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Wednesday, March 6, 2019

The Corporate Welfare Keeps Rolling for Amazon's Virginia HQ2

By Christian Britschgi - March 06, 2019 at 02:40PM

While it might have been chased out of New York City, Amazon is still getting the red-carpet treatment from officials in Arlington, Virginia, where the company is planning to locate its long-anticipated second headquarters.

On Tuesday, the Arlington county government released the details of its own incentive package for the e-commerce giant. In return for occupying a certain amount of office space, local officials are promising Amazon millions in straight cash subsidies along with a boatload of new infrastructure improvements for its planned $2.5 billion campus.

How much these subsidies will end up costing taxpayers is a bit of a guessing game.

Arlington's incentive package dolls them out by a formula that promises the company 15 percent of the anticipated increase in the county's tax on hotel and motel stays. County officials estimate that the direct subsidies will cost $23 million over 15 years.

The infrastructure improvements are estimated to cost another $28 million.

The incentive deal also requires county officials to meet once a year with representatives from Amazon, who will "offer insights on the company's transportation, open space and other public infrastructure needs."

These subsidies will be in addition to the $750 million on offer from Virginia's state government.

Unlike that incentive package—which requires Amazon to hit certain employment and wage targets—Arlington's corporate goody bag comes with remarkably few strings attached.

The one-way-street nature of the deal has a lot of Arlington activists steamed.

"What does Amazon have to do to get $23 million from Arlington? Just show up!" reads a tweet from one local anti-Amazon account. County officials have said in response that they can always pressure Amazon to make other concessions later, according to the Washington Post.

Activists' demands are wide-ranging, with the Post reporting that they include everything from the company agreeing to pay union-level wages to construction workers to refusing to do business with Immigration and Customs Enforcement (ICE).

It's understandable that Arlington residents would want something from Amazon in return for the tax dollars they'll be forking over.

However, instead of conditioning this public largesse, a better solution might be to just not offer one of the richest, most successful companies in the world corporate welfare in the first place.

Indeed, recent months have given reason to think these kinds of subsidies are far down on the list of Amazon's reasons for where it will locate its HQ2.

A good example of this is the fact that Amazon decided to place its new headquarters in Arlington and not nearby Montgomery County, Maryland, despite the latter offering $8.5 billion in incentives, or nearly eight times what state and local officials in Virginia have offered.

It was the same story further north, when Amazon picked New York City over the nearby Newark, New Jersey as the site for its other HQ2, despite the fact that the New Jersey location would have come with double the subsidies and incentives.

When fierce local opposition to the terms of New York's incentive package saw the company kill its plans for a NYC campus, Amazon noticeably declined to move across the river to Newark—despite New Jersey officials aggressively reminding the company that their $7 billion incentive package was still up for grabs. Amazon has also said it will be sticking to its plans to add just 25,000 jobs to its planned Arlington campus, despite Virginia offering the company an additional $200 million if it added 37,250 jobs.

It's foolish to look at all the money Amazon is leaving on the table and conclude these government incentive packages are what's driving the company's decision-making.

Offering them anyway is essentially a middle finger to the residents and businesses that are stuck paying for them. As we saw with New York's Amazon deal, the unfairness also lends legitimacy to the complaints of left-wing activists, whose critiques of corporations like Amazon extend well beyond the public subsidies they gobble up.

The Arlington County Board of Supervisors is scheduled to debate this incentive package at its March 16 meeting.


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