Amazon secures record U.S. tax breaks to expand delivery network

Amazon has won a record number of tax breaks this year as local authorities try to lure the online shopping giant to expand its overnight or same-day delivery networks in their regions.

According to data from Good Jobs First, a Washington DC-based economic development watchdog, Amazon has so far secured around $ 650 million in sweeteners from local and state governments in 2021, a mix of grants, d tax exemptions and other incentives. This was likely a conservative estimate, the group said, due to the secrecy surrounding some of the transactions.

With three months still to go, 2021 already has the largest annual tally since Good Jobs First began collecting data in 2000, excluding incentives for non-logistics projects, such as filmmaking and development. of office space, and the over $ 750 million package that Amazon received. in 2019 to build its “second” head office in Arlington, Virginia.

The one-off deals for Amazon’s delivery network come as local authorities grapple with rebuilding their economies and labor markets in the wake of the coronavirus pandemic, a crisis that has seen the benefits of Amazon is skyrocketing due to its pivotal role in distributing merchandise during the lockdown and beyond.

“I was hoping the officials would take a step back and say, ‘We are in such a difficult situation, we need to stop subsidizing very wealthy companies,'” said Kasia Tarczynska, research analyst at Good Jobs First. “Unfortunately, it is the opposite.”

“Amazon should stop asking for any kind of incentives,” she added.

Amazon defended the practice, highlighting its track record in creating jobs and saying that in many cases it accepted offers that were on the table for any business, not just Amazon.

“These incentives are generally available to any business that meets the criteria, and businesses don’t get a dime until they’ve created jobs and made capital investments,” Amazon said. “In 2020 alone, Amazon invested $ 150 billion in the United States, opened more than 100 sites and created more than 400,000 jobs in more than 40 states. “

The company also referred to statements from the Progressive Policy Institute (PPI) describing Amazon as its main “investment hero.” Like several other large companies, Amazon is a donor of PPI. The think tank did not disclose how much it received from the company, but said its research was based on “published financial data and [used] a clearly documented methodology ”.

Amazon won a package of more than $ 750 million in 2019 to build its “second” headquarters in Arlington, Virginia © Olivier Douliery / AFP / Getty

Including breaks related to company offices, Whole Foods grocery stores, Zappos warehouses, company film and television productions, and even a fashion studio in New York City, Amazon received “at least” 4. $ 1 billion in incentives since 2000, Good Jobs First calculated. . Secrecy makes it difficult to count accurately. In some cases, tax breaks are voted on before it is confirmed that the beneficiary will be Amazon and in other cases, dollar amounts are never disclosed.

The e-commerce giant is aggressively adding warehouses as it seeks to reduce delivery times to more markets in the United States. The company’s capital spending rose from $ 16.8 billion in 2019 to $ 40.1 billion in 2020. At the end of the second quarter of this year, Amazon said investments had reached $ 26.4 billion. of dollars.

Meanwhile, the company has sought incentives from local authorities, often through third-party development companies.

In a recent filing in Monroe County, New York, Amazon and its partner threatened to back down if demands were not met, saying “the economic uncertainty caused by the current pandemic” meant no incentives , the “cost of developing and operating at this site would likely outweigh the benefits.”

The county’s economic development agency was divided over the credibility of the Amazon threat. “We have a population of one million in the metropolitan area,” said Jay Popli, board member. “It’s not New York, but it’s pretty important. I didn’t think they were going to ignore this market.

In a recent deal, Amazon admitted to the Financial Times that it would continue with plans for Fort Wayne, Indiana, even after local authorities denied it an additional tax incentive of $ 7.3 million on top of that. an agreement already approved.

In Monroe County, it was ultimately agreed that Amazon would receive $ 150 million in tax subsidies over 15 years. Part of the rationale for the deal was a clause that required only local workers from nine neighboring counties to be hired for the construction project. Amazon agreed to this provision, only to then seek a waiver, saying it was not possible to meet its schedule for opening the facility – a schedule it refused to share before the incentive was granted. Popli said.

“It just wasn’t a good faith effort,” Popli said, adding that local contractors had complained about being given unfeasible deadlines to submit bids to do the work. “Granting a waiver when a company hasn’t given our local community a fair boost just wasn’t right for me. “

Amazon declined to comment on the Monroe County deal.

An Amazon delivery driver pushes a grocery cart through a distribution center in Redondo Beach, California

An Amazon delivery driver pushes a shopping cart through a distribution center in Redondo Beach, Calif. © Patrick T Fallon / AFP / Getty

The evidence is mixed as to whether or not the incentive offers are good value for money for the counties that offer them. A 2018 Economic Policy Institute study found that a new Amazon Fulfillment Center typically increased warehouse jobs by around 30%, but tended to attract staff from other employers. which resulted in no net new employment overall.

For local politicians, there was a huge personal incentive, said Nathan Jensen, a professor in the government department at the University of Texas-Austin. “You can go to an opening ceremony and say, ‘I brought Amazon here,’” he said.

Jensen’s research found that voters give politicians more credit for jobs that come to a city when an incentive deal has been struck than when a company has come in without any visible cajoling.

But that perception may change as more local opposition – often focused on Amazon’s record on workplace safety – begins to emerge. In particular, the locals of the Teamsters union are mobilizing to challenge the incentive agreements which, according to them, displace other more paying logistics jobs.

“There is a higher risk of having these jobs,” said Randy Korgan, who leads the Teamsters’ organizing efforts against Amazon, noting the company’s high injury rates. The new jobs should not be seen as de facto good, Korgan added.

“There must be criteria that absolutely establish what a good job is. Are these long-term jobs where people are going to be able to buy houses, or are people going to be able to contribute to the local economy? “

At a recent congressional hearing, committee members learned that the average wage for a union-backed delivery driver in New Jersey working for UPS was $ 38.35 an hour. The current starting hourly wage for Amazon drivers in the region is $ 19.25, according to job postings, although a $ 3,000 signing bonus is on the table due to shortages. workers nationwide.

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About Christopher Easley

Christopher Easley

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