California has Potential to be a Strong Contender in Amazon's Search for New Headquarters

Last week, an exciting opportunity arose for cities throughout North America. Amazon Inc. announced its plans to expand further by building a second headquarters, dubbed HQ2. Since the announcement, mayors and governors across the United States have been submitting proposals and offering tax incentives to the giant company, trying to get Amazon to choose them. According to Andrew Khouri's L.A. Times article, California won't be offering quite as much as other states when it comes to tax incentives, but instead, will be relying on its inherent attractiveness as a metropolitan area with good weather, education opportunities, and skilled laborers.

In some states, like Wisconsin or Nevada, billions of dollars in subsidies and tax incentives are offered to manufacturing and tech companies looking to make a move. They hope that the tax incentives they provide initially will be paid off in the future by thousands of more jobs in the area and an improvement in the housing market. Wisconsin is in the process of working out a $3 billion package with television producer Foxconn. In 2014, Nevada's $1.3 billion package earned them Tesla's lithium-ion battery factory, a factory that Governor Jerry Brown has been vying for.

The amount of money being offered may not matter as much for landing the Amazon deal. Amazon is one of the wealthiest companies in the world, and they have made the parameters of their new headquarters well known. They are looking for a metropolitan area with skilled workers, desirable housing, good distribution routes, and a strong base of customers. With its shipping ports, high quality of life, and many prestigious public universities, California could be a strong choice for Amazon's second headquarters.

Analysts believe that Amazon's main purpose in being so public about their search is to try to get competing offers from different cities so that they can use them to leverage a better tax incentive package from whichever city they actually want for their headquarters. That's why they believe that California has a good chance. Research shows that around 90% of the time, companies would choose the city they chose whether they got the same incentive package or not. It really seems to be up to California itself to shine. Either Amazon wants to build HQ2 here or the company doesn't. The amount of money being offered is unlikely to make much of a difference.

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Santa Monica Council Bans Short-Term Rentals

5/20/15 - Hundreds of property owners, especially those living in vacation destinations, rely on the income that they earn when they rent out their homes, condominiums, or spare bedrooms to short-term visitors. Because of new laws passed in Santa Monica, these individuals may find themselves struggling to find tenants. Tim Logan, in his L.A. Times article, discusses the implications of Santa Monica’s law banning short-term rentals.

Tourists who come to places like Los Angeles, New York, and San Francisco are not generally there for a month at a time, but that is what this law will require. The law, in an effort to deter short-term renters and protect the hotel industry, bans rentals that last less than 30 days, and force individuals renting out a room to pay extra taxes similar to those paid by hotels. This, however, is not to say that the Santa Monica officials are only interested in protecting hotels. The council claims to be introducing these regulations in response to the complaints of annoyed neighbors and advocates for affordable housing in the neighborhood.

Home-sharing, the term given to the practice of renting out a room for a short period of time, has grown exponentially over the past few years. Websites like Airbnb, on which people post their rental listings, have become the place to look for anyone needing a place to live, albeit on a short-term basis. According to Logan, the home-sharing industry is booming and unlikely to slow down anytime soon. Profits are large and demand is high, so even with the new laws, people will likely find some way to keep doing what they are doing.

Some people providing housing through Airbnb are entrepreneurs, managing multiple residences and earning money left and right. Others are elderly and retired, who rent out their apartment when they go out of town to visit family. They encompass two ends of the spectrum, but both feel the same way: the regulations need to be changed. Many understand that home-sharing should be regulated to some extent; they just believe that an all-out ban is the wrong way to do it.

While some people fear that similar laws will be proposed in cities other than Santa Monica, Logan believes that the spread will be limited. Usage of online platforms like Airbnb is hard to keep track of, which is why the government may be afraid of its continued progression toward becoming an integral part of society. Logan recommends wariness when doing business with anyone, but especially with strangers met online. Some feel that laws and governmental oversight would reduce risks. Others believe that the government getting involved would just create hurdles and reduce profit. It's hard to tell which side is correct. Santa Monica may be the guinea pig that the rest of the country needs to test these risky waters.

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IRS to Undergo Changes Regarding "Structuring"

2/13/15 - The Internal Revenue Service (IRS) is responsible for making sure people pay their taxes. As such, the IRS has many procedures they follow to uphold federal laws. Unfortunately, some of these procedures are flawed in that they can lead to unfair treatment of law-abiding taxpayers. In a recent Los Angeles Times article, the process by which the IRS deals with a practice called “structuring” is addressed.

Under federal law, all bank transactions over $10,000 have to be reported to the IRS. This law is meant to help federal officials catch drug dealers and money launderers. However, it is possible to avoid reporting all transactions to the IRS through “structuring,” by which large deposits are split up in such a way that less than $10,000 is deposited at any given time. The reason structuring is illegal is the assumption that the only people who would need to hide their income from the IRS are those earning money through illegal avenues. It is this practice on which the IRS has been cracking down in past years.

If a trend in your financial history shows many such deposits, which seemingly correspond to a structuring scheme, the IRS has the authority to seize your accounts, with no charges filed, for years on end in some situations. It hardly seems fair.

According to IRS Commissioner, John Koskinen, 60% of the 200 or so cases per year are not pursued by the owners of the seized accounts. This leads many to conclude that those individuals were in fact involved in illegal money practices, which could show that the practice is successful in some respects. But, what about the other 40%?

The problem with the current system is that the IRS doesn't need any proof. They don't have to know that the account holder is doing anything illegal. They just have to see that many deposits of less than $10,000 have been made in any given account. In many cases, there is very little for the law-abiding account-holder to do in response, to try to get their money back.

Some deposit smaller amounts into their accounts so as to not carry around large amounts of money between their place of business and the bank. Others simply make deposits at given times, and happen to deposit less than $10,000 at any given time. No matter what the reason, under current IRS practice, accounts can be seized under mere suspicions of possible wrongdoing. Some victims of the system eventually get their money back, but not after plenty of wasted time, stress, and legal fees.

Although the current way in which structuring is addressed has its major flaws, Koskinen assures the public that changes will be made. Congress and the IRS are working together to make sure that taxpayers are treated fairly, and to make sure that accounts will no longer be seized as long as the money in those accounts was earned legally. Although the changes may take some time to fully come to bear, it appears that when these changes are complete, the IRS will have lost some of its ability to seize money without reasonable cause.

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