Friday , April 23 2021

New Amazon Sites: Public Support Sparks Criticism

While New York and the suburbs of Washington like to have two new Amazon offices, the debate in the United States rages on the billions of dollars of incentives offered by these communities to attract the giant online business.

The Long Island District of New York and Crystal City, Virginia, on the edge of the US capital, are the turnovers for a month-long competition to attract two mega websites where Amazon promises to create a total of 50,000 jobs, with $ 5 billion in investment (4.4 billion euros).

But this man does not impress opponents who warn that the amount of tax incentives and government investment ($ 3 billion for New York and $ 2.5 billion for Virginia) could erase the financial benefits that the company brings.

It is common in the United States that a group looking for a place is looking for incentives. According to a report from Brookings Institution, approximately $ 90 billion is being offered to companies of states and local governments each year.

Michael Farren, an expert on business relocation at George Mason University in Virginia, believes that these incentives rarely make a difference in group decisions.

"Offshoring business decisions are based on factors that have a deeper impact on company profits, such as the availability of a skilled staff," he says.

He notes that Amazon could have received even greater tax benefits if he had crossed the Potomac River to settle in Maryland, north of Washington, where he was offered more than $ 8 billion, or in Newark near New York, putting $ 7 billion on the table.

– "profit company"

Such financial support arouses criticism from those who say that Amazon does not have to be a "profitable company".

"One of the richest companies in history should not benefit taxpayers, while too many New York families are fighting for the end to meet," protested the Democratic Senate from New York. York Kirsten Gillibrand.

To the right, subsidies are also moved to Amazon. "Arrangements like Amazon or other big groups are complete cronyism, it's scary!", Conservative economist Véronique de Rugy wrote in the National Review.

For Mr Farren, these subsidies distort the economy. According to him, cities should focus on improving education and infrastructure rather than human resources provided by a company to make places to live and work attractive.

But Tom Stringer, of BDO's property adviser, says that heartbreakers can not read the fine. According to him, the contracts are structured as "payment programs at any time".

"If Amazon does not deliver (promised terms), it does not enjoy the economic benefits. Taxpayers are quite well protected," he told AFP.

However, the issue of these public subsidies has become a major concern not only for Amazon, but also for Foxconn, a Taiwan-based electronics company, Apple's subcontractor, in particular, who has promised to build a factory in Wisconsin.

The Foxconn transaction provides $ 3 billion – up to $ 4 billion – to contribute to creating 13,000 jobs. This corresponds to a contribution of more than $ 200,000 per job created, compared with approximately $ 20,000 per job for Amazon.

The Foxconn Agreement, announced by President Donald Trump, contained "very unusual" elements, as opposed to the Amazon, says Stringer.

Wisconsin governor Scott Walker, who negotiated the deal with Foxconn, was not re-elected this month because of concerns about increased costs and a potentially reduced job created.

Other major groups have begun to recognize the problems arising from the tradition of public contributions.

Walt Disney Co. has sent a letter this year to Anaheim, California, calling for tax breaks to end with the motivation that they have created an "acrimatic climate".

However, tax incentives are "paramount" to attract business and boost economic development, assures property expert Tom Stringer. "It mocks the world to say they do not make any difference."

But communities must be "tough on negotiations so both parties benefit from these agreements," concludes Darrell West, Head of Leadership Studies at Brookings Institution.

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