It’s time to play Amazon’s new hit game, “Milk the Taxpayer!”
11 min read
As the winter solstice nears, people around the world are celebrating end-of-the-year holidays that, while widely diverse, share the ideal of a season for giving. But in the US, one offbeat sect is celebrating a season for getting: the Amazonians–the top executives, board members of and major investors in the voracious, e-commerce behemoth, Amazon.com. This tiny group of self-aggrandizing profiteers is spending December gleefully tallying their multibillion-dollar loot from the most disgusting example yet of Milk the Taxpayer, the old corporate-politico con game. It’s a 5-step con that generally works like this:
GreatBigCorporation decides to build a facility in City A.
Claiming the project will create beaucoup jobs, GBC demands that City A’s officials fork over boodles of tax breaks and gimmes.
If the officials hem and haw, GBC approaches City B to stir up a bidding war.
Fearing the stigma from “losing” those jobs, City A officials cave to GBC’s demands.
At a joint press conference, both parties hail the “win-win” deal and praise each other’s forward-looking vision and integrity.
So, GBC gets a windfall for a facility it was going to build anyway; public officials get plaudits for “winning” the jobs deal; and when the jobs don’t materialize … well, tough luck suckers, the check has been cashed.
These corporate welfare deals have zoomed from occasional and relatively modest sweetheart handouts to wholesale whoring. At a cost to taxpayers of at least $70 billion a year, practically every state, county, and city now flagrantly pimps its public resources to any corporation seeking economic development thrills. For their part, randy “free enterprise” executives openly solicit these public favors.
Participants in these sordid transactions shield their buck-naked embrace of corporate welfare with large screens emblazoned with one word: JOBS!–dubiously insinuating that these deals are not just vulgar taxpayer-funded giveaways. In my state, the governor and other officials engage in this hanky-panky so often they no longer try to justify it–they just deepen their voices and, with God-like profundity, draaawwwll that Holy J-word.
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Alas, America’s mass media outlets (themselves parts of giant corporations) have largely abandoned that hallmark of good journalism–healthy skepticism of altruistic claims by powerful special interests–and become cheerleaders for the flim-flam. Instead, the media powers are now glorifying the most brazen special-interest robbery of tax dollars ever attempted.
The Great ScAmazon of 2017. While practically every big brand name (Apple, Disney, Marriott, Toyota, Walmart, YouNameIt) travels hither, thither, and yon to play Milk the Taxpayer, Amazon is totally re-writing the rules of the game, supersizing its piles of public money without even having to go door to door. In September, the $136-billion-a-year, multi-tentacled monopolist sparked a prairie fire of excitement among state and local economic development officials when it coyly announced its intention to build a second corporate headquarters in Someplace, North America. Aha. Game on!
CEO Jeff Bezos baited his location-subsidy trap with red meat, announcing that Amazon “expect[ed] to invest over $5 billion in construction and grow this second headquarters to include as many as 50,000 high-paying jobs.”
Then Bezos & Co. made a bold move: They sat still and waited. Stretching corporate overreach to new lengths, the Amazonian royals bid public officials to approach the Seattle throne with all the jewels, bars of gold, frankincense, myrrh, and any other tribute they could muster to show their worthiness for HQ2 (Amazon’s cute, high-tekkie appellation for the proposed co-headquarters). Thus, in one stroke, Amazon switched its corporate role from asker to askee and instantly pitted taxpayers across Mexico, Canada, and the US against each other in a no-limit bidding war.
Reaching even farther, Amazon issued a seven-page directive listing some specific bribes (excuse me, “incentives”) that each supplicant should offer. First was a “business-friendly environment.” Then, urging hopefuls to “think big” when offering freebies, the directive listed specific incentives that would be “Decision Drivers,” including contributions of “land, site preparation, tax credits/exemptions, relocation grants, workforce grants, utility incentives/grants, and fee reductions.”
Oh, and also a highly-educated labor pool; an international airport with direct daily flights to key cities; quality of life where “our employees will enjoy living”; and, most important, “elected officials eager and willing to work with the company.”
Surely no self-respecting civic official would willingly play the sucker in such a demeaning, sell-out-the-public scam.
Ha! Officials from 238 cities, regions, and states have so far rushed to Bezos’ corporate castle to grovel, dance, beg, and stage dog-and-pony spectacles in the perverse hope that Amazon might choose their taxpayers to rip off.
Tucson showed its love by shipping Amazon’s prickly CEO a 21-foot Saguaro cactus.
New York City lit up the Empire State Building and other iconic landmarks in Amazon Orange.
Seattle, already a company town, pleaded with His Majesty Bezos to locate HQ2 adjacent to HQ1.
Stonecrest, Georgia, voted to annex 35 acres to create a new city to be named–yes–Amazon.
BATTLING THE BASTARDS is about as much fun as you can have with your clothes on–so have some fun and get involved in the movement to stop the stealing of public money through giveaways to giant corporations. These great groups have a whole lot of information and tools for the fight:
Good Jobs First includes a Subsidy Tracker database that lets you see which corporations are getting what in the “tax-break auction” megadeals being handed to the likes of Foxconn, Apple, and Amazon.
Our Neighborhoods, Our Future isn’t simply fighting against corporate give-aways–this coalition of community, labor, racial, and environmental justice groups is fighting for improved infrastructure, safe drinking water, better public transportation, high-speed internet connections, reliable child care, and other investments that benefit whole communities and not just a privileged few.
All this for a tacky PR stunt with one purpose: to compel the half dozen or so actual contenders to jack up their offers–since after all, this is not a “World’s Biggest Cactus” contest. In fact, Amazon’s data-driven, hard-nosed “economic development department,” set up five years ago, will decide among the few locations it has already deemed most profitable. All other cities are being snookered into spending millions on a rigged game only Amazon can win.
This is hardly Amazon’s first free ride on the taxpayer’s back. As The Lowdown reported in our August and September 2014 issues, Bezos’ “business genius” includes a fine-tuned talent for tax dodging. When he started the company in 1994, Bezos invented and exploited the infamous “Amazon Loophole” to avoid collecting local and state sales taxes. This strategy provided a huge, undeserved advantage over brick-and-mortar stores. In 2014 alone, it cost cities and states an estimated $625 million in sales tax and $420 million in lost property taxes. At taxpayers’ expense, Amazon’s low overhead and prices drove thousands of local shops and even entire chains out of business.
This free ride couldn’t last, however, for states, cities, and their on-the-ground, tax-paying retailers realized they were being robbed by this internet interloper. So, starting in 2012, state after state began outlawing the dodge. No problem, though. Bezos shifted to a different free ride: Instead of avoiding tax payments to governments, he would get payments from governments. In March 2012, Bezos set up a war room of experts dedicated solely to the political art of mining taxpayers’ money.
Mission accomplished. As documented by Good Jobs First, a feisty public interest watchdog, Amazon garnered an average of $68 million a year in local/state subsidies from 2005 to 2014. Then in 2015 and 2016–BOOM!–with its taxpayer assault squad fully deployed, its annual haul of public gimmes soared to average of $177 million. Its HQ2 lottery will lift the company into the multibillion-dollar stratosphere of public-handout absurdity.
The winners in these ever-bigger subsidy deals are easy to spot–they’re the corporate and public officials high-fiving each other at razzle-dazzle announcement press conferences. If you’re not one of them, you might agree with the pointed comment of economist Timothy Bartik: “These incentives aren’t free. There’s no fairy god-mother paying for them.” Indeed, the costs are many, and the tab is passed to you-know-who.
Taxpayers. The hustlers claim that job incentives are a sound investment of our tax dollars, for those new jobs create new taxpayers, meaning investments soon pay for themselves. Hmmm … not quite. In fact, not even close.
Last year, Good Jobs First tracked 386 incentive deals since 1976 that gave at least $50 million to a corporation and then tallied the number of jobs created. The average cost per job was $658,427. Each!
That’s likely far more than cities and states can recover through sales, property, income, and other taxes those jobholders would pay in their lifetimes. Worse, the rise of megadeals in the past 10 years has made the job-incentive argument mega-ridiculous:
New York gave a $258-million subsidy to Yahoo and got 125 jobs–costing taxpayers $2 million per job.
Oregon awarded $2 billion to Nike and got 500 jobs– $4 million per job.
North Carolina shelled out $321 million to Apple and got 50 jobs–$6.4 million per job.
Louisiana handed $234 million to Valero Energy and got 15 jobs–$15.6 million per job.
Thanks, but no thanks
NOT EVERY CITY JUMPED at the chance to dance with Jeff Bezos. The mayor and top county official of San Antonio, Texas, for example, sent a “Dear Jeff” letter in October, politely- but-firmly rejecting his offer to let them stuff his pockets with their community’s wealth. They rightly questioned the integrity of the bidding war process he initiated for choosing a second headquarters city: “It’s hard to imagine that a forward-thinking company like Amazon hasn’t already selected its preferred location,” they wrote. Their missive then explained that while San Antonio can compete on its merits with any city, “giving away the farm isn’t our style.”
San Jose, California’s Mayor Sam Liccardo went a step farther. His city, he wrote in a Wall Street Journal op-ed, wouldn’t offer special incentives to Amazon or any giant corporation. Why? “Because they are a bad deal for taxpayers.”
Then came Little Rock, Arkansas, with the most creative “no” of all. Like a love affair breakup letter, it began with “Hey Amazon, we need to talk.” The city’s human scale and non-hectic quality of urban life, it explained, “would be totally wrecked” by Amazon’s demands and, “we can’t sacrifice that for you. …Amazon, you’ve got so much going for you, and you’ll find what you’re looking for. But it’s just not us.”
Adding to the fun, Little Rock ran its break-up letter in a full-page ad in the Washington Post–owned by Jeff Bezos.
Workers. The rosy jobs-creation claims by incentive boosters also tend to be bogus, for they don’t subtract the number of jobs lost as a result of these deals. Amazon, for example, has leaned on officials in nearly every metro area to subsidize its creation of a nationwide network of warehouses, data centers, and other facilities. This web forms Amazon’s all-encompassing business structure, giving it the reach to achieve near monopoly power in industry after industry. In its 2016 report, Amazon’s Stranglehold, the Institute for Local Self-Reliance (ILSR) found that more than half of Amazon’s facilities had been built with government subsidies. The “Amazon Tracker,” a continuously updated web page produced by Good Jobs First, reports that since 2005, the retailer has been showered with $1.1 billion in local and state subsidies to build its private business.
Each of those taxpayer handouts (given to the world’s third-largest retailer) was made in the name of local workers. And, yes, the Amazon warehouses do employ thousands, but their subsidized network enables the giant to undercut local competitors, causing devastating job losses that greatly outnumber jobs gained. The ILSR report notes that at the end of 2015, Bezos did indeed employ 146,000 people in his US operations, but–ooops–they calculated that his taxpayer-supported behemoth had meanwhile eliminated some 295,000 US retail jobs.
Plus, there’s an ugly blotch on Amazon’s ballyhooed job-creation numbers: Working conditions in those sprawling, windowless warehouses are grim, and 40 percent of the employees are low-wage, temporary hires with no benefits and no job security. While warehouse wages everywhere are low, an ILSR survey documented that Amazon’s average 15 percent lower than what other companies pay.
Communities. Almost every city/state giveaway program ignores smaller and locally owned businesses (which really do create jobs), and instead tries to land brand name corporations with blockbuster deals. This emphasis–subsidizing big outfits to come from afar to compete unfairly against local, unsubsidized firms–is spreading an epidemic of vacant storefronts across America. It’s also altering the very essence of our communities. Rather than each having its own diverse, unique commercial character, our towns are being transformed into corporatized, homogenized versions of Everywhere, USA.
Beyond local business, our larger society also pays a substantial cost for these subsidies. Most of the deals woo the giants by granting long exemptions from paying property taxes–the chief source of funding for local schools, roads, fire departments, water systems, parks, and other essential public services. To cover the loss of revenue, school districts, cities, and counties respond both by cutting services and by hiking the property taxes of homeowners and hometown businesses–and spiking costs for renters, too. As a result, the community gets more inequality, gentrification, homelessness, and divisiveness. The corporate favor-seekers, however, fail to see (or care about) the connection between this result and their grab for the public’s money. For instance, Amazon’s directive to HQ2 applicants demanded that it be given both tax exemptions and top quality systems of education, transportation, and public amenities–oblivious to the nasty reality that its new neighbors will be forced to pay for its contradictory demands.
Why are we subsidizing these over-privileged, arrogant elites to enrich themselves at the expense of our common good? Of course, “we” are not actually the ones cutting these deals–our public officials are cutting them in our name (and often in secret), with most people not even aware of the costs. But it’s way past time to wake up and rally with the majority of people in our communities–Repubs, Libertarians, Greens, Independents, Dems, and none-of-the-aboves–who see that the rationalizations for these thefts are, as some West Texas friends of mine put it, “bovine excrement.”
We should also understand that if one city, state, or country says no to giving away its money, the corporatists will just go to another, so our fight for fiscal sanity and simple fairness must be widespread. But sanity has to start somewhere–maybe right where you live. If people in even one place stop their public officials from giving in to this shameful corporate selfishness, the whole game will change, because others will realize they can rise up and stop it where they live. That’s how “STOP THIS!” becomes a national movement.