Amazon's current search and selection for a second global headquarters is garnering serious attention and critical analysis from economists on how tax breaks end up ultimately impacting the communities bidding for a "jackpot employer" like Amazon. The debate mentioned in the article shows overwhelming support among economists behind the belief that massive tax incentives end up minimizing the potential benefits associated with bringing a global commerce giant to a community. The use of tax incentive programs as a tool to bring businesses to communities rose rapidly in the 1990s as a practice to allure businesses and valuable jobs. With that said, in recent years the practice has slowed down due to communities recognizing the weakening return of proposing such deals. Economists do see value in offering incentives but believe that the use of publicly funded transportation upgrades, job-training programs, or tax credits aimed at revitalizing areas in need of development would be more efficient incentives to benefit the communities proposing deals. Many communities are rolling out large tax breaks for Amazon in hopes of attracting them, but recognizing the needs of their individual communities might play a more key role if they hope for Amazon to ultimately impact their community positively economically.
https://www.nytimes.com/2018/01/26/business/economy/amazon-finalists-incentives.html?rref=collection%2Fsectioncollection%2Fbusiness-economy&action=click&contentCollection=economy®ion=stream&module=stream_unit&version=latest&contentPlacement=3&pgtype=sectionfront
3 comments:
There could be positive effects to Amazon coming to a city. However, there could be negative ones as well. Depending on where Amazon goes there could be a labor shortage due to the amount of jobs headquarters takes. Columbus for example has unemployment so low that many more people would have to move in to support such a large company all at once. This could create a potential problem for some companies that cannot lure employees like an Amazon. This could possibly artificially push up wages with a lack of supply of employees.
I completely agree with the point that incentives would be better served going towards resources in cities such as upgrading transportation, offering job training or utilizing the funding for publicly schooling or better public housing in neighborhoods. Amazon is just one company and although their impact and reach is vast, cities should be more concerned about their current businesses and residents in order to look like an appealing location to headquarter businesses in the future.
I wonder if the increase in income tax revenue would make up for giving Amazon a tax break. If people come to the city for work because of Amazon, I can see the tax break being a long run benefit, but if the tax break doesn't out weigh the costs cities shouldn't be giving tax breaks at the expense of the locals.
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