Amazon is locked in a battle with Apple to see which will become the first company to hit $1 trillion in market capitalization. Amazon CEO Jeff Bezos earlier this year surpassed Warren Buffett on the world’s richest person index, hitting $76.3 billion, Forbes reports. He trails only Bill Gates.
Despite the company’s massive wealth, state and local governments across the country — and even in Mexico and Canada — will rush in the coming months to offer Amazon and its founder billions of dollars in free money.
Amazon, based in Seattle, announced on Thursday that it will establish a second corporate headquarters somewhere in North America. The new campus, company officials say, could result in $5 billion in local investment and be home to 50,000 workers. But where will it be? Amazon has set a deadline of Oct. 19 for locales to submit their proposals. Translation: Show us the money!
“The competition to win Amazon’s business likely will be fierce and could break records for tax incentive packages,” The Wall Street Journal reported Friday. One consultant told that paper, “I would expect the interest to be unmatched and unrestrained by every location, even ones that don’t have much of a shot.”
Nevada will likely be in the latter category. Steve Hill, who leads the state’s economic development efforts, told the Review-Journal’s Wade Tyler Millward that the state will be involved in trying to lure the tech giant. “We have a very solid relationship with Amazon,” Mr. Hill said. Perhaps. But realistically it will be an uphill climb.
First, the money necessary will make the state’s $1.3 billion Tesla deal seem restrained. Wisconsin lawmakers just approved $3 billion in taxpayer subsidies to entice Foxconn, a Taiwanese electronics supplier, to build a factory there, so the willingness of states to dole out corporate tax breaks shows no signs of slowing. One source told the Journal that it will take in the neighborhood of $8.7 billion — the amount of money Washington threw at Boeing to keep production of a new jet from going elsewhere — to satisfy Amazon.
Second, the Journal reports that “Amazon said it would prefer its new headquarters to be in a metropolitan area with more than a million people, near a strong university system and within 45 minutes of an international airport.” The New York Times reported that the company also wants “statistics on the qualification of local workers.” It’s unfortunate, but Nevada’s system of higher education lags behind most other states, which will certainly hurt the effort.
Nevada has many attractive features to offer any business, including a friendly tax and regulatory climate, affordable housing and relatively modern infrastructure. But crafting a financial deal necessary to catch Amazon’s attention would certainly be politically problematic and is probably beyond the state’s means.
Greg LeRoy, executive director of Good Jobs First, which tracks incentive packages for corporations, told the Times, “This is the trophy deal of the decade, as far as I can tell.” But barring a stunner, the only trophy Nevada is likely to earn in the Amazon sweepstakes is one for participation.