if tax reductions are disallowed, the cities have to "compete" on other metrics. Otherwise we'll soon hear that cities pay Amazon to pick them up.

I never said Amazon would be considering a Caribbean island as a potential candidate. I think you missed my general point.

What does a company do when trying to gain your business? They can compete on price or quality/service. In this case the local city governments are competing in price, especially those that cannot offer the education like that of Boston for example.

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