Amazon Jobs Are Not Worth $ 3 Billion in Corporate Welfare

This week, Amazon announced that it was abandoning its plan to create a "second seat" in New York. The company's withdrawal came amidst strong political opposition from a number of elected officials and activists, mainly due to the $ 3 billion tax incentive the company was to receive from State and local authorities.

Immediately after the announcement of this announcement, Amazon has presented democratic recriminations that are the subject of feverish dreams. On the one hand, there were Democrats from the establishment, like Andrew Cuomo and Bill de Blasio, who, like many politicians, are conventional about economic development strategies involving fiscal incentives. . On the other side were Democrats, such as Representative Alexandria Ocasio-Cortez, who viewed tax incentives as a disempowerment of state and local government services.

In the beginning, the Conservatives on Twitter were "rooted for wounds" and joked about the internal conflicts of the left. But finally, the right-wing conventional wisdom seemed to blend in with Cuomo's and Blasio's perspective on tax incentives. It's crazy, they said, that AOC would have opposed a package of tax incentives that would have created (more) jobs at Amazon in New York! Think of the jobs!

But while the Conservatives were rejoicing over the consequences of Amazon's release as an opportunity to proclaim Ocasio-Cortez's economic ignorance, Ocasio-Cortez is more correct about the Agree with Amazon that she is not mistaken and much closer to the path of good tax policy.

Economic development is a huge pork show

In fact, the debate on the Amazon takes into account more broadly the obvious points of view than those that were not visible and does not aim only to determine if the average project of "economic development" will go from there. even without a tax incentive, but also on the overall effects of abusive tax incentive policies on governance objectives in general.

First, we can not know for sure if Amazon would have come to New York without reduced tax incentives or with reduced tax incentives, but we know that bookmakers who have disabled Amazon's search had always made Virginia and New York one of the favorites of the HQ2. small part because both have a highly skilled workforce, not to mention their proximity to power. In fact, many offers of tax incentives to Amazon from other states far exceeded the value of New York. Amazon's statement about its withdrawal from the New York headquarters in New York can easily be interpreted not as a cash flow issue but about the public relations fiasco that Amazon was about to suffer at the hands of the class of New York activists.

The question of whether, or to what extent, incentives are needed, is not just about Amazon, and the research on incentives that include or imply "without" language – "but for the incentive, the project will not 39 will not happen "- are useful here, for example, a study by the WE The Upjohn Institute, published last year, reveals that the vast majority of companies receiving tax incentives under a heading" but for "would probably have pursued their projects even without l & # 39; incentive.

In other words, many of these projects benefit from tax incentives, not because the project would not take place without them, but because commercial interests have become accustomed to receiving them and know how to use the system for tax purposes. get them. The result? With the proliferation of local tax incentives, fewer and fewer taxpayers are required to assume a growing share of local government funding.

This failure of management by governments across the country costs state and local taxpayers Billions dollars annually. This affects not only government services, including roads and education, but also the government's ability to reduce taxes for all, if it wishes. The city of Kansas City, Missouri, where I come from, pays $ 90 million a year into its budget through tax incentives, not to mention the $ 42.5 million extra that these decisions redirect public schools of the city and other tax districts, which rely on these tax flows, but have relatively little to say in their diversions.

By joining this concern with the findings of Upjohn, it is clear that in the case of Kansas City, tens of millions of dollars each year do not go to children, roads or other necessary projects, simply because some connected companies want specific tax treatment for the projects they would undertake. even though they have not received the incentives. This is unfair to both taxpayers and competing companies, whose opponents have managed to obtain a preferential agreement only for them.

In some respects, these revenue diversions are only beginning to be more specific with the enactment of new accounting standards requiring greater transparency on money that governments across the country are renouncing in the name of "development". If you have not tried to find out your local and regional governments give, you should probably. The financial situation will be reformulated the next time these governments come before you claiming to be poor in money and looking for tax increases.

Businesses should not benefit from public benefits

Would some tax incentive projects be withdrawn if there was no tax incentive? Certainly. Would most others go as planned? The evidence suggests that they would do it.

I do not claim that Amazon would have come to New York without any tax incentive, if not less, because no one really knows the answer to that question. Nor do I pretend that the New York government "deserves" funding at a higher level and that the departure of Amazon's head office allows it.

What I support is that Amazon and other private companies are comparing state and local governments for their own financial benefit, and that politicians are generally more than happy to play for the simple fact to wear their helmet and plant their shovel the ground in front of a bunch of cameras.

What puzzles me is that if the national Conservative experts (rightly) give in to the idea of ​​ethanol and sugarcane subsidies and all the rest, they can not consider failures local tax policy and the state as equally deserving of unambiguous and acute criticism. Maybe in the context of the actors involved – Amazon, Jeff Bezos, Ocasio-Cortez, Blasio and Cuomo – it's just too delicious to watch the fire of cultural and economic sinking, and relatively disadvantageous to say, even if it is clear, that Amazon and New York will go well, and that these offers of tax incentives are rarely in the interest of the taxpayers who subsidize them.

Specifically, the Conservatives would do themselves a favor by clearly recognizing, and repeating loudly, that tax incentives do not indicate "healthy tax competition" and that agreements like the one between Amazon and New York are more of a showcase for a national disease policy that uses paychecks of individuals and small businesses across the country, to distribute money to businesses well connected people.

Milton Friedman was right: "You talk about preserving the free market system. Who destroyed it? The business world has to take a lot of responsibility. … You have to separate being a pro-free company from pro-business. "

New York was pro-Amazonian; it was not for the market. We would all do well to focus on this latter approach as a guiding principle on these issues and similar issues of local tax policy in the future, regardless of the state or actors involved.