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Analysis

Dear Amazon, here’s our offer: not one dime

Boston has more than enough to attract Amazon without extra financial incentives.Nicholas Pfosi for The Boston Globe

Boston doesn’t need Amazon, and Amazon doesn’t need our tax dollars, so maybe we should dispense with the inducements and put in the simplest possible bid for the new Amazon headquarters: Come to Boston because it’s a great city, with smart residents, thriving communities, and just about everything else Amazon could need for a successful second home.

Would it be risky to go this route? Maybe, but Boston can afford to lose this bidding war, if it comes to that. The metro area is already thriving, with rising incomes, low unemployment, high demand for housing, and companies jumping at the chance to relocate. Amazon might be the cherry on top, but sundaes are good even without cherries.

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And even if we were desperate, it’s not clear tax incentives would matter. Think of it from Amazon’s perspective: Anything we can realistically offer would be trivial compared to the scale of Amazon’s business.

Say we put together a package roughly 10 times what we gave General Electric — something like $1.5 billion spread over a decade. That’d be a significant cost, more than we spend on environmental programs. But to Amazon, which had 2016 revenues of $136 billion, it would be little more than a rounding error.

For context, imagine a family with $100,000 in household income. Would they choose where to buy a vacation home based on who offered $100 in tax breaks. Or would they care more about weather and nearby activities?

Generally speaking, state taxes aren’t a driving consideration for most businesses. Sure, they’d prefer to pay less, but there are more pressing matters: Can you find enough employees? Will your executives and key decision-maker be happy with the local communities and schools? Is housing affordable, and commuting manageable?

Across measures like these, Boston has few real rivals. Our city is full of young, highly educated workers. We’ve got the best public schools feeding into leading colleges. And while housing is relatively expensive and the T needs work, our situation looks pretty good measured against the fire-prone DC subway or the price of a Manhattan apartment.

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Perhaps the oddest thing about Amazon’s headquarters scheme is this company is sophisticated enough to understand that local tax incentives don’t matter enough to its bottom line.

So why is Amazon still insisting that tax breaks and other special incentives will be “significant factors” and “critical decision drivers” in its search for a new headquarters?

Perhaps it’s just a thrifty operation looking to pinch pennies anywhere it can.

But there’s also a more worrying interpretation: Maybe what Amazon is looking for isn’t money, but rather pliability — some proof that the anointed city will bend to its needs. A big inducement package is a signal of weakness that Amazon can exploit for additional concessions as times change. Air rights for delivery drones? Food labeling issues at Whole Foods?

This doesn’t mean we should sit out the competition. Luring Amazon may not be do-or-die for Boston, but the arrival of up to 50,000 high-paying jobs could have some positive spillovers, especially if the headquarters is in an underdeveloped neighborhood ripe for an infusion of work-a-day spending.

To land this fish Boston may not need much in the way of bait. Our bid should certainly meet Amazon’s minimal requirement, which includes an appropriate parcel of land — connected to city life, but empty enough that Amazon can imagine building such a big campus.

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And it’s fair to point out Massachusetts already has its share of special business tax breaks, some of which might apply to Amazon — including incentives for certain kinds of research and investment.

But the biggest, best thing we have to offer is Boston itself, which is doing great without Amazon, and will thrive whether we win or lose this competition.

Amazon executives should join in, if they want to benefit from great schools and a city brimming with qualified workers. And if lucrative tax incentives and a pliable political establishment ultimately drive them somewhere else, that’s okay, too. We’ll still be able to get two-day shipping.


Evan Horowitz digs through data to find information that illuminates the policy issues facing Massachusetts and the US. He can be reached at evan.horowitz @globe.com. Follow him on Twitter @GlobeHorowitz