Two of the biggest tech companies, Apple and Amazon, are planning new “campuses,” planning to share the wealth with other American cities by breaking out of their Silicon Valley and Seattle enclaves. (Note the knowledge-based metaphor: not “offices,” implying bureaucracy, or “facilities,” like a factory, but “campuses” like a university.) Cities are competing with each other to lure the huge companies with their host of well-paying jobs. These expansions tell us some things about today’s economy.
First of all, the tax cuts are working already. Apple announced plans to repatriate $245 billion from its overseas accounts, taking advantage of the new tax bill’s incentive to do so. Companies that bring their money back into this country will only have to pay a tax of 15.5%, which in Apple’s case means $38 billion going into the U.S. Treasury. Apple will also be taking advantage of the lowered corporate tax rate of 21%, down from 35%, to keep more of its operations in the United States.
In response, Apple pledged to invest $350 billion in the United States over the next five years and to add some 20,000 new jobs. This will include a second campus somewhere else in the U.S. in addition to its soon-to-be-expanded Cupertino, CA, headquarters, concentrating on customer service.
Amazon is further along in its plans to build a second headquarters to supplement its Seattle operations. A total of 268 cities and towns submitted proposals in an effort to persuade Amazon to locate there, touting their virtues and offering incentives like tax breaks and prime real estate.
The company has announced the 20 cities that are finalists:
- Atlanta, GA
- Austin, TX
- Boston, MA
- Chicago, IL
- Columbus, OH
- Dallas, TX
- Denver, CO
- Indianapolis, IN
- Los Angeles, CA
- Miami, FL
- Montgomery County, MD
- Nashville, TN
- Newark, NJ
- New York City, NY
- Northern Virginia, VA
- Philadelphia, PA
- Pittsburgh, PA
- Raleigh, NC
- Toronto, ON
- Washington D.C.
Do you notice anything that these cities have in common? With a few exceptions, these cities are already thriving and most of them already have strong high-tech industries.
Many of the 248 disappointed cities were hoping that Amazon might prove to be their economic savior. But businesses operate in their own self-interests, rather than other people’s interests, though others can benefit greatly when the business is successful. Amazon needs a big supply of well-qualified employees, who, in turn, will demand a certain quality of life that other communities can only aspire to.
Similarly, the tax cuts will directly benefit the “haves” the most. But others can share in their prosperity, just as these cities hope to benefit if they can attract these particular corporate citizens.
Photo by Joe Ravi [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons
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