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No Tax Breaks for Amazon

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Logistic center employees of Amazon march through Bad Hersfeld, western Germany, during a strike on May 14, 2013. German employees of Amazon staged their first-ever walkouts as the US Internet retail giant was hit by a dispute over pay. Germany’s giant services sector union Verdi is demanding that Amazon’s 9,000 employees in Germany be paid according to a sector-wide wage deal for the retail and mail-order industries. AFP PHOTO / UWE ZUCCHI / GERMANY OUT (Photo credit should read UWE ZUCCHI/AFP/Getty Images)

Cities should tell Amazon to stick their new headquarters up their profit hole.

Among the criteria Amazon will use to determine where its second headquarters will go is everything you’d expect: a large-enough population, good schools, solid public transportation.

And, inevitably, tax breaks. Loads and loads of tax breaks.

“Incentives offered by the state/province and local communities to offset initial capital outlay and ongoing operational costs will be significant factors in the decision-making process,” said Amazon’s request for proposals. “The initial cost and ongoing cost of doing business are critical decision drivers.”

I suffer under no illusions that cities are going to do anything other than barrel into this competition, filling up bags of money that will then be thrown at the feet of Amazon’s executives. But it’d be better for everyone if no city or state played this game.

After all, this is what big corporations do in modern-day America: They pit cities and states against each other in a battle royale to see who can dish out the most tax incentives and other giveaways to an already mammoth moneymaking organization. It initiates a race to the bottom, with lawmakers unable to see past the immediate promise of jobs and income to the long-term costs of allowing corporate America to erode their tax base.

“Taxpayers should watch their wallets as the trophy deal of the decade attracts politicians to a hyper-sophisticated tax-break auction. We fear that many states and localities will offer to grossly overspend to attract Amazon, even though the business basics – especially a metro area’s executive talent pool – will surely control the company’s decision,” Greg LeRoy, executive director of Good Jobs First, an organization that tracks corporate tax subsidies, said in a statement.

According to a 2012 investigation in The New York Times, cities, states and counties in the U.S. had been spending some $80 billion every year on these sorts of corporate tax giveaways. Depending on whose numbers you’re looking at, the amount governments throw down the gullet of big business has tripled since 1990. And Amazon is no stranger to the game: It’s garnered about $1 billion in subsidies since 2000 all by itself.

The problems with this corporate tax-wooing are many and varied. First, every dollar thrown at a corporation is one less dollar that can be spent on government’s core functions: education, safety, infrastructure and the like. Furthermore, a lot of this money winds up going to companies that would have wound up moving to a particular city anyway, for reasons other than tax breaks; some corporations have even admitted, after the fact, that they would have made a move without any incentives, and that the tax breaks they received were just a windfall provided at public expense.

While it seems highly unlikely that Providence could really compete for this, there is talk about it taking a stab. All of this is a terrible idea. Yes, let’s bring in a libertarian company with enormous tax breaks from an already poor state that will not only have the affect of being a giant giveaway, but will also lead to rapidly rising housing prices thanks to the rich people moving in. Great! Everyone wins?!?!?! I know my Denver friends, who are already freaking out about housing prices in their city, are really outraged at the idea of Amazon moving there. But for politicians, this is gold. This is what they live for. Someone is going to give away the house for Amazon. And it won’t go well.

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