Magazine article The American Conservative

Crony Capitalism Writ Large: Amazon's Pursuit of Corporate Welfare and Tax Avoidance

Magazine article The American Conservative

Crony Capitalism Writ Large: Amazon's Pursuit of Corporate Welfare and Tax Avoidance

Article excerpt

Powerful is the man who, with a short series of tweets, can single-handedly send the bluest of the blue-chip stocks into a headlong tumble. For better or for worse, the current occupant of the Oval Office is one such man, tapping into his power with the following missive that crossed the Twitter transom on the morning of March 29:

I have stated my concerns with Amazon long before the Election. Unlike
others, they pay little or no taxes to state & local governments, use
our Postal System as their Delivery Boy (causing tremendous loss to the
U.S.), and are putting many thousands of retailers out of business!

Over the next five trading days, with four subsequent tweets peppered in, Amazon's stock dropped by more than $75 a share, losing a market value of nearly $40 billion. Card carrying-members of the Resistance and Never Trump brigade quickly portrayed the president's scorn as the latest evidence of his "soft totalitarianism" and general disdain for the First Amendment and the free press. They noted that Amazon's CEO and founder, Jeff Bezos, owns the Washington Post--a leading "perpetrator" of what Trump has called the "opposition party" and "fake news."

Concerns of politically motivated impropriety are not without merit. Trump has repeatedly proven himself unworthy of the benefit of the doubt. As presidential candidate and commander in chief, he has demonstrated an eagerness to use his Twitter account as a bully pulpit in his petty brawls with lawmakers, media personalities, and anyone else who might draw his ire.

And yet, ulterior motives though there may be, knee-jerk dismissals of the president's attack are shortsighted. The president's bluster in this instance is rooted in reality.

Indeed, contra the libertarian ethos that Amazon and its leader purport to embody, the company has not emerged as one of history's preeminent corporate juggernauts through thrift and elbow grease alone. Although the company's harshest critics must concede that Amazon is the world's most consistently competent corporation--replete with innovation and ingenuity--the company's unprecedented growth would not be possible without two key ingredients: corporate welfare and tax avoidance.

Amazon has long benefitted from the procurement of taxpayer-funded subsidies, emerging in recent years as the leading recipient of corporate welfare. According to Good Jobs First, a Washington, D.C., organization dedicated to corporate and government accountability, Amazon has, since 2000, received more than $1.39 billion in state and local tax breaks and subsidies for construction of its vast network of warehouses and data centers.

These private-public "partnership" deals are perhaps best illustrated by the sweepstakes for Amazon's second headquarters. Touted as the economic development opportunity of the century, the chosen destination will reap the benefits of 50,000 "high-paying" jobs and $5 billion in construction spending. The possibility of securing an economic development package of this magnitude elicited proposals from 238 North American cities and regions, fomenting what some have called a "bidding war" between mayors, governors, and county executives desperate for economic invigoration.

After a first round deadline of October 19, the pool of applicants was, in mid-January, whittled down to a list of 20. As expected, each finalist offered incentive packages worth more than a billion dollars, with Montgomery County, Maryland, ($8.5 billion) and Newark, New Jersey, ($7 billion) offering the most eye-popping bundles. Proposals utilized a wide array of state and local economic development programs: property tax discounts, infrastructure subsidies, and, in the case of Chicago's proposal, an incentive known as a "personal income-tax diversion." Worth up to $1.32 billion, Amazon employees would still pay their income taxes in full--but instead of Illinois receiving the money, the tax payments would be funneled directly into the pockets of Amazon itself. …

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