“Economic Development” Tax Breaks are Flat Wrong

Filed in National by on November 15, 2018

If you feel queasy about John Carney style “economic development” that mindlessly throws tax breaks at companies to try and lure them to the state, you have good reason to feel queasy.

This article about Amazon’s corporate welfare (h/t RE Vanella) explains why tax breaks are a terrible deal. In short:

1) They don’t influence company location decision, so they are shit as a marketing tool.

2) They increase everyone else’s taxes.

3) The trade off’s are too high and simply not worth it.

It is worth asking what are the tradeoffs politicians are willing to impose on taxpayers in order to shower Amazon with privilege. Farren and Philpot look at this matter too. They have a great table on page 13 of their report that shows that New York, with the money that’s now going to Amazon, could have paid for three years of road maintenance or have reduced the corporate income tax rates by 5.42 percent, which would benefit ordinary companies without political favor. Virginia could have reduced the corporate income tax by 45.16 percent and maintained the roads for four years with that money. Congrats Amazon and sorry everyone else!

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Jason330 is a deep cover double agent working for the GOP. Don't tell anybody.

Comments (20)

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  1. We do it all the time in Delaware. And then bar the public from seeing whether they are money winners or money losers. (Proprietary information, you know.)

  2. Al and I talked on the air about this several years ago. Here’s some of the source material that we discussed. At best, at BEST, it’s a zero sum game:


    This searchable database is invaluable:


  3. Bane says:

    I wouldn’t say that this is carney’s strategy. He has been pretty vocal against it, he just refused to completely remove it from the tool box.

    • jason330 says:

      citation required

    • I call bullshit. Total bullshit, in fact. It was Carney who sold the General Assembly (well, they were bought by the Chamber already) into privatizing DEDO, and replacing them with a non-governmental panel comprised of insiders, then giving the new panel of insiders the right to hand out Delaware dollars to beneficiaries w/o requiring them to disclose what they gave, how much they gave, and to whom they gave, to the public. The same public who is paying for the program.

      Kids, by now you KNOW what ‘non-governmental’ means (even though there are several legislative hacks on the panel): No FOIA.

      This is just one more example why Carney must go.

  4. RE Vanella says:

    Bizarre Carney apologia. As someone who has argued about this very thing to his face I find Bane’s comment very strange indeed.

    Private sector economic growth is Carney’s raison d’être. He’s a errand boy for capital interests everyday all day.

  5. Arthur says:

    at least amazon will provide jobs. unlike fisker and bloom (who got tax breaks and actual income from residents)

  6. RE Vanella says:

    Provide jobs for whom?

    Ask Seattle. Amazon will import affluent professionals to your neighbourhood, drive up rents and push long-term residents out. Or worse push marginal folks into the street.

    Already happened. No need to guess.

    Price tag is ~ $60,000 per job. Think about that.

    • Arthur says:

      how many jobs did fisker and bloom import?

      • RE Vanella says:

        I agree with the Fisker and Bloom thing. But an argument could be made that at least these 2 were fledgling, innovative firms that actually needed an investment.

        Amazon hardly needs capital. This is a successful company run by one of the world’s richest men. Mafia extortion.

        None of it is good.

  7. RE Vanella says:

    This entire thing makes me sick. Think of the thousands of New Yorkers who could be employed at a fair wage to do infrastructure work, social work, health work…

    Think of the MTA subway and bus improvements that could be made!

    Instead they subsidize Bezos’ business. Fucking vile. And the so-called progressive de Blasio is using his role as the head of some “Development Corporation” to ensure NY City Council get no say. Very cute. Purzycki probably creamed his boxers when he saw the details.

  8. gary myers says:

    For Delawareans, the memory card is Fry Manufacturing LLC and its french fries vending machine and uncle (Senator) Robert Venables

  9. jason330 says:

    Under the agreement, first announced by Amazon in a blog post, the company would receive performance-based direct incentives of $1.525 billion based on the company creating 25,000 jobs in Long Island City, most of which come from a state tax credit. “Amazon will receive these incentives over the next decade based on the incremental jobs it creates each year,” th[e] company wrote.

    $1.252 billion for 25,000 jobs? Huge piles of money are easy to find for “economic development” and bombs. Everything other governmental outlay requires belt-tightening and the selling off of family heirlooms.

  10. Beach says:

    I recently read the book The New Localism (anyone else?), and my biggest takeaway was that, instead of bribing companies to re-locate to our area, it’s more sustainable and equitable for everyone in the community to invest in education and infrastructure. Companies blossom and grow from areas where they’re able to partner with sophisticated students, and if a company leaves the area, then the educational system, which is anchored to the location, will be able to replace the departing economic gravity. I’d like to see that kind of focus and investment in Wilmington.

  11. Paul says:

    It’s too bad pols don’t invest in local talent to develop economic infrastructure, you would think locals would have the most to gain from success.

  12. Paul says:

    I propose investing in economic infrastructure projects in Sussex County, a place that has little. I like 3D printing ventures and entrepreneurial ventures at the county level to change the economic landscape. Dave Wilson will be unable to adapt to economic development at the constituent level if this takes off. He becomes irrelevant

  13. Paul says:

    In NYC, DeBlasio said on MJ that the only incentives Amazon received were statewide ones for which they qualified like any other company could. DeBlasio is a master of NYC speak.

  14. Alby says:

    The problem for Sussex County is its location far down a peninsula that leads nowhere. Nobody is going to build a manufacturing plant without better access to transportation networks. It works OK for stuff that’s locally produced, like chickens and vegetables, but anything else requires more expensive transportation both in and out of the plant. At least in Kent you have access via the Bay Bridge. In Sussex, you are at the end of the line. Most manufacturers would rather be in the center.

    Delaware’s auto manufacturing plants were closed for similar reasons — they were too far from the supply chain in the Midwest.

  15. Dave says:

    The only economic development that works for Sussex County in addition to what Alby stated are things that require no transportation networks, such are remote work/information technology/software development. Even then, the lack of an airport creates difficulty. It is always going to be difficult to have a diverse economy in Sussex.

    And of course you can’t ignore the other obstacles of a county council that primarily concerns itself with approving development, but doing nothing for infrastructure or amenities that would attract both companies and the workforce they need.