Amazon Looking for a new HQ - Detroit-Windsor Bid Rejected

[iheartthed]

That doesn't have anything to do with where their HQ is based.

If that were the case, GM would have moved its HQ to China by now.

But your point is that Amazon would stay in the U.S. due to issues of nationalism and protectionism. My point is that if Amazon is forced to choose between nationalist and protectionist policies in the U.S. and moving to Toronto then it is more likely going to move to Toronto. I think it is very telling that they are considering all of North America, and not just the United States.

I work at a company that, like Amazon, hires a lot of foreign-born highly skilled workers. It is far easier for foreign-born highly skilled workers to get visas to live in Canada than it is in the United States, and that was true way before the president decided that the process should be even harder. My company regularly has employees that encounter visa issues due to the rigid nature of the H1B visa process. Sending those employees to Toronto is usually the first option that is considered if they have to leave the U.S.

I'm not trying to make a political statement about immigration since my own feelings are pretty nuanced. However, I do know for a fact that leadership in companies that rely on highly skilled foreign workers have not been pleased with the president's position on immigration, nor his attempt to make it harder for educated workers to come here.

[313WX]

But your point is that Amazon would stay in the U.S. due to issues of nationalism and protectionism. My point is that if Amazon is forced to choose between nationalist and protectionist policies in the U.S. and moving to Toronto then it is more likely going to move to Toronto. I think it is very telling that they are considering all of North America, and not just the United States.

You already have an increasing number of prominent people pushing to have Amazon trust busted. At least in the political climate now, I don't think they're going to want to stir that point.

Besides, there aren't many other places in the world [[if any) where they can do all of the following combined things:

1. Abuse [[read: overwork) their employees.

2. Enjoy an extremely laxed regulatory and tax environment.

3. Not worry about having to turn over their intellectual property to the government or government ownership.

[Canadian Visitor]

You already have an increasing number of prominent people pushing to have Amazon trust busted. At least in the political climate now, I don't think they're going to want to stir that point.

Besides, there aren't many other places in the world [[if any) where they can do all of the following combined things:

1. Abuse [[read: overwork) their employees.

2. Enjoy an extremely laxed regulatory and tax environment.

3. Not worry about having to turn over their intellectual property to the government or government ownership.

In reverse order....

In what developed country are you aware of government confiscating or nationalizing I.P?

The entire E.U., Canada, the U.S., Australia, Japan etc. all have I.P. laws, and trade treaties which cover them.

There are different lengths of copyright and drug patents, but not by that much.

Really a complete non-issue.

****

2. Canada is not particularly regulation heavy and has a LOWER corporate tax burden than the U.S.

All-in rate for Michigan [[Fed, 43.5 + Mich 6) = 49.5%

All-in rate for Ontario [[Fed, 15 + ON 11.5) = 26.5%

just saying.

****

1. While it is true that Ontario's labour laws are a bit more generous than those in most US States, the differences aren't huge and would hardly matter to a well-paid, well educated workforce.

Largely the differences are, higher min. wage [[but our software engineers and senior corp. managers have lower salaries, after factoring for currency).

A whopping 2 paid sick days by law [[ I would imagine most Amazon staff get more than this already)

And three weeks paid vacation after 5 years.

Again, at the pay-grade we're discussing, most will get this or better already.

The work week here is 44 hours [[before OT kicks in); and OT doesn't apply to managers.

Its also rare to apply it to salary staff. [[only hourly)

[313WX]

In what developed country are you aware of government confiscating or nationalizing I.P?

Define "developed." China is notorious for demanding partial government ownership of the company and/or its intellectual property.

2. Canada is not particularly regulation heavy and has a LOWER corporate tax burden than the U.S.

All-in rate for Michigan [[Fed, 43.5 + Mich 6) = 49.5%

All-in rate for Ontario [[Fed, 15 + ON 11.5) = 26.5%

just saying.

Canada may have a lower marginal tax rate, but when you account for the plethora of loopholes in the US, the effective rate is higher [[I.E., GE somehow avoided paying any taxes on $200+ million in revenue).

1. While it is true that Ontario's labour laws are a bit more generous than those in most US States, the differences aren't huge and would hardly matter to a well-paid, well educated workforce.

Largely the differences are, higher min. wage [[but our software engineers and senior corp. managers have lower salaries, after factoring for currency).

A whopping 2 paid sick days by law [[ I would imagine most Amazon staff get more than this already)

And three weeks paid vacation after 5 years.

Again, at the pay-grade we're discussing, most will get this or better already.

The work week here is 44 hours [[before OT kicks in); and OT doesn't apply to managers.

Its also rare to apply it to salary staff. [[only hourly)

All fair points, but to be clear, I said one would be hard pressed to find a country besides the US where all of the 3 things I listed *combined* applies.

The biggest mark against Canada would be its taxes, not only the higher effective rate for corporations, but also the higher rate for the middle class workers Amazon would want to attract [[between VAT and the universal health care system).

[canuck]

Define "developed." China is notorious for demanding partial government ownership of the company and/or its intellectual property.



Canada may have a lower marginal tax rate, but when you account for the plethora of loopholes in the US, the effective rate is higher [[I.E., GE somehow avoided paying any taxes on $200+ million in revenue).



All fair points, but to be clear, I said one would be hard pressed to find a country besides the US where all of the 3 things I listed *combined* applies.

The biggest mark against Canada would be its taxes, not only the higher effective rate for corporations, but also the higher rate for the middle class workers Amazon would want to attract [[between VAT and the universal health care system).

Yes, the GST and Universal Health scheme are highly repugnant to most civilized beings. Social measures like paid parental leave or cheap subsidized daycare will drive folks away, no contest there.
Lol.

[313WX]

Yes, the GST and Universal Health scheme are highly repugnant to most civilized beings. Social measures like paid parental leave or cheap subsidized daycare will drive folks away, no contest there.
Lol.

I don't personally disagree with you, but everyone is different and has different priorities.

The fact is quite a few people would rather not pay to have those "social measures" you listed.

[Canadian Visitor]

Define "developed." China is notorious for demanding partial government ownership of the company and/or its intellectual property.



Canada may have a lower marginal tax rate, but when you account for the plethora of loopholes in the US, the effective rate is higher [[I.E., GE somehow avoided paying any taxes on $200+ million in revenue).



All fair points, but to be clear, I said one would be hard pressed to find a country besides the US where all of the 3 things I listed *combined* applies.

The biggest mark against Canada would be its taxes, not only the higher effective rate for corporations, but also the higher rate for the middle class workers Amazon would want to attract [[between VAT and the universal health care system).

China is a non-issue as this was always a North American location as specified by Amazon...........but let's leave that to one side.

In respect of taxes..........you imagine we pay ALOT more?

A fact based comparison would show someone w/income of $105,000USD would pay less income tax, after income and payroll taxes in Ontario than in New York. [[that includes adjustment for Canada's child benefit, and assumes you have 2 children.

Yes, it can be higher, but not much when you adjust for direct cash transfers.

Keep in mind, no municipal income tax; retirement savings deductions, disabled child deductions etc.

plus parental leave for 52 weeks @ 55% of income

It mostly comes out in the wash.

Corporately we have deductions too, including accelerated capital cost depreciation and very generous R&D tax credits.

[313WX]

China is a non-issue as this was always a North American location as specified by Amazon...........but let's leave that to one side.

In respect of taxes..........you imagine we pay ALOT more?

A fact based comparison would show someone w/income of $105,000USD would pay less income tax, after income and payroll taxes in Ontario than in New York. [[that includes adjustment for Canada's child benefit, and assumes you have 2 children.

Yes, it can be higher, but not much when you adjust for direct cash transfers.

Keep in mind, no municipal income tax; retirement savings deductions, disabled child deductions etc.

plus parental leave for 52 weeks @ 55% of income

It mostly comes out in the wash.

Corporately we have deductions too, including accelerated capital cost depreciation and very generous R&D tax credits.

Comparing NY taxes [[a state with one of the highest rate of taxes in the country) specifically to Canadian taxes nationally is pretty dishonest. In reality, the fact is Americans in 42 out of 50 jurisdictions pay a lower effective rate than Canadians, and on a *national average*, Canadians pay effectively higher taxes than US citizens, especially if you make more than $100K. And this doesn't even account for the significantly higher COL [[which is part of the reason Amazon's looking to expand outside of the expensive west coast in the first place).

Where Canada comes out on top is with the cost of health care and education, which is significantly lower in Canada. That said, to be fair, would a degreed Amazon worker making 6-figures really care [[at least very much) about the cost of health care and education?

Getting back to your point about the corporate tax rate, according to the Government Accountability Office, US corporations only pay an effective rate of 12.6% in taxes on average [[the lowest rate in US history).

[davewindsor]

Canada may have a lower marginal tax rate, but when you account for the plethora of loopholes in the US, the effective rate is higher [[I.E., GE somehow avoided paying any taxes on $200+ million in revenue).

BTW, I googled this point about GE not paying taxes on $200m whether it was fake fact reporting from you again and an article quoted GE's response: "The company claims that its zero-dollar tax bill is largely a result of losses at its financial arm, GE Capital, due to the Wall Street meltdown." http://abcnews.go.com/Politics/gener...ry?id=13224558

In other words, they didn't pay tax on that $200m because they lost it on bad loans. Obviously, if you don't make a profit, you don't pay taxes. It's not a loophole, and it's something you can do in any tax jurisdiction.

The rest of the money they made was made outside of the US. So, if a subsidiary of GE makes a washing machine in China and sells it in China for a profit, why would they pay US corporate taxes on that income? They would pay corporate taxes in China on their profit made in China. It makes no sense otherwise.

Also, ask yourself, why did Burger King move their head office from the US to Canada a couple years ago if it's not a cheaper tax jurisdiction? Though it's not as common as there are much cheaper tax jurisdictions like the UK and Belgium, my point being is that a lot of head offices have left the US because of the high US corporate taxes vs other countries. Ireland, for example, has a corporate tax rate half that of Canada and a lot of US corporate head offices have moved there. Whether it's Canada, Ireland, Belgium, etc., a lot of other countries have cheaper "effective" corporate tax rates or overall taxes, otherwise they wouldn't be leaving or have left the US.

[313WX]

BTW, I googled this point about GE not paying taxes on $200m whether it was fake fact reporting from you again and an article quoted GE's response: "The company claims that its zero-dollar tax bill is largely a result of losses at its financial arm, GE Capital, due to the Wall Street meltdown." http://abcnews.go.com/Politics/gener...ry?id=13224558

In other words, they didn't pay tax on that $200m because they lost it on bad loans. Obviously, if you don't make a profit, you don't pay taxes. It's not a loophole, and it's something you can do in any tax jurisdiction.

The rest of the money they made was made outside of the US. So, if a subsidiary of GE makes a washing machine in China and sells it in China for a profit, why would they pay US corporate taxes on that income? They would pay corporate taxes in China on their profit made in China. It makes no sense otherwise.

So basically, you just proved my point regarding all of the ridiculous loopholes in the US corporate tax system that allow for the aforementioned accounting tricks. Thanks.

Also, ask yourself, why did Burger King move their head office from the US to Canada a couple years ago if it's not a cheaper tax jurisdiction?

It wasn't a tax driven move. Burger King is paying the same exact rate in Canada that they were paying in the US [[~25%).

[davewindsor]

So basically, you just proved my point regarding all of the ridiculous loopholes in the US corporate tax system that allow for the aforementioned accounting tricks. Thanks.

Um, was your original point that there are loopholes or that US Corporate taxes are not higher than Canada? My response was that both countries have these same, as you call them, "loopholes".

Let's use some logic and examine this again:

If both these countries have these same loopholes

AND

All-in rate for Michigan [[Fed, 43.5 + Mich 6) = 49.5%

All-in rate for Ontario [[Fed, 15 + ON 11.5) = 26.5%

THEN

The effective corporate tax rate is cheaper in Ontario.

It wasn't a tax driven move. Burger King is paying the same exact rate in Canada that they were paying in the US [[~25%).

SO, why does this article say that Burger King will save between $400m to $1.2billion over the next four years by moving their HQ from the US to Canada? https://www.cheatsheet.com/business/...tml/?a=viewall