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Amazon’s announcement last year that it was building a second headquarters (called HQ2) in the United States had cities scrambling to offer the best deal.
Cities offered “their own employees’ income taxes, free land, and even a partial surrender of community control,” according to CityLab.
In pursuit of a high-tech office and the thousands of white-collar jobs that come along with it, some cities are willing to sweeten the pot to the point that it’s basically pure sugar. But is it worth it?
As Vice reports, Amazon has a history of building its fortunes with help from government giveaways.
When Amazon has set up outposts in cities across the U.S in the past, (like other large corporations) it’s often received astronomical economic incentives from local governments. The retail giant received at least $613 million in public subsidies for warehouses it built from 2005 to 2014, according to a 2016 report published by the Institute for Local Self-Reliance, a research group that advocates for local solutions for community development. The company raked in another $147 million in subsidies for its data centers during the same period, the report found.
And HQ2 may not be the gift some cities are hoping for. In Washington, D.C., there are concerns that Amazon could make an already expensive city even costlier to live in. Big tech can drive big gentrification. In Washington state (home of HQ1), officials are learning how hard this can be to undo.
To help alleviate its shortage of affordable housing [in Seattle], several city council members proposed a 26-cent tax for each working hour at companies with more than $20 million in annual revenue — the largest impact of which would fall on Amazon, with its 45,000 local employees.
Amazon took exception to the proposal, saying that it would pause construction planning on a new skyscraper downtown and might sublease space in another that’s already being built.
Although Amazon has taken some steps to help ease the city’s homelessness problem, such as donating space to shelter 200 homeless people in one of its new buildings and additional $40 million to a city-managed fund for affordable housing, the measure’s backers took Amazon’s move as an ominous sign.
Cities and states have been using offers of tax breaks or discount land to lure corporations for years.
Is it worth it?
- Reid Wilson National correspondent, The Hill; author of a new book, "Epidemic: Ebola and the Global Scramble to Prevent the Next Killer Outbreak" @PoliticsReid
- Carolyn Adolph Reporter, KUOW; co-host, "Prime(d)"; @carolynadolph
- Greg LeRoy Founder and executive director, Good Jobs First; @GregLeRoy4
- Rich Fitzgerald County executive, Allegheny County, Pennsylvania; @ACE_Fitzgerald
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