States Use Big Subsidies to Lure Amazon

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States Use Big Subsidies to Lure Amazon

The long wait to see where Amazon’s new headquarters will be located is over. In a surprise move, the company announced that it was opening up two new headquarters – one in New York and one in Virginia. It also will open a call center in Tennessee. While state and local leaders cheer these developments, some critics question the size of subsidies that taxpayers will provide to Amazon.

 

Across the nation, state and local leaders had put together subsidy packages to lure Amazon to their areas. Amazon evaluated these packages and other amenities before making its decision, which it announced earlier this week. It chose a site in Long Island, New York, as well as northern Virginia for its two new headquarter locations. Somewhat unexpectedly, it also announced that it would locate a new operations center in Nashville, Tennessee.

 

Here are the subsidy packages these governments promised to Amazon:

 

New York

  • $1.5 billion in direct payments to Amazon on the condition the company creates 25,000 jobs
  • Additional payments to the company if it creates more than 25,000 jobs

 

Virginia

  • $573 million in direct payments to Amazon on the condition the company creates 25,000 jobs
  • $233 million for transportation infrastructure improvements, including upgrades to two metro stations
  • Additional payments to the company if it creates more than 25,000 jobs

 

Tennessee

  • $102 million in payments for a new operations center that Amazon says will create 5,000 jobs

 

New York’s subsidies for job creation will come in the form of tax credits to Amazon, which equal $48,000 per job. Virginia will provide direct cash grants worth $22,000 per job.

 

Supporters of these subsidies argue that they are a vital part of growing an area’s job base. They say that if governments did not offer these incentives, then companies would locate elsewhere. Opponents counter that governments should not tax citizens and businesses to then give that money to a for-profit company. They point out that every dollar given to a company like Amazon is a dollar that cannot be spent on schools, roads, or other public services.

 

While taxpayers in New York, Virginia, and Tennessee will be providing a significant amount of money to Amazon, other states offered even larger incentive packages. Maryland, for instance, put together a subsidy plan that was worth $8.5 billion. New Jersey offered $7 billion in subsidies.

 

Legislators in the three states must now approve these incentives to Amazon. While there are some lawmakers who have vowed to fight the subsidies, it is generally expected that the packages will see quick approval.

 

Do you support states providing subsidies to lure Amazon? Should New York taxpayers provide $48,000 to Amazon for every job it creates in the state?

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