Earlier quoted context omitted.
How do you get the 2% number? From what I found, the Governor's office expects $200million in extra tax revenue per year from doing this [0]. 7,000 jobs [1] is $350million per year, if the jobs pay about $40K/year (which means the cost to the employer, after payroll taxes and overhead, is at least $50K... 7K * 50K == 350mill.) [0] http://jan.ocregister.com/2011/06/29/amazon-terminates-deal-... [1] http://www.forbes.c…
The 2% was from an NPR Marketplace story I heard on the radio last night. http://marketplace.publicradio.org/display/web/2011/09/01/pm... "The state estimates sales tax would bring in around $83 million from Amazon alone -- $317 million from all Internet retailers. Income tax from Amazon's promised 7,000 jobs might add up to 2.5 percent of that." What we're comparing here is how much sales tax California would pull i…
One thing the state presumably would like to do with the tax revenue is promote job creation. Having 7,000 extra jobs available would bring all sorts of great benefits to California - some of which are easy to quantify, and some of which aren't.
The whole situation reminds me of a little skirmish recently between the San Francisco board of supervisors, and Twitter. Twitter was willing to move its main offices to a slightly run-down section of San Francisco in exchange for some city tax breaks; otherwise, they'd relocate to (I think) Burlingame instead. Twitter was going to have those jobs SOMEWHERE; the only question was whether it was going to be in SF, or somewhere else. And it didn't make economic sense for them to set up shop in SF without the tax breaks.
Providing jobs in an area, as well as the local business benefits of those people spending their salary in that location, was expected to bring enough benefit that the tax breaks were given, and Twitter decided to stay [0]. A lot of people were howling about corporate subsidies, though.
This whole subject is near and dear to my heart. One primary goal with my own startup is to create jobs that help financially support people and their families.
And on that note, back to work ;)
[0] http://venturebeat.com/2011/04/22/twitter-san-francisco/