The race is on! Amazon’s very public search for a location to house its second headquarters has chosen an unlikely front runner: the Big Apple itself. Despite the city’s sky-high state and local taxes, Amazon is nearing a deal to set up shop in Long Island City in Queens.
This decision goes against the current trend in corporate America — to establish locations where real estate is cheap and taxes are low or non-existent. For example, Google and Apple have recently opened branches in cities like Austin, Denver, and Portland where employers and workers both enjoy lower costs than in California. New York City, on the contrary, boasts some of the highest income and corporate taxes in the country: the average lies between 4% and 8.82%, but those in higher brackets can see as much as 12.7%! Though there are a number of tax services NYC offers to lessen the blow, it simply doesn’t seem logical for a company to choose such an expensive location.
“At the metro level, if they’re going to wind up in D.C. and New York instead of Atlanta or Dallas, they’re not going for a low-cost, low-tax, laissez faire environment,” said Jenny Schuetz, a fellow at the Brookings Institution’s Metropolitan Policy Program. Dallas sees state and local income tax rates at zero.
Fortunately, Amazon claims it will compensate workers for the increased living rate, providing an average annual compensation of more than $100,000 (which places them well above the average New Yorker).
However, if any company could keep up with the exorbitant living costs in the City That Never Sleeps, it’s the retail giant. With an annual revenue of $178 billion, Amazon can not only effortlessly afford it’s employees living costs, it can easily handle the taxes (such as the NYC franchise tax) that will be levied against the company. Additionally, their unimaginable revenue offers them the luxury of the various tax services NYC offers — specifically those niche laws and regulations that require the expertise of various accountants.