Sometimes losing is better than winning.
Two Maine communities, Scarborough and Brunswick, made long-shot bids to serve as the home of Amazon’s second headquarters, a projected $5 billion investment that would produce as many as 50,000 jobs.
Scarborough was marketing the former Scarborough Downs racetrack by promising a 100 percent property tax exemption under the state’s Business Equipment Tax Reimbursement program. If the company would consider the former Brunswick Naval Air Station, backers there said, it could get $200 million in incentives from the state. Fortunately, even those offers were too paltry to get Maine anywhere near consideration.
Instead, Amazon has managed to get 20 cities bidding against each other to pile up enough tax breaks, free land and other government-funded goodies to convince the e-commerce colossus to make them its second home. If corporate welfare were an Olympic event, Amazon would carry home the gold.
But for the businesses and residents in the lucky winner community who still have to pay taxes, this is not going to be such a happy event. Their money will be handed over to a company that collected $136 billion in revenue last year.
Deals like this stimulate growth without generating the tax revenue to pay for the additional services. The result will be higher taxes and higher housing costs for anyone who doesn’t have the clout of an Amazon to set their own prices.
The finalists could make a huge statement if they joined forces and told Amazon that it should buy land and pay taxes just like everyone else – an idea that was promoted last week on Twitter by urban development expert Richard Florida. But that’s too much to ask in the all-or-nothing environment in which states now find themselves. Industries move off shore if they can get a better deal, leaving whole communities devastated. Standing up for the principle of fairness won’t stop a big employer from moving somewhere else.
It would take a federal law to prevent profitable companies like Amazon from playing desperate communities against each other. As this game gets bigger, it’s time for Washington to step in.
Amazon may be the most audacious contender, but it is hardly the only company that takes advantage of states’ hunger to replace lost jobs.
Foxconn, a Taiwanese manufacturer of iPhones, got $3 billion last year from the state of Wisconsin for a flat-screen TV plant that is projected to employ 13,000 people. That’s a lot of jobs, but they will cost the other taxpayers $230,000 apiece.
Toyota and Mazda announced a new car plant in Huntsville, Alabama, which comes with $800 million in state and local incentives. The companies promise to create 4,000 jobs, but at a cost of $200,000 in subsidy for each one.
Amazon is not new to this game. In 2016, the nonprofit watchdog Good Jobs First revealed how the company has collected $246 million in economic development subsidies in 14 states to build fulfillment centers. The subsidies don’t affect the number of jobs created, just their location.
This time, Amazon simply let the world know that it was looking for a site for a second headquarters where it would employ as many as 50,000 people who would average $100,000 a year in income.
Its needs seemed very high-minded. The company said it was looking for an educated workforce, access to public transportation and recreational opportunities for after-work hours.
The offers poured in from drooling local officials.
The finalists, released last week, include places like Atlanta, Boston and the Washington, D.C., area, a list of cities that Amazon was probably already aware of and one that the company could have put together without all the fanfare.
Now the contest will devolve into an economic-development strip poker game, where the winner will be the one with the most humiliating package of public-sector giveaways. Expect the bidding to start at $200,000 per job and go from there.
Congress should put an end to this kind of exploitative bargaining.
In the meantime, Maine officials should stay out of these high-stakes games, and focus on the kind of things that Amazon said it was looking for – like an educated workforce and a pristine environment. Then, instead of breaking the bank trying to lure an Amazon here, we can focus on giving Maine businesses what they need to grow.
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