The Seattle Times editorial board says Amazon's decision to look for a second, equal headquarters somewhere outside of this city is "a distressing wake-up call" that signals the "end of Amazon’s Seattle monogamy," and that people here need to respond by assuring Amazon we'll do everything that is required to keep the company happy and satisfied, while also assessing our own shortcomings and then reversing them so that we can better please this mammoth business that "other cities crave."
At the same time, the advice of Heather Redman, the future Chair of the Seattle Metropolitan Chamber of Commerce, is that Seattle needs to "wake up and realize that Amazon is the best thing that has happened to the city." Redman also believes we need to abandon our "unpredictable and outright hostile" attitudes toward the company, which has a market value of nearly $500 billion, and keep in mind that "it’s never too late to say we’re sorry."
Aside from sounding rather desperate and pathetic, this demand from certain civic leaders that we treat Amazon as a potent, insatiable lover who's straying because of our own character flaws gets the story of the actual relationship totally wrong. According to The Seattle Times' own reporting, it began not with Seattle loudly begging Jeff Bezos to come here so we could satisfy his every economic desire, but with Bezos quietly searching around the country for a low-tax environment that suited the particular purposes of a start-up he had in mind.
Taxes were on Jeff Bezos’ mind right from the beginning of Amazon.
He once told an interviewer he’d thought about founding his Internet bookseller startup on a California Indian reservation to escape taxes. When that proved impractical, Bezos settled on Seattle, in part because Washington’s relatively small population effectively would leave more Amazon sales untaxed.
According to Amazon's "Request for Proposals" for this second, equal headquarters—which, by the way, means the company is not leaving Seattle, and in fact will still be growing here—the search for enticingly low-tax environments is still at the forefront of Bezos's mind.
"A stable and business-friendly environment and tax structure will be high-priority considerations for the Project," Amazon says of HQ2, adding: "Incentives offered by the state/province and local communities to offset initial capital outlay and ongoing operational costs will be significant factors in the decision-making process."
And: "We acknowledge a Project of this magnitude may require special incentive legislation in order for the state/province to achieve a competitive incentive proposal."
Translation: If you want to be the new home of Amazon's HQ2, you need to offer Amazon some major, taxpayer-financed subsidies. Those taxpayer-financed subsidies may have to be so big that it'll take an act of your state's publicly elected legislature to make them happen. (Sound familiar?)
Rather than understanding that this is just how Amazon rolls, and has been rolling for more than two decades, The Seattle Times takes all of this as yet another sign that Seattle has failed to please its man (Bezos).
"Seattle officials should have been working closely with Amazon on its expansion plans," the editorial board laments. And: "It won’t be lost on historians that two months after City Hall cheered itself for 'taxing the rich,' Amazon chose to seek a 'stable and business-friendly environment' for its next act: A $5 billion investment and 50,000 new jobs."
But if The Seattle Times editorial board had broadened its view beyond the last two months, and searched its own newspaper's archive, it would see that Bezos is just doing what he's done before: seeking, as ever, to dodge taxes when and where he can. (The Seattle Times, 2012: "For more than a decade, Amazon has aggressively resisted individual state efforts to require sales-tax collections....")
In his new book World Without Mind, Franklin Foer describes this dodging of taxes as "an overriding corporate obsession" at Amazon—a secret to the company's early growth and current success. In just one of many examples, Foer writes: "As the company expanded, it needed employees spread across the country. Each time Amazon opened warehouses in a different state, it should have paid taxes there—at least that was the prevailing understanding of the law. Bezos rejected it. There was something Nixonian about this effort. Traveling Amazon employees carried misleading business cards, so that the company couldn't be accused of operating in a state."
Foer also recounts how Amazon, according to IRS calculations, has used a headquarters in Luxembourg to dodge "a bill of at least $1.5 billion that would otherwise have been paid to the US government."
Washington State, as The Seattle Times editorial board and all the rest of us know, has a sales tax. It does not, however, have an income tax. This helps to give Washington State one of the most regressive tax systems in the nation. (The Seattle Times' own business columnist could have told the ed board that.) Bezos has benefitted greatly from our state's lack of an income tax—by retaining greater personal wealth for himself, and by being able to hire out-of-state employees with promises that they'll keep more of their paychecks out here—and he actively fought against the creation of a state income tax in 2010.
That income tax, which would have applied only to the highest income earners in this state, could have funneled billions of dollars into Washington's beleaguered public education system over the last seven years, helping to create the "highly educated labor pool" and "strong university system" that Amazon's "Request for Proposals" says must be present in any non-Seattle locale that wants to become Amazon's new HQ2.
In this sense, Amazon's long-running preference that Washington state remain a relatively low-tax haven for its business has helped to create the very conditions—an inadequate homegrown "labor pool," inadequate mass transit—that Amazon now says it doesn't want to see in any future home for its HQ2. (But generous public subsidies for the company? It definitely wants to see those.)
Given all this, instead of berating the Seattle City Council for supposedly driving Amazon from our civic arms by passing a local high-earners income tax that would fund valuable public services—a tax that isn't likely to take effect for a long time, if at all, because it's going to be tied up in court proceedings—perhaps The Seattle Times editorial board could have noticed the real game that's being played here.
It's not hard to figure out, and once again it's been reported in The Seattle Times' own pages.
Having dropped a lot of cash into Seattle's pockets over many years, yes, but also having gotten close to the maximum that it can from this city's existing taxpayer-funded infrastructure, while also aggressively limiting its contributions to the upkeep and improvement of taxpayer-funded infrastructure, Amazon is now seeking to expand to another state in which taxpayers have already paid for a world class education system, mass transit system, and road system that the company can take immediate advantage of—and where political leaders are willing to effectively pay Amazon (in the form of tax breaks) for the privilege of using those taxpayer-funded amenities. (Like Elizabeth Warren said...)
After which, as The Seattle Times's Dominic Gates writes, Amazon will be able to "play one city off against the other in asking for incentives—and almost certainly will do so." Seattle will be told it's not being as nice to Amazon as, say, Denver, and then Denver will be told it's not being as nice to Amazon as Seattle, and on, and on.
And while it's true that Amazon states it's looking for "a stable business climate for growth and innovation" in the new home for its HQ2, and although the desperate self-flagellators on The Seattle Times ed board and the Seattle Metropolitan Chamber of Commerce seem to have taken this as proof that we in Washington state are not already living in "a stable business climate for growth and innovation," well, uh, there's also this data point: "Washington is America's Top State for Business in 2017." So, you know...
Get a grip, people.
Amazon is not Seattle's newly cheating lover who needs to be pleased with greater alacrity and skill. Amazon is a massive business with a longstanding, low-tax agenda, and it has in fact been getting very valuable things from the City of Seattle and Washington state for decades.
Instead of encouraging civic despair and a renewed race toward the tax-giveaway bottom in response to the HQ2 news, dear civic leaders, how about reminding Amazon that it's gotten at least as good as it's given here at HQ1?