8 ms·

Subsidies Awarded to Amazon: at least $4.04B and Counting

75 points by vivekmgeorge 5y ago

vivekmgeorge 5y ago
The irony. The bride of capitalism basks in welfare benefits. All the while paying minimal taxes and working tirelessly to turn workers basically into machines ;) A smarter move by politicians would be use these same dollars to support worker owned co-ops in a greater way. They have proven to be more efficient as a businesses model and better at shifting money to more hands. Plus, good jobs for the workers :)
dionidium 5y ago
We do this kind of weird dance in which we create subsidies to incentivize desirable behavior and then when it works and we get more of the desirable behavior we complain about the handouts. I understand that democracy implies multiple constituencies, not all of which agree on the need for any particular policy (and so arguments about the necessity of specific subsidies are reasonable and inevitable), but it's always worth remembering that we offer these subsidies because we want to encourage the behavior that's tied to the them. It's not an accident or a secret handout. It's quid pro quo.
- snarf21 5y ago
  Agreed. You get what you incentive for. You get what you optimize for. Jobs and housing will always be incentivized. because they are needed everywhere. It is always why corporate taxes are setup to be paid after expenses and personal taxes are setup to be paid before expenses (generally).
- ashtonbaker 5y ago
  It's a race to the bottom, though. The entire premise of subsidizing e.g. an Amazon datacenter is that Amazon needs a datacenter, and it's going to be built somewhere, so you need to offer them a lot of money if you want the jobs in your state/city. It's not a question of if the "desirable behavior" of opening a datacenter and "creating a lot of jobs" is going to happen or not, just a question of where. So there's this whole competition between locations to offer the greatest possible tax break, but it doesn't actually have any bearing on Amazon's overall desirable behavior. We're just giving them tax breaks for doing their normal business.
  - dionidium 5y ago
    Sure, and I broadly agree that there's a collective action problem here; it's just that accurately understanding and addressing that problem requires a different level of analysis that's removed from raw anger about "handouts."
    - ashtonbaker 5y ago
      Sure, I agree with that.
mikece 5y ago
I wonder how much of these "subsidies" are actually tax abatements as opposed to a handout? I am familiar with the Kansas City area: the chart shows Amazon getting $20M for their distribution center in WYCO/KCK whereas they only got $1.8M for their distribution center in Edgerton. Property taxes alone could explain such a massive difference (WYCO property tax rates are ridiculous) and the distribution center is in a commercial/freight zone whereas the one in Edgerton used to be open farmland (though close to an intermodal hub). And yes, in an ideal world, businesses would pay for things themselves without handouts or tax breaks but pretty much every state and many localities pour millions and billions into public sector financing of private businesses in the name of bringing good jobs to the area. Can't really blame the politicians: if they didn't give these handouts on the Kansas side of the state line I'm sure Missouri would have been willing to lure Amazon over to that side. Amazon is just taking what they can get, same as every other company. The only way to reform this is to ban the practice nationwide -- buy getting politicians who pull down millions in lobbyist and corporate donations to bite the hands that are feeding them.
- kogus 5y ago
  Virtually every item on the list is categorized as a "tax abatement", "tax deferral", or "tax exemption". I think it's misleading to call those 'subsidies'. As always, the existence of such taxes gives politicians a tool to amplify their corruption and incompetence. The right answer is to take such tools out of politician's hands by ending the taxes in the first place. It feels good to tax a corporation, but it's much more practical, efficient, and transparent to keep taxes at the personal and consumer level.
  - mikece 5y ago
    > It feels good to tax a corporation, but it's much more practical, efficient, and transparent to keep taxes at the personal and consumer level. It's also worth pointing out that a business is subject to a number of taxes: property tax, income tax, various fees for operating a business, infrastructure upgrades (to support the tonnage of Amazon trucks), and more. I would like to think that the complete re-build of a highway interchange and re-placement of a normal asphalt street to a heavy-duty concrete road meant for hauling tons of freight, the installation of water and power connections, and everything else a company would need for a large installation would be paid for by them. But we all know these are seen as infrastructure investments that will (hopefully) lure more companies to the area (companies that WON'T be given all of the breaks) now that an anchor tenant is there and justifying a long-term investment.
shrubble 5y ago
Amazon and FAMGAN in general's take is far, far more than is recognized. Example: datacenters that cost more than $xxx million to build received special tax breaks, which means that only the largest, big tech companies received them. https://www.crn.com/news/data-center/sweeping-data-center-tax-exemptions-passed-in-illinois https://www.crn.com/news/data-center/sweeping-data-center-ta... No sales taxes.... but you must spend a minimum of 50 million a year for 5 years. Company that wants to build a mid size, 30 million dollar datacenter? No tax breaks. This is a barrier to entry for smaller would-be competitors and those that would prefer to have their own machines.
- zdragnar 5y ago
  Breaks for projects of that scale are often negotiated ad hoc- the list break is more of an advertising move than anything. I would bet dollars to donuts that if a mid sized company wanted to build a $30 mil data center, local and state governments would be willing to work something out, especially if the location would bring construction and long term jobs and other investments to an otherwise underserved area.
  - ghaff 5y ago
    >and long term jobs Very few. A datacenter might only have a few dozen people as I understand it.
    - DetroitThrow 5y ago
      Some writing on this: https://www.techrepublic.com/article/why-data-centers-fail-to-bring-new-jobs-to-small-towns/ https://www.techrepublic.com/article/why-data-centers-fail-t...
    - londons_explore 5y ago
      Lots of jobs during build. But after that, 10 guys on a security rotation 24/7, 5 guys on 'take stuff out of boxes and put it in racks to replace failed components' duty, and 5 more to do all the certifications and paperwork (who might be offsite).
cheph 5y ago
So the racket in US, as far as I can tell, is basically this: Bezos and friends (e.g Bill Gates) push for higher taxes and other policies that are supposed to balance the power between business and "the people", this results in more taxes for businesses who would be their competitors, but Bezos and friends get waivers and don't have to pay the taxes or comply with policies. I think US should pass a specific bill to tax Bezos and friends, take at least 90% of their net worth, and then start taxing "the rich". Anything else is just bullshit. I mean, taxing the rich has nothing to do with deficit anyway, there are not enough rich people in the world to even make a dent in the massive hole US dug for themselves with their "money printer goes brrrr" clown act.
parhamn 5y ago
Why do people act like governments are some benevolent entity that corporations must do favors for? It's like any other market. You create jobs, tax revenues and opportunities and different governments create incentives to lure them in. If anything the complaints should be levied at the governments who citizens think are doing a bad P/L analysis on these subsidies. Alas, only Amazon in mentioned in this title.
IncRnd 5y ago
Those subdidies are almost all for distribution centers. Of course local & state subsidies are given for large businesses. There is a net positive for the community with jobs and for the company with lower tax.
gumby 5y ago
This looks like direct subsidies only. The big dollars are in the subsidies paid directly to employees (i.e. welfare) so that Amazon can pay them low wages. Walmart, McDonalds etc are also major indirect recipients of this subsidy.

75 points by vivekmgeorge 5y ago

The irony. The bride of capitalism basks in welfare benefits. All the while paying minimal taxes and working tirelessly to turn workers basically into machines ;) A smarter move by politicians would be use these same dollars to support worker owned co-ops in a greater way. They have proven to be more efficient as a businesses model and better at shifting money to more hands. Plus, good jobs for the workers :)

dionidium 5y ago

We do this kind of weird dance in which we create subsidies to incentivize desirable behavior and then when it works and we get more of the desirable behavior we complain about the handouts. I understand that democracy implies multiple constituencies, not all of which agree on the need for any particular policy (and so arguments about the necessity of specific subsidies are reasonable and inevitable), but it's always worth remembering that we offer these subsidies because we want to encourage the behavior that's tied to the them. It's not an accident or a secret handout. It's quid pro quo.

snarf21 5y ago
Agreed. You get what you incentive for. You get what you optimize for. Jobs and housing will always be incentivized. because they are needed everywhere. It is always why corporate taxes are setup to be paid after expenses and personal taxes are setup to be paid before expenses (generally).
ashtonbaker 5y ago
It's a race to the bottom, though. The entire premise of subsidizing e.g. an Amazon datacenter is that Amazon needs a datacenter, and it's going to be built somewhere, so you need to offer them a lot of money if you want the jobs in your state/city. It's not a question of if the "desirable behavior" of opening a datacenter and "creating a lot of jobs" is going to happen or not, just a question of where. So there's this whole competition between locations to offer the greatest possible tax break, but it doesn't actually have any bearing on Amazon's overall desirable behavior. We're just giving them tax breaks for doing their normal business.
- dionidium 5y ago
  Sure, and I broadly agree that there's a collective action problem here; it's just that accurately understanding and addressing that problem requires a different level of analysis that's removed from raw anger about "handouts."
  - ashtonbaker 5y ago
    Sure, I agree with that.

mikece 5y ago

I wonder how much of these "subsidies" are actually tax abatements as opposed to a handout? I am familiar with the Kansas City area: the chart shows Amazon getting $20M for their distribution center in WYCO/KCK whereas they only got $1.8M for their distribution center in Edgerton. Property taxes alone could explain such a massive difference (WYCO property tax rates are ridiculous) and the distribution center is in a commercial/freight zone whereas the one in Edgerton used to be open farmland (though close to an intermodal hub). And yes, in an ideal world, businesses would pay for things themselves without handouts or tax breaks but pretty much every state and many localities pour millions and billions into public sector financing of private businesses in the name of bringing good jobs to the area. Can't really blame the politicians: if they didn't give these handouts on the Kansas side of the state line I'm sure Missouri would have been willing to lure Amazon over to that side. Amazon is just taking what they can get, same as every other company. The only way to reform this is to ban the practice nationwide -- buy getting politicians who pull down millions in lobbyist and corporate donations to bite the hands that are feeding them.

kogus 5y ago
Virtually every item on the list is categorized as a "tax abatement", "tax deferral", or "tax exemption". I think it's misleading to call those 'subsidies'. As always, the existence of such taxes gives politicians a tool to amplify their corruption and incompetence. The right answer is to take such tools out of politician's hands by ending the taxes in the first place. It feels good to tax a corporation, but it's much more practical, efficient, and transparent to keep taxes at the personal and consumer level.
- mikece 5y ago
  > It feels good to tax a corporation, but it's much more practical, efficient, and transparent to keep taxes at the personal and consumer level. It's also worth pointing out that a business is subject to a number of taxes: property tax, income tax, various fees for operating a business, infrastructure upgrades (to support the tonnage of Amazon trucks), and more. I would like to think that the complete re-build of a highway interchange and re-placement of a normal asphalt street to a heavy-duty concrete road meant for hauling tons of freight, the installation of water and power connections, and everything else a company would need for a large installation would be paid for by them. But we all know these are seen as infrastructure investments that will (hopefully) lure more companies to the area (companies that WON'T be given all of the breaks) now that an anchor tenant is there and justifying a long-term investment.

shrubble 5y ago

Amazon and FAMGAN in general's take is far, far more than is recognized. Example: datacenters that cost more than $xxx million to build received special tax breaks, which means that only the largest, big tech companies received them. https://www.crn.com/news/data-center/sweeping-data-center-tax-exemptions-passed-in-illinois https://www.crn.com/news/data-center/sweeping-data-center-ta... No sales taxes.... but you must spend a minimum of 50 million a year for 5 years. Company that wants to build a mid size, 30 million dollar datacenter? No tax breaks. This is a barrier to entry for smaller would-be competitors and those that would prefer to have their own machines.

zdragnar 5y ago
Breaks for projects of that scale are often negotiated ad hoc- the list break is more of an advertising move than anything. I would bet dollars to donuts that if a mid sized company wanted to build a $30 mil data center, local and state governments would be willing to work something out, especially if the location would bring construction and long term jobs and other investments to an otherwise underserved area.
- ghaff 5y ago
  >and long term jobs Very few. A datacenter might only have a few dozen people as I understand it.
  - DetroitThrow 5y ago
    Some writing on this: https://www.techrepublic.com/article/why-data-centers-fail-to-bring-new-jobs-to-small-towns/ https://www.techrepublic.com/article/why-data-centers-fail-t...
  - londons_explore 5y ago
    Lots of jobs during build. But after that, 10 guys on a security rotation 24/7, 5 guys on 'take stuff out of boxes and put it in racks to replace failed components' duty, and 5 more to do all the certifications and paperwork (who might be offsite).

cheph 5y ago

So the racket in US, as far as I can tell, is basically this: Bezos and friends (e.g Bill Gates) push for higher taxes and other policies that are supposed to balance the power between business and "the people", this results in more taxes for businesses who would be their competitors, but Bezos and friends get waivers and don't have to pay the taxes or comply with policies. I think US should pass a specific bill to tax Bezos and friends, take at least 90% of their net worth, and then start taxing "the rich". Anything else is just bullshit. I mean, taxing the rich has nothing to do with deficit anyway, there are not enough rich people in the world to even make a dent in the massive hole US dug for themselves with their "money printer goes brrrr" clown act.

parhamn 5y ago

Why do people act like governments are some benevolent entity that corporations must do favors for? It's like any other market. You create jobs, tax revenues and opportunities and different governments create incentives to lure them in. If anything the complaints should be levied at the governments who citizens think are doing a bad P/L analysis on these subsidies. Alas, only Amazon in mentioned in this title.

IncRnd 5y ago

Those subdidies are almost all for distribution centers. Of course local & state subsidies are given for large businesses. There is a net positive for the community with jobs and for the company with lower tax.

gumby 5y ago

This looks like direct subsidies only. The big dollars are in the subsidies paid directly to employees (i.e. welfare) so that Amazon can pay them low wages. Walmart, McDonalds etc are also major indirect recipients of this subsidy.