The Destructive Cycle of Tax Giveaways

New Orleans   Phil Mattera has written a quarterly column for Social Policy for the last several years specializing in corporate accountability or the lack thereof.  Phil files regular reports to his list, me included, of the Dirt Diggers Digest, to keep us up to date on corporate impunity and shenanigans, as part of the Corporate Research Project of Good Jobs First.  This isn’t a new thing for him, but a lifetime pursuit.  Many times, he no doubt feels like a voice in the wilderness.  Just maybe, that might change, thanks to Amazon of all things.

In what has to be a first, the editorial pages of both the New York Times and the Wall Street Journal blasted the multi-billion-dollar tax giveaways that Amazon demanded and was given to locate in New York’s Queens and in the Washington, DC northern Virginia suburbs.  Somehow the notion of a trillion-dollar company, one of the richest in the world, run and largely owned by Jeff Bezos, one of the richest men in the world making by some estimates, almost $100 million per day, needing a tax break finally struck them as absurd.  Even Nashville coughed up a couple of million in breaks for 5000 support jobs in the show place in this horse race.

I’m betting that Phil has already been filing freedom-of-information requests to get the skinny on the giveaways public authorities in cities, counties, and states offered Amazon to be their second headquarters.   The report he’ll do on the gazillions that everyone threw at Amazon in this crazy competition will be a barnburner!

This competition is crazy, because there’s no proof that it pays except as a corporate donation that just keeps on giving.  Wisconsin had been the headliner with its more than four-billion-dollar tax dodge to FoxConn to locate there.  Meanwhile, FoxConn has steadily scaled back its promises of new jobs being developed.  Let’s see if Scott Walker, the recently defeated governor of that fine state, doesn’t end up as a consultant, representative or board member of the company soon.  He’s earned it!

Here’s what’s worse.  Monkey see, monkey do.  Give candy to one corporation, and they all want the same sugar high.  Jamie Dimon of J.P. Morgan Chase had already announced that if Amazon came anywhere near where they operated, they would want the same deal.  That will not turn out to be an original idea unique to him.

Meanwhile, the real story seems clear that tax incentives to businesses often don’t work out.  Texas schools lost an estimated $4 billion to the state’s economic development program.  Cleveland schools lost $34 million in one year alone.  New Jersey is on the hook for a loss of $1 billion.  Michigan’s tax credit liability is $9.38 billion over 20 years.  Hollywood moves from state to state on this incentives-for-jobs scam.  Louisiana was big film country during the Republican Bobby Jindal’s time, and the state loss millions on the deal.  Now they are hanging out in Georgia playing the same game.  A suburban Louisiana school district just nixed a break for redevelopers of a shipyard, having recently won the power in the state to “just say no” explaining that they really needed the money to support educating students.

Between the Amazon and FoxConn farces and the dire need of every level of government for every penny of tax dollars for schools, infrastructure, and basic services, there is a full accounting that might finally be coming due.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

The “Amazoning” of Urban Economic Development

New Orleans     Amazon has spread its tentacles from books to groceries to virtually everything we touch as the premier online marketplace for America and increasing parts of the world.  There seems no end to their range from drone deliveries to explorations of space to the Washington Post.  Now, in real time we may be watching the “amazoning” of urban economic development in the wake of their highly publicized search for a second headquarters that they promise would bring 50,000 jobs to some city in North America.  It is disturbing to imagine cities listening more intently to Amazon than their own citizens!

The search is down to twenty cities, and many voices in some of the cities, Toronto for example including ACORN Canada’s members and leaders, are less than enthusiastic as they envision even more displacement and tension around the unaffordability of housing.  Business leaders and politicians are lapping at Amazon’s feet in hopes of winning this strange contest and potentially mixed blessing.  That doesn’t count the potential truck loads of financial incentives and tax breaks that are likely to come to Amazon from the winning city that mortgages its future to become a company town for this secretive and totally self-interested enterprise.

We could almost dismiss this as a modern-day reality show that will play out for good or evil in only one city.  We could say, “be careful what you wish for” to the winning city and see what happens..

Sadly, like so many things Amazon, they won’t let us do that, because cities all over the country are reportedly now seeking the company’s advice on their own city’s development and planning.   There were two-hundred or more “losing” cities, so that makes this Amazon problem worse for all of us.  The Wall Street Journal and the financial and editorial pages of our daily papers that act as the sounding boards for business interests and local chambers of commerce are all trying to embrace Amazon group-think about how they need to reconfigure their development to fit the needs of the future as defined by Amazon.  Sacramento is restructuring all of its workforce training programs as is Orlando in order to develop more tech talent.  Detroit, a case study in urban sprawl and core abandonment, finally hears the fact that its apartheid might need a regional transit system to allow tech workers to amass sufficiently to attract an Amazon-like company. Cincinnati is using the Amazon rejection to “put the city’s economic development plans on steroids.”

To the degree a rejection slip might coincidentally force city fathers to hear what their citizens have said for years, maybe this is a good thing, but who believes Amazon demands are a prescription for every city’s future economic development?  Surely, no one in their right mind.  The music in the background is the same that accompanies every horror movie.

Meanwhile, Amazon in its current headquarters city of Seattle just announced that it was stopping construction on a building employing 7000 construction workers and not occupying another building until they get guarantees that the City Council will not assess a $500 per capita tax on workers in order to fund a better transportation system.  This kind of bullying is standard operating procedure for the company that calls the shots in a company town.  The potential winning city needs to follow this dispute carefully before they turn over the keys to their city to Amazon.

A city’s interests and needs are different than a company’s.  Cities like Detroit and Orlando surely know the downsides of being a company town, but haven’t all urban planners and economic development departments learned that a city can’t survive without a diversified economy?  The “amazoning” of urban America would not be a disruption, but a disaster.

Facebooktwittergoogle_plusredditpinterestlinkedinmail