Some of the 238 pending bids from cities trying to get Amazon to build in their town take corporate welfare to an obscene new level.
12-figure billionaire Jeff Bezos‘ online retail empire currently calls Seattle, Washington home, but has announced plans to build a second headquarters (HQ2) in another city yet to be named. Mayors and city council members salivating at the opportunity to take credit for sealing the deal on a $5 billion, 50,000-employee monstrosity are falling all over themselves to give Amazon the keys to their city.
Seattle Times columnist Danny Westneat read through 30 cities’ proposals for corporate tax breaks that would be granted to Amazon in exchange for building their HQ2 in their respective cities. Some proposals are overly generous, with Chula Vista, California offering a 30-year exemption for property taxes (worth an estimated $300 million) and 85 acres of free land for construction (valued at $100 million). Newark, New Jersey is offering $7 billion.
However, one of the most absurd tax break packages comes from Chicago, where Mayor Rahm Emanuel’s government has essentially told Amazon that it can pocket roughly $1.32 billion in workers’ tax payments that would normally go to the city:
Called a personal income-tax diversion, the workers must still pay the full taxes, but instead of the state getting the money to use for schools, roads or whatever, Amazon would get to keep it all instead.
“The result is that workers are, in effect, paying taxes to their boss,” says a report on the practice from Good Jobs First, a think tank critical of many corporate subsidies.
However, that proposal doesn’t even come close in comparison to some of the more obscene proposals floated by other city governments. In Fresno, California, for instance, the government has put forth a plan that would allow 85 percent of all taxes paid by the company to be spent in accordance with the wishes of a board made up of Amazon officials and city officials.
In a revealing quote to the Los Angeles Times, Larry Westerlund, who is the economic development official in Fresno, spoke with disdain about Amazon’s potential tax dollars going toward public services rather than things that would help Amazon.
“Rather than the money disappearing into a civic black hole, Amazon would have a say on where it will go,” Westerlund said. “Not for the fire department on the fringe of town, but to enhance their own investment in Fresno.”
In case you needed further proof that all levels of government are wholly owned by corporations, Wisconsin is giving tech manufacturer Foxconn $3 billion in tax breaks for a new factory that would result in 3,000 to 13,000 new jobs — meaning that Wisconsin taxpayers will pay between $230,000 and $1 million for each Foxconn job. And the Federal Communications Commission is on the verge of giving control of the entire internet to telecoms titans like Comcast, Verizon, Google, and AT&T.
Remember when government was of the people, by the people, for the people?
Matthew P. Robbins is a freelance economics contributor covering wages, budgets, and taxes. He lives in Chicago, Illinois with his husband and two cats.