This week, the bids were all finally submitted for Amazon’s new HQ2. Raleigh shipped a 32-pound box (!) containing its proposal. Charlotte set up a website. Winston-Salem, Greensboro, and High Point pulled together a Piedmont Triad proposal. There were even rumors that Hickory might submit a bid.
The bids are confidential, so we don’t know a lot of the details, but we do know that Amazon has asked for various kinds of incentive payments. Their own RFP lists “land, site preparation, tax credits/exemptions, relocation grants, workforce grants, utility incentives/grants, permitting, and fee reductions” as “critical decision drivers.”
This is Amazon we’re talking about. It is a company worth $483.5 billion, with revenue last year of $136 billion. But they want money and special tax favors from state and local taxpayers wherever they choose to build HQ2. They want so much money, in fact, that they say right up front in that same RFP,
We acknowledge a Project of this magnitude may require special incentive legislation in order for the state/province to achieve a competitive incentive proposal. As such, please indicate if any incentives or programs will require legislation or other approval methods.
This is audacious for many reasons. But among them is the fact that businesses pay taxes. Most businesses pay quite a lot in corporate income and franchise taxes, property taxes, and payroll taxes. I’m sure the owners of businesses could list others. So when Amazon asks for all this tax money and exemptions from state and local governments, what they’re actually proposing is that small (because virtually everyone is “small” compared to Amazon), mostly local businesses subsidize their competition. Amazon is suggesting that money should be taken from businesses with roots in the local economy, which sometimes go back decades, and be given to them for HQ2, which will then compete with many of those very same small businesses for the sale of goods and services and, most importantly, for local talent.
Amazon, you have got to be kidding.
Don’t get me wrong. I’m not opposed to Amazon. I buy stuff from them all the time. But I do think that it’s fair for them to play by the same rules as everyone else. The incentive package they’re requesting is the very opposite.
Meanwhile, with far less fanfare, there are businesses that are doing it right. Iberiabank, a Louisiana-based bank, has announced that it’s expanding into North Carolina, with no special subsidies or incentives, as far as I can tell. PlantResponse, a Spanish biotech company, has announced it will locate its North American headquarters in North Carolina, again with no incentives.
State and local governments should pay attention to these kinds of announcements because they prove that incentive payments aren’t necessary to get businesses to locate here. Strong infrastructure, light regulation, low taxes, and a well-educated workforce are attractive enough. Sure, these companies aren’t boasting that they’ll create 50,000 jobs like Amazon is, but they’re also not asking taxpayers to foot the bill either. That makes them far better value. They typify the kind of organic, sustainable growth that North Carolina cities and counties, as well as the General Assembly, should be seeking.