Saturday , July 31 2021

New Amazon seats: criticism of public subsidy

Although New York and the Washington suburbs enjoy having two new Amazon offices, the debate is astonishing in the US on the billions of dollars of incentives offered by these communities to attract an online business giant.

The Long Island Area in New York and Crystal City in Virginia, on the outskirts of the US capital, is a lucky winner of a monthly competition to attract two mega sites where Amazon promises to create a total of 50,000 jobs, with investments of $ 5 billion (€ 4.4 billion).

But this manna does not impress defaults, who warned that the amount of tax incentives and investments of the state ($ 3 billion for New York and $ 2.5 billion to Virginia) could be deleted & The economic benefits of the company.

It is common in the United States that a search-based group is looking for incentives. According to a report by the Brookings Foundation, around $ 90 billion is offered every year to businesses from local states and governments.

Michael Farren, a specialist in business relocation at George Mason University in Virginia, believes that these incentives will not make a difference in group decisions.

"Decisions of illegal companies are based on factors that have a profound effect on company profits, such as the availability of skilled workforce," he said.

It says that Amazon could get even more tax benefits if it had crossed the Potomac River to settle in Maryland, to the north of Washington, where it was offered over $ 8 billion, or in Newark near New York, who gave $ 7 billion on board.

– "Profit company" –

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

"One of the richest companies in history should not get taxpayers' help while too many New York families are struggling to meet their heads," protested the Democratic parliament from New York. York Kirsten Gillibrand.

On the right also, the subsidies granted to Amazon moved. "Arrangements like one of Amazon or other large groups are completely cronyism, it's terrible!", The Conservative economist Véronique de Rugy wrote in the National Review.

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

But Tom Stringer, from a BDO real estate consultant, says that seamless people can not read the small print. According to him, contracts have been structured as "payment programs as and when".

"If Amazon does not provide (promised conditions), it does not enjoy the financial benefits. Taxpayers have looked pretty well," he told AFP.

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

The transaction with Foxconn provides $ 3 billion subsidies – up to $ 4 billion – to create 13,000 jobs. This means a grant of more than $ 200,000 per job created, compared to around $ 20,000 per job for Amazon.

The Foxconn agreement, published by President Donald Trump, contained "very unusual" elements, unlike Amazon, says Stringer.

Wisconsin Governor, Scott Walker, who negotiated the deal with Foxconn, was not re-elected this month due to concerns about rising costs and potential drop-in jobs created.

Other large groups have begun to identify the problems raised by the tradition of public subsidies.

Walt Disney Co. have sent a letter this year to the city of Anaheim, California, calling for the end of tax breaks on the basis that they have created a "tired climate".

However, tax incentives are "very important" to attract businesses and boost economic development, Tom Stringer's real estate expert ensures. "It's the world's best to say they do not make a difference."

But communities need to be "tough on discussions so that both sides benefit from these agreements," concludes Darrell West, head of governing studies at the Brookings Foundation.

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