The Amazon Conquest of Alexandria

[XLFD]

Seattle-based retail and tech giant Amazon had spent a bit of time in looking for a proper place for their second headquarters.  Michigan politicians participated in the Amazon HQ2 sweepstakes in 2018, reportedly offering tax breaks and subsidies worth up to $4 billion.  In November, Amazon passed on that gift and instead had decided to make two new hubs off the east coast, in the borough of Queens in New York, and Arlington, Virginia. 

From the day Amazon announced the new headquarters, city and state officials drew widespread criticism for offering Amazon $3 billion in tax breaks. Fomenting a lot of this unrest was newly elected Rep. Alexandria Ocasio-Cortez lamenting the huge giveaway “at a time when our subway is crumbling,” and hundreds of locals packed into town meetings in the following weeks to condemn the city’s private deal-making. Unlike previous cases of lavish incentive packages, the terms of the Amazon deal were eye-popping enough to draw potent skepticism even before any sign that the company might not live up to its hiring and spending commitments.

On Valentine's Day, Amazon decided against settling in New York, saying:  "While polls show that 70% of New Yorkers support our plans and investment, a number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project we and many others envisioned."  Ocasio-Cortez, whose district neighbored the proposed development district, was quick to react on Twitter:

"Anything is possible.  Today was the day a group of dedicated, everyday New Yorkers & their neighbors defeated Amazon's corporate greed, its worker exploitation, and the power of the richest man in the world."

A parade of New York officials from both sides of the political spectrum chided the freshman representative for her part in killing the deal.  On the national stage, outside of Arlington, most conservatives and independents rolled their eyes over another apparent gaffe made by the rising star of the socialist wing of the Democrat party.  Democrats were divided between acceptance and avoidance of the topic.

Many are used to Alexandria Ocasio-Cortez saying inane quotes, throwing out inaccurate facts, and advocating odd pie-in-the-sky ideas, but they should find it refreshing that she was able to accomplish what President Trump hasn't in the two plus years of his presidency: potentially draining the corporate welfare swamp that entrenches most of our country.  

According to a comprehensive 2017 study by economist Timothy J. Bartik, since the first boom of company-specific tax breaks in the U.S. during the early 1990s were offered, there has been no correlation between such incentives and a region’s wage and unemployment levels.  Landing a big company to your town with tax breaks often produces meager results even when the company hires and spends as much as expected.  All of the new costs are being subsidized by existing incumbent taxpayers who bear a disproportionate burden of added public costs.

For mayors and governors, the chance to brag about bringing jobs to their city has more than made up for the perverse consequences of company-specific tax breaks. But now, after Amazon’s pullout from New York—along with recent high-profile busts in deals with Foxconn in Wisconsin and General Electric in Massachusetts—the public appeal of tax lures is likely to diminish.

Interestingly, it looks like it has taken the new face of socialism, a system which desires to grow and empower government, to accomplish the opposing libertarian goal of eliminating corporate welfare-- which creates an unlevel playing field for others who effectively pay for the subsidy and create fertile grounds for government corruption.  In the future, this odd alliance may spell the end of most corporate giveaways if they remain energized.  

In January, Amazon became the most valuable company in the country, yet Amazon didn’t pay any federal income taxes on profits of $11.2 billion in 2018, according to a report from the Institute for Taxation and Economic Policy.  It is the second consecutive year in which Amazon hasn’t paid any federal income taxes.  Federal income tax credits and exemptions allowed the company to get a federal tax rebate of $129 million in 2018. ITEP claims that 2018.  The company was able to shelter more than two-thirds of its profits from tax during the last five years.

Michigan's aforementioned MEDC has been instrumental in helping Amazon avoid taxes in the Great Lake State.  They awarded Amazon a $4 million grant in May 2018 for a 100-acre distribution center in Gaines Township, they approved a $4.5 million grant for Amazon in September 2017 in return for the company building a distribution center in Shelby Township, they approved a $4.5 million grant for Amazon in September 2017 in return for the company building a distribution center in Shelby Township, and they approved a $7.5 million business subsidy in December 2016 for another distribution center in Livonia. 

The time has come for socialists, libertarians, and all others to tell Jeff Bezos and his fellow corporate welfare queens to quit living off the government and compete fairly with others.

[Willy]

I'm not in favor of special deals for businesses that cost the taxpayers money however the Amazon deal does not seem to be one of those types of deals. The total deal would have been in mostly tax breaks given by the State and City which was to be around 3 billion dollars over a 10 year period. For that, Amazon would build a facility of 4 million square ft which would be expanded to around 8 million square feet within 15 years. Amazon would create 25,000 new jobs at an average of $ 150, 000 per job within the 10 year period. Within a 15 year period that would expand to 40, 000 new jobs. I don't know all of the details but that sounds like a good deal because right now there is no deal between the state and city because, of course, Amazon is not there. So in order for the deal to kick in both the Government and Amazon must come to an agreement. That didn't happen so no tax incentives and no jobs. If this were an apartment building such as the complex going up in down town Ludington there would be no job creation, only tax breaks which the citizens would have to make up but with Amazon employing 25,000 people at an average of $150,00 each, that adds up to and annual addition of  3,750,000,000 flowing into the economy. What community wouldn't want this type of economic influx? Michigan wanted this deal along with many other States. I don't see this as bad business if it benefits the community and local and State Governments make Amazon and other companies hold up their end of the deal.

[stump]

Willy, I believe the pay scale for the average employee is $15.00 per hour which is poverty in New York.  But even at that that is a lot of jobs lost.