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Communities Are Paying Amazon to Set Up Shop. It Should Be the Other Way Around.

Economic development incentives or subsidies for Amazon are essentially a form of tax avoidance, says Greg LeRoy.

An Amazon delivery truck drives past Amazon's JFK8 Staten Island fulfillment center in Staten Island, New York, on March 25, 2022.

Janine Jackson: It’s meaningful that Amazon’s head, Jeff Bezos, also owns The Washington Post, and that the paper sometimes needs to be reminded to disclose that relationship to readers, as they run stories like “Jeff Bezos Blasts Into Space on Own Rocket: ‘Best Day Ever!’” — buttressed by op-eds like “The Billionaires’ Space Efforts May Seem Tone-Deaf, but They’re Important Milestones.”

The difficult reality is that Bezos doesn’t need to outright own a news outlet to get coverage that undergirds his worldview that, yes, it makes sense for a man to launch himself into space while some of his employees rely on public assistance to feed themselves, and face every underhanded obstacle if they try to organize, and for a company that contains those contradictions to be labeled a wild economic success.

Corporate news media aren’t the first place to look for critical examinations of corporate capitalism, but they do present themselves as watchdogs of the public interest, and especially public spending: the “cost to taxpayers.” If that’s true, a hard look at public subsidies to Amazon should be compelling stuff.

Here to tell us about it is Greg LeRoy, executive director of Good Jobs First, the group behind the #EndAmazonSubsidies campaign. He joins us now by phone from Maryland. Welcome back to CounterSpin, Greg LeRoy.

Greg LeRoy: Thanks, Janine. Great to be with you.

Simply enough, how do you describe to people the problem that the #EndAmazonSubsidies campaign is aimed at?

I think everybody understands now that Amazon is kind of metastasizing. It’s now the No. 1 retailer by dollar volume in the United States; it leapfrogged Walmart a couple years ago. It’s massively growing its warehouse network, because pandemic deliveries surged. They added hundreds of new warehouses during the pandemic, and are still adding more.

As if Amazon was ever a small company 20 years ago, and might have needed some help, we’ve passed that Rubicon eons ago, right? This is a very aggressive, very rapidly growing company, with lots of other tentacles that people don’t know very much about, like cloud computing and fashion and movies and groceries, obviously, and many other things.

But ten years ago this month marks the anniversary when the company basically set up a part of its public policy department, charged with doing nothing but getting tax breaks, because the company now was in a growth mode where it was going to have to build lots of warehouses next to every major market with lots of Prime households, and therefore they wanted to get paid to do that. And the company has pulled down more than $4.1 billion dollars already, mostly for warehouses, sometimes for data centers and other things, but mostly warehouses all over the country. And we think that’s nuts.

It’s money coming from public coffers to support what is not a fledgling, struggling business that requires that kind of lift.

Well, tax avoidance is never an accident at Amazon, right? It’s always been a conscious part of their model. You’re talking now about moving from tax avoidance to subsidies, but from the get-go, they have not been interested in supporting the state or the community that they function within.

That’s exactly right. And it’s not wrong to think of these economic development incentives or subsidies as another form of tax avoidance, because it means you’re avoiding paying your property taxes for 10 or 20 years. It means you’re not paying sales tax on your new building materials and machinery and equipment. It means you might be getting an income tax credit back, because you invested X dollars or hired X people. So many of these deals involve multiple tax breaks of the normal kinds of taxes that a family would pay otherwise, for example, and a company should pay.

And then from the community, the government point of view, and I saw your colleague Kenneth Thomas quoted in this report in Vice, it’s worth just saying it out loud, that the money that these communities are giving to Amazon, they could have put into education or healthcare or infrastructure or a million other things.

That’s exactly right. Education, obviously, is the most expensive local public service, and is usually the biggest dollar loser. But everything that takes place at the local level — county public health programs, infrastructure, whether or not we’re going to reduce class size or have pre-kindergarten classes — all those things are affected by the amount of money available. And when a big company comes in like Amazon and doesn’t pay much, if anything, toward all the growth that’s being induced, guess who gets socked with lousier public services and higher taxes?

And that’s not even to mention the displacement or the harm to smaller and local businesses who just can’t compete because they’re paying their taxes. They’re not getting the same kind of break, necessarily, that a behemoth like Amazon is able to finagle.

That’s right. We’ve been saying for years, communities and states should not pay Amazon to arrive. It should be the other way around. Amazon should pay for the privilege of arriving, because of the damage it’s going to do to the local economies.

Another aspect that should be catnip for reporters is the secretiveness. The Chicago Tribune ran a piece by Pat Garofalo from the American Economic Liberties Project about how, for instance, when Amazon got more than $100 million in tax breaks in 2020 from a village in Illinois, they demanded that the trustees wouldn’t disclose that Amazon was behind the deal until the deal was basically a foregone conclusion, so the community didn’t get to weigh in on this massive deal. What’s up with that?

And a similar thing happened in Fort Wayne, Indiana, right next door, where in the first-phase tax abatement, the council literally didn’t know they were approving a property tax abatement for Amazon. And then on the second bite, by the time the company’s name had come out, they voted it down, but the company stayed anyway, despite a threat.

I think Amazon knows there’s something wrong with this. They’ve gotten more secretive in recent years. We’ve noted that. Our tracker on our website has multiple lines now saying, “amount unknown” or “amount incomplete,” because they were working very aggressively with public officials to try to cover up something. Maybe they feel dirty about it. I can only speculate.

And, yeah, sunshine is always going to be the best disinfectant there. And just one note on that Chicago Tribune piece: Garofalo also noted that, in the case he was talking about, funds came disproportionately from Black neighborhoods. And that’s another problem with these nondisclosure agreements: Corporations can make different demands of different localities, and some might have to pay more to host a facility than others, but they don’t know that, because it’s all shrouded in secrecy.

Yes, and Amazon’s classic secretive whipsawing of communities against each other, putting public officials in what’s known as a “prisoner’s dilemma” in game theory, where they don’t know who they’re competing against, they don’t know if what the company is telling them is truthful about bids from other places. And in the case Pat was talking about, this is a fantastic investigation by WBEZ radio in Chicago and something called the Better Government Association where they really dug in and found very sharp racial disparities between the company’s treatment of different communities.

A story on CBS Moneywatch last year cited your work, Good Jobs First, and the critique of Amazon subsidies. And they had a counter, not much of one, but sort of halfway through the piece, it says, “Amazon defends its use of subsidies, pointing to its hiring record and saying that the tax breaks are available to all companies.” What do you say?

You know, it’s not wrong to say that too many of these tax breaks are available to too many companies. But that’s a big, structural, recurring problem we’ve been screaming about for 20 years. That is, once you make a program, like an abatement program, basically a gimme, or nearly an automatic, or a tax increment financing district or an enterprise zone or name your poison, then sure, rich companies with armies of consultants and accountants and tax experts are going to come in and grab every piece of money laying on the table they can. That’s the big structural problem with incentives these days.

That doesn’t make it a good thing, you know?

Right. Exactly. That’s an excuse.

And I get, in a cynical way, why Amazon, or any company, wants to scrounge and scrape and withhold in order to hold on to every thin dime. What I don’t understand is how anyone can make that part of their free enterprise fairy tale, like it’s a better mousetrap, and if you work real hard, you can do it too. That’s the part I object to. Amazon is doing something that really only Amazon can do at this point.

I guess what I’m saying is, I don’t understand why this is presented as an example of capitalism working as it should: You know, someone’s got a great idea, and was able to make it bigger and bigger and bigger. And so, you know, then they get to launch themselves into space.

Yeah, I mean, I think if you read the comment threads on some of these articles, there certainly are some people that say, like, what are you belly-aching for, you know? This is capitalism, that everybody does it. But I also think it suggests that capitalism is kind of fragile.

I mean, you look at developers who always expect breaks — of many different kinds, not just retail developers — and you ask yourself, if these things just weren’t legal, if they expected to pay full freight for coming in, they would still do it, right? The markets are still there, the spending power is still there, the jobs still need to be housed, whatever the project is. We’ve allowed companies to just assume they’re not going to pay to arrive. And I think that’s a real weakness in both public policy, but also corporate mentality.

And haven’t there been instances where communities have said, they think Amazon would have located the warehouse there for basic economic reasons even without the subsidy? So it was not just not necessary for it to go into Amazon‘s coffers, they had reasons to locate there outside of that…

Oh, we have a great deal of evidence. We have an interactive story map on our website where we updated it with all the new pandemic warehouses, and the recurring theme is proximity to affluent zip codes with lots of Prime households, although not in the Prime households, because land’s so expensive. Two or three ramps out on the highway, near an airport, near a rail head, near a truck depot, and in a warehouse district close to affluent zip codes. It’s really predictable where they’re gonna go.

Just finally, there are communities that push back, that don’t see Amazon as a gift from the gods arriving in their town, and who actually resisted and have done so successfully.

And we didn’t even touch on the fact that Amazon is doing this around the world. We’re not just talking about the United States. They’re getting subsidies in every country they can, but also around the world folks are resisting it.

It’s true. I mean, these new damning findings by Reuters about their behavior toward third party vendors in India just spawned the letter from five members of Congress to the Department of Justice, asking them to look at Amazon’s potential lying to Congress about their behavior toward third party vendors. You’re right. This is a global story.

All right then. We’ve been speaking with Greg LeRoy; he’s executive director at the group Good Jobs First. You can find their work, including around ending Amazon subsidies, online at Greg LeRoy, thank you so much for joining us this week on CounterSpin.

Thanks, Janine.

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