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

[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.

[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.

[Canadian Visitor]

To be clear, the point isn't that Toronto/Canada is better.

Nor is that I think Toronto will get it.......I'm leaning against if nothing else for sheer odds.

I'd even be happy to point out Toronto's real shortcomings [[leans expensive on real estate, pretty severe congestion)

That said, I want to correct the knocks that aren't factual.

[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]

Below suggests the main reason they're looking for a new HQ is because Seattle's risk of experiencing an earthquake.

Let's recall that Detroit is the safest city in the US from Natural Disasters...

​https://www.newyorker.com/magazine/2...really-big-one

[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%).

[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).

[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.

[canuck]

313wx,

Yes but I am betting there are a whole lot more people wishing they had it. If you count the substantial percentage of families wishing the lottery doesn't pick them for a disastrous health situation, the lesson for the future is obvious. You know, in Canada as elsewhere, Insurance companies are backing the government schemes. The private sector is managing in large measure the actuarial operations and redistribution of sums. We also have private plans for dental and optical that are serviced outside the social net. I think quite frankly that those who resist the progressive measures that the richest country on earth can easily provide are paying lip service to people who you rightly say don't worry much about these costs. On the other hand, in Canada, it is considered necessary even by the extremely well off to spread the wealth of the land. It is far from perfect, but it is a base that remains, as always perfectible.

[313WX]

With respect to Atlanta, below has some interesting information. Apparently, there's a "mystery company" that will bring "thousands of high-paying jobs" whose working with a developer to build 500K sq. ft. of office space.

http://news.wabe.org/post/atlanta-s-...ffice-prospect

[iheartthed]

Below suggests the main reason they're looking for a new HQ is because Seattle's risk of experiencing an earthquake.

Let's recall that Detroit is the safest city in the US from Natural Disasters...

​https://www.newyorker.com/magazine/2...really-big-one

Yes, I alluded to this probably being their reason for seeking an HQ2 in one of my earlier responses. This is why other disaster prone coastal cities will probably not be considered. Even NYC would probably lose points because of susceptibility to rising sea levels.

[iheartthed]

This really lays bare why Detroit would not otherwise be a no-brainer for this site right now.

On the low-cost end, that leaves Atlanta, Baltimore, Charlotte, Chicago, Dallas, Denver, Detroit, Houston, Minneapolis, Philadelphia, and St. Louis. Houston has its own issues to deal with right now. Detroit has no mass transit system to speak of; Charlotte isn’t far ahead and, further, lacks a strong university system. There are political risks, too: Detroit gives Amazon the potential to play savior but comes with sky-high property taxes, abysmal public schools, and a dysfunctional regional government. Charlotte is at the mercy of the reactionary North Carolina Legislature.

http://www.slate.com/articles/business/metropolis/2017/09/your_city_will_lose_the_contest_for_amazon_s_new_h q.html

If it is a race between Detroit and Charlotte then I think Detroit would win. Amazon is just too big for Charlotte right now. If it's a race between Detroit and Philadelphia... That would really depend on what they value more. Philly would probably be the safer choice, but Detroit would be the most sentimental. If Shinola can build a globally recognized brand from scratch off of nostalgia about Detroit, imagine what the deep pockets of Amazon could do? The city will absolutely need to play up the sentimental factor in whatever proposal they create.

[313WX]

A point was also brought up that Amazon's looking for a place with "direct flights to DC and NYC."

Thus, that would eliminate those two cities from consideration IMO...

EDIT: They also mentioned that direct flights to Seattle and San Francisco were critical. Seattle's airport is a Delta hub, so the following cities would have a ton of direct flights to/from Seattle:

- Detroit

- Minneapolis

- Cincinnati

- Atlanta

- Salt Lake City

Also, I think United Airlines just launch direct flights from SFO to DTW.

[313WX]

From what I'm hearing, Amazon will make a decision in January 2018.

Wouldn't it be awesome if we get both a MLS Franchise and the Amazon HQ within a few weeks time?

[313WX]

The Washington Post conducted an analysis of the potential contenders and we made the Top 12 [[Chicago did not)...

https://www.washingtonpost.com/news/...=.6ecd31fe9d9f

[iheartthed]

A point was also brought up that Amazon's looking for a place with "direct flights to DC and NYC."

Thus, that would eliminate those two cities from consideration IMO...

EDIT: They also mentioned that direct flights to Seattle and San Francisco were critical. Seattle's airport is a Delta hub, so the following cities would have a ton of direct flights to/from Seattle:

- Detroit

- Minneapolis

- Cincinnati

- Atlanta

- Salt Lake City

Also, I think United Airlines just launch direct flights from SFO to DTW.

Delta has a daily flight from DTW to SFO [[I flew it last week). It's probably more important that there be a major airline hub nearby, so that would knock Cincinnati and SLC out of the running.

[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

[313WX]

Delta has a daily flight from DTW to SFO [[I flew it last week). It's probably more important that there be a major airline hub nearby, so that would knock Cincinnati and SLC out of the running.

Cincinnati and SLC still have hub status, albeit the operations have been significantly reduced since the NWA merger.

EDIT: Boston is also a Delta hub, but in the same boat as Cincinnati and Salt Lake City.

[313WX]

[QUOTE=davewindsor;533117]
Um, was your original point that there are loopholes or that US Corporate taxes are not higher than Canada?[/QUOTE]

My point was pretty clear, which is that the US tax code has far more loopholes in it than other nations.

The effective corporate tax rate is cheaper in Ontario.

This was debunked earlier in the thread. The average corporation in the US only pays an effective tax rate of 12.6%, according to the GAO.

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

I never said they won't get tax benefits from the move. But you seemed to imply that was the *main* reason driving their move to Canada, which is not the case.

[iheartthed]

Cincinnati and SLC still have hub status, albeit the operations have been significantly reduced since the NWA merger.

EDIT: Boston is also a Delta hub, but in the same boat as Cincinnati and Salt Lake City.

Logan is a huge airport with direct flights to all locations that Amazon would require. But those flight just may not be on Delta, since Logan isn't a major Delta hub. It probably has fewer Delta flights than Cincinnati.

Logan is a focus for the Delta Shuttle which serves Boston/NYC/DC/Chicago, and also a couple of international routes to Europe [[I think to just Heathrow, Amsterdam, and Charles de Gaulle). Those international routes are just to fill the gaps that JetBlue does not cover due to its domestic focus. JetBlue is the airline with the most flights from Logan.

[SammyS]

Not sure if it has already been mentioned but doesn't Amazon already have a presence in Detroit?

http://www.freep.com/story/money/bus...tech/72797396/

Amazon currently leases space on one floor in the 150 W. Jefferson office tower downtown where about 100 employees work on software development, engineering and advertising sales. Amazon will be expanding that space to multiple floors in early 2016 to create its tech hub but has not released an estimate on how many more employees it will hire there.

[wolverine]

The Washington Post conducted an analysis of the potential contenders and we made the Top 12 [[Chicago did not)...

https://www.washingtonpost.com/news/...=.6ecd31fe9d9f

Chicago mayor has also been in meetings with Bezos for the past two months prior to this anouncement discussing a 2nd hq. What Chicago ONLY lacks is a stable govt budget and isn't the cheapest place to do business, but cheaper than the coasts for them and their employees.

Amazon could literally open in months in Chicago. There's so much modern office space coming online next to major rail stations. If the city was willing to throw away a ton of money on the Olympics, I'm sure they'll dig the debt hole deeper for a trophy hq and generous subsidies. Also, any necessary infrastructure costs can just be passed onto the developers. City: "Hey we need $200 million for a new subway station for a potential company relocation." Developer: "Sure here you go!"

[313WX]

Not sure if it has already been mentioned but doesn't Amazon already have a presence in Detroit?

http://www.freep.com/story/money/bus...tech/72797396/

Amazon has "a presence" in several cities.

[313WX]

Chicago mayor has also been in meetings with Bezos for the past two months prior to this anouncement discussing a 2nd hq. What Chicago ONLY lacks is a stable govt budget and isn't the cheapest place to do business, but cheaper than the coasts for them and their employees.

Amazon could literally open in months in Chicago. There's so much modern office space coming online next to major rail stations. If the city was willing to throw away a ton of money on the Olympics, I'm sure they'll dig the debt hole deeper for a trophy hq and generous subsidies. Also, any necessary infrastructure costs can just be passed onto the developers. City: "Hey we need $200 million for a new subway station for a potential company relocation." Developer: "Sure here you go!"

I personally think Chicago is a strong candidate for Amazon on paper.

That said, my focus is more so on cities that *NEED* Amazon. Chicago, Boston, Denver, Dallas, Minneapolis, Austin, etc. are all doing just fine without it.

If it were up to me, I would want the following places to score this [[in the exact order):

1. Detroit
2. Atlanta
3. Nashville
4. Pittsburgh
5. Chicago