Billions in tax breaks offered to Amazon for second headquarters

(Reuters) - A public contest ending Thursday to bid over housing Amazon.com Inc’s (AMZN.O) second headquarters has drawn pitches from governors and a prime minister, marketing campaigns and offers of tax credits worth at least as much as $7 billion.

The world’s largest online retailer has won promises from elected officials who are eager for the $5 billion-plus investment and up to 50,000 jobs that will come with “Amazon HQ2.” For its second campus, Amazon wants a metropolitan area of more than a million people with good education, mass transit and likely lower costs than its home base in Seattle.

Amazon has said it will announce a decision next year.

“There is no better place to do business than Canada,” Prime Minister Justin Trudeau said in an Oct. 13 letter to Amazon’s Chief Executive Jeff Bezos, seen by Reuters.

New Jersey proposed $7 billion in potential credits against state and city taxes if Amazon locates in Newark and sticks to hiring commitments, according to a news release from the governor’s office earlier this week.

In a far different proposal, the mayor of the Atlanta suburb of Stonecrest, Jason Lary, said his city would use 345 acres of industrial land and create a new city called Amazon. Bezos would be its mayor for life, Lary said.

Since its beginnings as an online bookseller in 1994, Amazon has had a savvy approach to taxes, collecting no sales tax for many purchases until recent years, and now pitting governments against each other to win tax breaks.

“The cities I talked (to) all know they are being taken and resent it,” urban studies expert Richard Florida said in a message to Reuters. However, cities expect some indirect benefits from the contest, such as closer ties to state and regional officials, he said.

Jerry Brown, California’s governor, said in a letter to CEO Bezos seen by Reuters that Amazon could claim some $300 million in incentives and benefits under current law. A California assemblyman also introduced a bill on Thursday that could offer Amazon $1 billion in tax breaks over the next decade.

Many governments are declining to tip their hands, however, worried about the competition.

A bid by Austin - the contest’s favorite based on a Moody’s study of Amazon’s criteria - is confidential, a chamber of commerce official told Reuters. Missouri’s economic development department said the state had a non-disclosure agreement with Amazon.

St. Louis, Missouri received more than 1,300 Twitter mentions related to HQ2 over the last two weeks, more than any other city, according to social media monitoring company Brandwatch. Boston and Chicago were next.

Still, other candidates have simply taken the opportunity to market themselves.

”Hey Amazon, we need to talk,“ ran an ad for Little Rock, Arkansas in the Bezos-owned Washington Post on Thursday. ”We’re happy knowing that many great companies find our natural good looks coupled with our brains for business irresistible.

“You’ll find what you’re looking for. But it’s just not us,” the ad read.