Amazon HQ Coming to L.A.? No Effing Way!

Amazon's headquarters in Seattle. The company estimates that investments in Seattle between 2010 and 2016 added $38 billion to the city's economy. Amazon photo

Mayors around the country have been publicly salivating ever since the announcement by Amazon earlier this month that the online juggernaut/destroyer of retail storefronts/evil empire will create a second campus somewhere in North America. Where? Maybe Toronto! Maybe San Francisco! Maybe Chicago!

Los Angeles, too, is a possible destination. In what could be a windfall of development and job creation for one lucky city, the new Amazon headquarters will bring upwards of 50,000 jobs to one fortunate community, in addition to a $5 billion construction project to boot.

“L.A. is the perfect place for a company like Amazon to find talented workers,” said a gleeful Mayor Garcetti is a written statement, “and an environment that nurtures growth and innovation. I welcome the opportunity to compete for this remarkable investment, and the tens of thousands of good-paying jobs it is sure to bring with it.”

L.A. has absolutely zero chance to compete for this opportunity.

While LA is large enough, has multiple high-quality universities, a mass transit system that goes to a few significant places in town, and Amazon CEO Jeff Bezos owns a home in Beverly Hills, the city falls short in friendliness to business owners.

The “gross receipts tax”, a tax on every dollar of revenue generated by businesses in the city, stands at 0.5 percent, almost 10 times greater than the average in other cities within the state. In spite of phony commitments by city leaders to roll back this tax, it does account for around 10 percent of the city’s budget, a budget already considered to have a structural deficit.

This issue of high gross receipts tax is a mere minor stumbling block, however, as the mayor and city council have the power to grant individual exemptions from it. A bigger issue is actually the state income tax. California has one of the highest state income taxes in the country, applying to both capital gains and payroll. Jeff Bezos is evidently not too keen on paying taxes, so this further weakens the city’s chances in landing the new Amazon HQ.

Throw in the fact that it is increasingly more difficult to land a decent home for less that 700 thousand dollars and average monthly rent in the city topping out at over 2 grand a month for a one bedroom apartment, which can be an impediment to attracting and retaining top level talent, and it’s not difficult to see why L.A. has slim chances at competing for Amazon.

-The Guru