Amazon Played American Cities For Suckers, LA Times Editorial Board

Last edited Fri Nov 16, 2018, 07:31 PM - Edit history (1)

Over the 14-month "Bachelor"-like competition for Amazon's second headquarters, more than 200 cities across the country went to embarrassing and expensive lengths to woo the online retailer. City leaders raced to hire consultants, compile data and draft elaborate proposals, offering ever more generous financial incentive packages, all in hopes of landing the promised $5-billion corporate office with 50,000 high-paying jobs.

Although Amazon may have flirted with mid-sized cities like Pittsburgh and Denver, and eyed Rust Belt resurgence in Indianapolis and Columbus, Ohio, the company ultimately picked two of the nation's biggest metropolitan areas for its new corporate centers — New York City and Greater Washington, D.C. — with each landing half the jobs. The company managed to extract well more than $2 billion in financial incentives and tax breaks in the process. Whether those incentives pay off for taxpayers will depend in large measure on how well Amazon does in the coming years, and whether its success gets passed on to workers in the new offices.

In the end, did all that wooing really make a difference? Nah. It sure looks like Amazon used the "open bidding" process to play cities against each other so it could extract more financial incentives from a short list of locations the company was seriously considering for headquarters. The process generated some offers that certainly seemed irrationally exuberant; for example, Philadelphia and the state of Pennsylvania offered subsidies worth about half a billion dollars more than Amazon said it was going to invest in the new headquarters.

If a tax break goes to a company that would have moved in even without such a subsidy, then taxpayers have traded away money that could have been spent on education, infrastructure and other public services. Nor are such tax giveaways fair to existing businesses that pay their required share of taxes and rely on the services and infrastructure funded by those tax dollars. Worse, researchers have found that incentives are often poorly targeted and don't deliver the promised benefits in terms of jobs and economic activity. That's not economic development. It's corporate welfare.

...Cities and states can't continue this race to the bottom. They have to be more savvy when the next mega-company comes knocking for subsidies. Some academics have proposed a kind of armistice or interstate compact in which states collectively refuse to offer company-specific financial incentive packages. -MORE...

http://www.msn.com/en-us/news/opinion/editorial-amazon-played-american-cities-for-suckers/ar-BBPJZCo?ocid=HPCOMMDHP15