Just Taxes Blog by ITEP

Amazon HQ2 Finalists Should Disclose the Financial Incentives They Promised

Amazon HQ2 Finalists Should Disclose the Financial Incentives They Promised

November 6, 2018

ITEP
Guest Blogger

Following is a guest blog by Greg LeRoy, executive director of Good Jobs First.

The news that Amazon may have decided on Long Island City (a neighborhood in Queens, N.Y.) and Arlington, Va., as the locations for its HQ2 is eliciting much coverage for the projected number of jobs it will bring and the overall economic investment in these metropolitan areas.

But taxpayers in these metro areas should hold their elected officials accountable and ask tough questions about the incentives their local and state governments are providing to this highly profitable Fortune 500 company to determine whether the return on investment will be worth it.

As my group, Good Jobs First, documented in a study last April, the Crystal City and Long Island City subsidy offers are among the many HQ2 bids that remain completely hidden. Citizens have no idea what their elected officials have promised to a company headed by the richest person on earth.

What special new subsidies, for example, have been promised that will require state or local enactments? The New York and the District of Columbia metro areas (of which Arlington, Va. is a part) are two of the costliest housing markets in the country. Are gentrification buffers, e.g. affordable housing, included? Are claw backs or other safeguards included? We don’t know the cost per job. But we do know that that past U.S. “megadeals” have cost an average of $658,000 per job. At that price, taxpayers can never come close to breaking even. Such deals convey a massive transfer of wealth from taxpayers to shareholders. Given the huge federal tax break that Amazon received from the 2017 tax law, it makes little sense for states to throw even more tax breaks its way without clear benefits that far outweigh the giveaways provided to Amazon.

Even at half the projected HQ2 size, each of these projects will induce enormous growth and about four-fifths of the job takers will predictably not be current residents. That means more classrooms, more teachers, more transportation infrastructure and service, and more public safety costs. If Amazon gets tax breaks and doesn’t pay the full costs of this induced growth, existing residents and small business owners will get stuck with higher taxes and more-stressed public services.

Gov. Andrew Cuomo and Gov. Ralph Northam should immediately fully disclose their first- and second-round incentive packages and schedule multiple town halls in the project footprints for local citizens to debate them.

Good Jobs First’s Amazon resources are visible at https://www.goodjobsfirst.org/amazon .