Fire in the backyard! Amazon headquarters forced to move

Let’s start today’s main text.

Recently, Amazon’s stock price has really refreshed my worldview. In just less than a month, it has risen from around US$2,500 to nearly US$3,200 per share. This increase is really scary.

Amazon's market value has now exceeded 1.5 trillion and is heading straight for 2 trillion. However, my brother-in-law's glory days did not last long, and some people wanted to take advantage of this giant Amazon.

In Seattle, where Amazon is headquartered, due to the local financial constraints caused by the epidemic, the local city council recently passed a new bill that will impose additional taxes on large companies in the city to supplement their finances. Amazon, as the world's largest company by market value, is the first to bear the brunt. And this time the government specifically stated that this tax can only be paid by Amazon itself and cannot be passed on to others.

The corporate tax introduced by Seattle this time is aimed at the city's "large enterprises with annual wage expenditures exceeding 7 million US dollars." For all enterprises that meet the collection conditions, taxes will be levied according to the employee salary standards. For each employee with an annual income exceeding 150,000, 0.7% of the salary will be levied, and if the employee's annual income exceeds 400,000 US dollars, 1.4% will be levied.

I found some data online and it is estimated that Amazon's Seattle headquarters has about 60,000 to 70,000 employees. And the headquarters employees are not like warehouse employees. Most of them are well-paid managers.

These employees will bring additional costs to my brother-in-law because of this new tax in Seattle. Each employee with an annual salary of 400,000 will have to pay $9,400 in taxes, and an employee with an annual salary of 150,000 will have to pay $2,100. Even if we calculate it based on the minimum of $2,100, 60,000 employees will have to pay $126 million in corporate taxes each year , not to mention that executives will have to pay a tax rate of 1.4%.

The Seattle government said that the tax is expected to bring more than $2 billion in revenue to the city of Seattle each year. In order to prevent companies from passing the tax on to their employees (which Amazon does regularly), the government also specifically stated that the tax must be paid by the company and cannot be collected from employees.

This amount of money is not small, and Amazon is a very stingy company. If it doesn’t pass it on to its employees, it is impossible for them to hand over the money obediently. Will it pass it on to us sellers?

In fact, this "head tax" was discussed by the Seattle City Council a long time ago. In 2018, Amazon also threatened that "if the council passes such a controversial head tax bill, we (Amazon) will be forced to leave the city, or even stop the construction of the tower in downtown Seattle."

At the time, Amazon's threat was quite effective, and the Seattle government immediately shelved the bill and never brought it up again . However, the impact of the epidemic on the economy this year is too great. If the economy is not doing well, the tax revenue will also be poor. The government has also invested too much money in epidemic prevention work. The current financial situation of Seattle is very worrying, and it can no longer take care of too much.

Amazon has not yet made any comments on the passage of this bill, but according to foreign media analysis, although the final tax rate is more than half lower than the initial one, it is expected that based on Amazon's cost control style, Amazon will still choose to gradually move out of Seattle.

So Amazon had already searched for a location and started building its second headquarters last year, and 2,000 people have already moved to Crystal City, Virginia, where the second headquarters is located. This is Amazon voting with its feet for Seattle's head tax policy. If this bill is implemented (expected to be implemented next year), it will only accelerate Amazon's pace of leaving Seattle.

In the process of moving out of Seattle, Amazon will probably still be hit by the head tax. Amazon has not made any statement yet, and it is hard to say who it will pass on the profit to. In short, the best thing is for everyone to leave a good profit margin and make money from every order.