To lure Amazon's HQ2, Detroit would free it from many taxes -- and allow it to pocket employees' state income taxes for 20 years

  • More than 200 cities are vying to land Amazon’s second headquarters.
  • Detroit’s bid, which was made public this week, includes numerous incentives.
  • Among those incentives are barring the company from having to pay many local taxes for 30 years and, for 20 years, allowing it to keep at least half of the state income tax its employees pay.
  • Such incentives often don’t pay off for cities in the long term, numerous studies have found.

It’s no secret cities across the country are falling all over themselves to land Amazon’s second headquarters and its promise of 50,000 jobs.

Count Detroit among those that have made extraordinarily generous offers to convince the e-tail giant to set up shop in their neck of the woods. Just how generous? Crain’s Detroit Business, which got a copy of Detroit’s bid, offers a picture.

Should it choose to accept the joint bid from Detroit and neighbouring Windsor, Canada, Amazon would receive extensive tax breaks and be allowed to pocket the state income taxes paid by its Detroit employees for 20 years. Meanwhile, the state of Michigan has committed to investing $US120 million to train students to become tech workers.

“The road has been paved for Amazon,” said businessman Dan Gilbert, who is the chairman of the committee leading Detroit’s bid effort, in a letter to the company. “There is no better place for you to innovate and continue to improve the delivery of your customer experience.”

Under Detroit-Windsor’s 242-page offer, Amazon would be able to keep all of the state income taxes paid by its HQ2 workers for the first 10 years and then half of those taxes over the next 10 years. It would also be able to operate in Detroit for 30 years without incurring real estate, personal property, city income, or utility users taxes. The documents redact the value of the tax incentives, so it’s unclear how much they’d be worth.

In addition, the proposal provides copious details regarding the physical makeup of Amazon’s potential headquarters. The bid proposes a campus similar to Amazon’s Seattle compound that would include the construction of 20 new buildings along 28 acres sprawling along the city’s east Riverfront.

Amazon announced in September its plans to spend $US5 billion to open a second headquarters that would be home to up to 50,000 workers. Since the announcement, the company has received bids from more than 200 cities. Some of the bids are potentially even more generous than Detroit’s; Newark, New Jersey, for example is offering some $US7 billion in tax breaks.

Rust belt cities such as Detroit and Chicago have been particularly eager to land Amazon’s new headquarters and the promise of thousands of high-paying tech jobs. But numerous studies have indicated that the kinds of tax incentives cities offer to lure or keep businesses usually don’t pay off.

The e-commerce giant has made clear it would like to locate HQ2 in a metropolitan area with more than one million people that’s also business-friendly and is able to accommodate a development that’s similar to that of its Seattle campus. Amazon plans to announce the location of its second headquarters in 2018.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.