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After a long courtship with 238 cities that resembled Silicon Valley’s version of "The Bachelor," Jeff Bezos threw his suitors a plot twist and kept three roses for the season finale. Rather than choosing a single city to build a second headquarters, Amazon will build two new HQ locations in New York’s Long Island City and Northern Virginia’s Crystal City, along with a smaller “operations center” in Nashville.
These headquarters will come at a tremendous cost to current residents and taxpayers. Amazon is expected to receive $2.8 billion in tax subsidies from state and local governments and may benefit from additional federal tax subsidies.
New York was so desperate to win the contract, it offered Amazon more than $1.5 billion in tax subsidies, which amounts to $48,000 per job. That is a heck of a discount, considering the average annual salary of these new Amazon jobs will be $150,000. Then again, it’s always easier to be generous when you are spending somebody else’s money.
The Amazon deal is a prime (see what I did there?) example of corporate welfare. A company valued at $1 trillion as recently as September does not need special handouts to break ground on new office buildings.
Perhaps New York State Sen. Mike Gianaris put it best when he asked, “Why can Google bring 20,000 jobs here without any public subsidies, but Amazon needs $3 billion? What is so special about Amazon?”
Opposition to Amazon’s government handout deal is one of the few issues that unites the political Left and Right. Rep.-elect Alexandria Ocasio-Cortez, D-N.Y., took a break from sit-in protesting her Democratic colleagues to rail against Amazon’s massive tax breaks on social media, tweeting:
Ocasio-Cortez is right. That’s something I don’t often say, but hey, even a broken clock is right twice a day. The Amazon tax breaks are unfair to local taxpayers who will receive marginal benefits, if any, from the new offices.
If New York truly has more than $1.5 billion tax dollars to spare, it should have taken less money from New York families and small businesses all along. Why does Amazon get the tax breaks, but not the local mom-and-pop store in Clarendon or Astoria? Jeff Bezos should not get preferential treatment over residents. He should be paying his own way, just like anybody else.
Corporate welfare is not the key to job creation because it is never about the people; it is always about the politics. Legislators make sweetheart deals with companies that allow them to brag about their success with “economic development” and “job creation” on the campaign trail.
But as the Wall Street Journal editorial board so aptly wrote, these politicians aren’t creating jobs; they are buying jobs. If state and local governments embraced the free-market policies that attract businesses and entrepreneurs, they wouldn’t have to bribe megacompanies like Amazon to set up shop in their cities.
Perhaps Milton Friedman put it best when he said, “If it’s jobs you want, then you should give these workers spoons, not shovels.” In this case, Virginia and New York might as well pay Amazon to hire more workers to deliver their Prime orders on foot if “more jobs” is the bottom line.
To add insult to injury, residents will be forced to endure more crowded public transportation, more traffic, and higher housing costs due to ridiculous city zoning laws. If Ocasio-Cortez thought renting an apartment in Washington, D.C., was expensive before, just wait until the Bezos Bros move in. Markets, not central planners, should be dictating where firms set up shop.
But hey, at least residents can take comfort in knowing they are subsidizing one-third of the salary of the Amazon employees who are inadvertently pricing them out of the apartment building they have lived in for the past 40 years. Right?
If there is one party who shouldn’t be calling the shots here, it’s the politicians. Large, successful corporations don’t need tax breaks from federal, state, and especially local governments. The massive tax breaks for Amazon set a bad precedent that we should be wary of.
But let's be clear. The fault lies with the politicians for putting the money on the table. Firms will always be on the lookout for handouts, but it’s up to elected officials to put the lid on the taxpayer-funded cookie jar.
Adam Brandon (@adam_brandon) is a contributor to the Washington Examiner's Beltway Confidential blog. He is president and CEO of FreedomWorks.