Amid frenzied speculation about Amazon’s search for a so-called “second headquarters” (HQ2) beyond its mothership in Seattle — 238 cities and/or regions are bidding — the data point emphasized repeatedly is 50,000. As in 50,000 Amazon jobs materializing to boost the economy of the winning applicant. (Charlotte, Hickory, Raleigh and the Triad are North Carolina’s candidates).
But job creation is only one variable in the high stakes scenario. The quest to win over Amazon requires far more than producing slick chamber-of-commerce video presentations. The corporate welfare phenomenon, nothing new, is about behemoths shamelessly plunging cities and states into a cash incentivizing orgy, which is precisely why organizations like Generation Opportunity cast a skeptical eye on Amazon mania.
GO’s North Carolina state director, Anna Beavon Gravely, in an op-ed published by North State Journal, does the math on the Amazon gambit:
Away from the spotlight you will find the losers of corporate welfare: the small businesses struggling to stay afloat, the young entrepreneurs who can’t compete with established interests, and the taxpayers who are forced to pick up the tab.
Gravely notes that under the first-year administration of Gov. Roy Cooper, North Carolina has handed out $125 million as suitors of insurer AXA and financial giant Credit Suisse, among others. Cooper (and governors nationwide) are quick to give themselves credit for thousands of incoming jobs, 1,200 at Credit Suisse and 550 at AXA. But the financial incentives that brought them here makes the creation of one job a very pricey investment. A single job created at Credit Suisse’s Raleigh campus cost taxpayers $33,500 because it received $40.2 million worth of incentives.
Corporate welfare enthusiasts like Cooper will always try to justify it as “creating jobs.” But as we’ve seen here in North Carolina, lowering and simplifying taxes for everybody does far more to create jobs than special handouts for the few.
Just look at the extraordinary progress our state has made in recent years. Since 2011, the General Assembly has lowered personal and corporate income tax rates, eliminated the estate tax and simplified other business taxes. This year, lawmakers overrode Cooper’s veto to enact even more tax cuts for North Carolinians, which will result in $476.4 million in savings for businesses over the next five years.
Amazon is the standard bearer of no-hassle e-commerce deliveries, but it’s proving to be more than capable of receiving. New Jersey has offered Amazon a mind boggling $7 billion across the next decade. Irvine, Calif., took a straightforward approach. Amazon estimates HQ2 will cost $5 billion, so Irvine suggested its taxpayers underwrite the entire project.
Gravely and her colleagues at Generation Opportunity believe future economic growth will be driven by millennial entrepreneurs, who are launching new businesses at twice the rate of their parents’ generation. If Amazon decides that North Carolina is an ideal place to go forward with HQ2, roll the red carpet but not at the expense of small businesses, the engines of the state’s booming economy.