by Anna Manning
Michael Farren and Anne Philpot, of the Mercatus Center, wrote an article featured in The Baltimore Sun on an $8.5 billion incentive package offered to Amazon by Maryland legislators to sway the tech giant to house the new “HQ2” headquarters in Montgomery County.
You may recall articles the John Locke Foundation has written on corporate incentive packages and how they distort the market, allow government to pick winners and losers, and benefit big, outside companies at the cost of smaller, local businesses with roots in the community. Read some of them here, here, and here.
Farren and Philpot echo this same sentiment in their article:
“The problem is that targeted tax incentives, grants and government-backed loans in the name of ‘economic development’ don’t actually grow the economy.
At best, targeted subsidies simply transfer money from ordinary taxpayers to large, influential corporations. And at worst, they can actually reduce economic growth by misspending public funds and pointing the economy in the wrong direction.
Targeted corporate subsidies redirect public funds away from the public services that people depend on. They also force smaller local businesses to pay for an 800-ound gorilla to move to town and compete with them for workers, office space, and pubic attention.”
Not to mention, these corporate subsidies do not sway the decisions of companies like Amazon, who will pick the best city for operations, regardless of subsidies. They are simply added benefits for the company at the expense of local businesses and taxpayers.
“Maryland could take the $8.5 billion offer to Amazon and instead reduce the corporate income tax for homegrown businesses by a whopping 96 percent…income taxes by 8.5 percent, the state sales tax by 16.5 percent, or the state property tax by 69 percent.
The only winners in this game are Amazon stockholders and subsidy-granting politicians who will claim they’ve ‘created jobs.’ Everyone else loses.”