Will Amazon Choose California?

Joel Fox

Editor and Co-Publisher of Fox and Hounds Daily


Amazon’s competition for a massive second headquarters has launched a number of bids from California. Will the state’s reputation as being difficult for business work against the cities and regions that seek Amazon Headquarters 2?

Amazon is looking at many factors in considering a home for its second headquarters outside of its home base in Seattle. California cities meet many of the qualifications including a population around a million, a nearby airport, tech talent and top educational facilities, and good transportation.

A number of California cities are included in the 238 bids Amazon received. Among those submitting a proposal are Concord, Fremont, Fresno, Irvine, Los Angeles, Oakland, Richmond, Sacramento, San Diego, San Francisco, San Jose and Vallejo. An in-house Amazon economic development team is considering the proposals.

One of the things Amazon is looking for are tax incentives. While economists often consider tax incentives to bring in major projects like sports stadiums losing propositions for local government, in this case given the size of the enterprise—50,000 good paying jobs—some independent economists believe the Amazon move could pencil out for a local government even after the tax breaks.

However, the tax issue may work against California bids.

California is a high tax state. Those good paying jobs that come with the headquarters could face as high as the top 13.3% state tax rate.

Many California governments are leery of offering tax breaks demanded by businesses. Citizens in Los Angeles urged local officials to deny any incentives to build a football stadium and the National Football League stayed away until a team owner agreed no public money would be involved in a new stadium to move his team to L.A.

Property tax incentives are not in the cards under Proposition 13’s set formula on property taxes. In fact, as reported on this site recently, Los Angeles Daily News columnist Susan Shelley predicted that the constant talk of increasing business property taxes in California would prevent Amazon for pitching its tent in the Golden State.

In addition, California’s laws and regulations affecting business could be a concern for Amazon.

The California Business and Industrial Alliance ran an ad last week in USA Today headlined: “Dear Amazon: Our Weather Is Nice. Our Business Climate Is Not.” The ad complained about labor laws that made it hard to conduct business in the state. CABIA founder Tom Manzo explained the ad wasn’t designed to tell Amazon to stay out of the Golden State. “We view the ad as a warning,” said Manzo. “We’re rooting for California’s success, but it doesn’t do the state’s current employers or Amazon any good if we pretend that the status quo is acceptable. It’s not acceptable – our members know it, and hundreds of other small and large employers in the state know it, too. That’s why we founded our organization.”

CEO Magazine’s 2017 Best and Worst States for Business placed California last for the sixth year in a row.

California certainly has a lot going for it in a bid to get the Amazon headquarters, but the business reputation is not one of the positive items.

Given that Amazon Headquarters 1 is already on the West Coast, it is a likely Amazon would look elsewhere. Just a gut feeling, but the nation’s capitol could have an inside track. Amazon’s founder and chief, Jeff Bezos, owns the Washington Post newspaper and he purchased a multi-million dollar home in the Washington area last year. Close to the center of power might be an attraction for the already powerful Internet company.

(The article was updated with Tom Manzo’s quote.)

Share this article: Share on FacebookTweet about this on TwitterShare on LinkedInPin on PinterestEmail this to someone

Comment on this article


Please note, statements and opinions expressed on the Fox&Hounds Blog are solely those of their respective authors and may not represent the views of Fox&Hounds Daily or its employees thereof. Fox&Hounds Daily is not responsible for the accuracy of any of the information supplied by the site's bloggers.