Rich Amazon Demands Welfare, Subsidies

Reuters/ Ben Nelms

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Washington’s surrounding counties are the country’s wealthiest. Wealth, however, does not unclog congested roads; it doesn’t thin crowded classrooms, nor does it keep housing costs from spiking.

Amazon, the richest company in the world, is considering expanding to one of three Washington, D.C. areas, promising to spend $5 billion on facilities and employing 50,000 people with average $100,000 payrolls. It’s called HQ2.

The catch? Amazon wants its expansion subsidized by the community. The Maryland bid, for example, is a massive taxpayer subsidy ranging from $5.6 to $8.6 billion. Competing bids from the northern Virginia and Washington, D.C., areas are secret, but likely in the same range.

Ordinarily, one would think that Amazon’s setting up shop would be a dream come true for a community. But watching the wealthiest communities in the country race to the bottom feverishly showering money on one of the richest companies in the world baffles this mind.

Five of the 10 wealthiest American counties are in an area bidding for Amazon’s HQ2: they are Virginia’s Arlington, Fairfax, Falls Church and Loudoun Counties, as well as Maryland’s Howard County.

Do any of these locations need Amazon? No. Do they need the problems that will come? No. The problems are not secret. Prudent proposals need to study Amazon’s impact on its home city, Seattle, where increased homelessness, surged housing prices, and decreased living standards.

Amazon’s impact on Seattle has forced its city council to raise taxes to ameliorate the deep social problems it thinks Amazon has worsened. The pride Seattle exhibited for years while Amazon was growing has worn thin as its downtown streets have been taken over by homeless people who can’t afford spiraling housing costs caused by huge demand.

Amazon is also considering almost two dozen potential locations for HQ2, among which is the world-famous traffic jam of Los Angeles. The Washington, D.C., proposal for HQ2 resembles that of Los Angeles in that both proposals would essentially be financed by huge minority populations; in Los Angeles by 5.2 million Hispanics and in the District of Columbia by its 48% Black residents.

In the case of Los Angeles, what’s worse is that Amazon’s HQ2 will be partially financed by the 5.2 million (48.5 percent) Latino taxpayers (plus 9.1 percent Blacks) that live in Los Angeles. Latinos make up 48.5 percent of LA’s population and 40 percent of the city’s small businesses. They would disproportionately shoulder the costs and risks associated with subsidizing one of the richest companies in the world. Wouldn’t the same be true of Washington, D.C., with 47.7 percent of its population Black and 10.9 percent Hispanic? Both cities are majority-minority cities with poverty at 12.7 percent in Los Angeles and 18.6 percent in Washington D.C.

The problem is that Amazon falls short of any real diversity but expects a diverse, heavily-taxed minority population to subsidize it. For example, of the top 100 executives at Amazon, not one of them is Latino; For a company that falls short on diversity, specifically within its executive team (or 100 percent non-Hispanic White Board), Amazon is quite bold to demand billions of dollars in direct and indirect subsidies from the same population they traditionally ignore.

In short, any area Amazon chooses including the booming Washington/Northern Virginia area, needs more than the promise of more millionaires that will further raise rents, strain health and social infrastructure, and put money into few pockets of few people. All this while low-income communities struggle in $9-$10-an-hour jobs as they are eliminated by the continuing impact companies such as Amazon are having on the shrinking retail sector.

Amazon’s HQ2 promises to employ 50,000 highly paid workers with graduate degrees; that alone will raise the region’s education level. Good on paper, but this investment would be at the expense of millions in taxpayer dollars from those who work hard every day in jobs Amazon does not provide.

It doesn’t matter if the final selected area is one of the wealthiest in the country; much of all tax revenues in the U.S. come from people who earn less than $100,000, those affected by punitive regressive taxes. And it’s not as if the company will be paying it forward: despite Amazon’s reign as the number one company in the U.S., it pays a pittance in federal taxes (15 percent in 2017?). Under the new tax law, it will pay less.

Certainly, new Amazon employees will generate millions in future revenue over coming years, but it’s the people there now that will pay the billions Amazon demands. If one lives in Loudoun County, for example, one will hardly notice a tax increase; for them regressive taxes are hardly noticeable. If, however, one lives in Washington D.C. median income is $72,935 which is far lower than Loudoun County with its $125,672 even as it is higher than Baltimore, ($44,262) 30 miles away. D.C. residents will shoulder the subsidies. The District of Columbia has a poverty rate of 18.6 percent. How will Amazon lessen the poverty rate?

Furthermore, this move will fuel already-skyrocketing housing costs in and around Washington, D.C. Fortunately, the situation is not yet what it is California where an unlivable condemned shack in Northern California’s city of Fremont sold for $1.2 million. Just how can average working people afford million-dollar homes or rents that exceed $3,000-$4,000 a month for a two-bedroom apartment, even just outside of Skid Row.

Amazon insists on taxpayer subsidies. Amazon favors areas that are already prosperous; it should choose a place that needs what Amazon has to offer, jobs and an influx of many who earn good money and pay taxes.

Contreras is the author of The Armenian Lobby & U.S. Foreign Policy and The Mexican Border: Immigration, War and a Trillion Dollars in Trade

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.