Earlier this month Amazon announced it was looking for a second headquarters in North America. The company said it would involve 50,000 jobs and $5 billion in investment. It is unquestionably a big deal.
Nevertheless, some prices are too high, and what Amazon wants in exchange for bringing its headquarters to North Carolina is far too high of a price.
Here’s an indication of just how much: Capital Broadcasting quoted Research Triangle Park Foundation vice president for marketing and communications Michael Pittman on Amazon’s criteria:
“Amazon’s specs also seek information on incentive programs available for the project at the state and local level — for land, tax credits, workforce grants, and other needs. A project of this scale far exceeds the kinds of current incentive limits. Lawmakers need to rethink those limits and seize an opportunity that may not come our way again for years.”
It would take new legislation to boost state incentives to the point of achieving Gov. Roy Cooper’s promise to “relentlessly pursue every opportunity” to bring Amazon here. That means what’s in place still wouldn’t be enough.
The News & Observer discussed what North Carolina already has in place:
- Enhanced incentives under which “transformative projects” like the Amazon project “could receive full refunds on their tax bills and” — there’s an “and”! — ” the state can chip in money to help develop the sites.”
- “Transformative projects also” — there’s also an “also”! — “can receive up to $50 million for a project’s infrastructure such as water, sewer and rail access, with the money coming from a reserve account in the state’s general fund.”
- “In addition” — now there’s an “in addition”! — “the One North Carolina Fund can award up to $5,000 per year, per job, for up to five years.”
Full refunds on tax bills for a quarter-century and this stuff, also that stuff, in addition to this other stuff, but we’re still going to need legislative action to make our incentives package more competitive? It beggars belief.
Plus, it turns out we’re going to need to restructure our entire transportation system. “Access to mass transit” is one of Amazon’s “Core Preferences,” specifically “Direct access to rail, train, subway/metro, bus routes.” The N&O reported:
“We have buses, but the vast majority of Triangle commuters drive; only an estimated 2 percent in the Raleigh-Durham-Chapel Hill metropolitan area took the bus to work in 2016, according to the U.S. Census Bureau’s American Community Survey released last week. …”
“Pittman of the Research Triangle Foundation said the fact the Triangle is just getting started on building mass transit could be appealing to a huge employer like Amazon, which might relish the opportunity to help mold the region’s nascent system to meet its needs as it grows.”
The expense of rearranging resources in North Carolina to conform to Amazon’s transportation demands would be incalculable.
You may remember how mass transit (especially rail transit) advocates in the Triangle hold up Atlanta’s MARTA as the regional ideal. Guess what else is considered insufficient to suit Amazon’s tastes? Atlanta’s transit options, including MARTA.
Amazon also wants to locate among a “highly educated” populace. I submit that any area foolish enough to give into these demands would necessarily disqualify itself on that score.
Because the simple truth — and the good news — is that North Carolina doesn’t need to debase itself chasing after Amazon.
North Carolina is a national model for growing the economy the right way.
Over the past four years, North Carolina’s leaders have cut taxes, spending, and red tape. Those are empirically backed policies, so it’s no wonder that as the state has lowered the cost of doing business here in general, we’ve seen greater growth, jobs, and investment.
It has worked so well that now North Carolina is considered a national model for tax reform.
Those reforms work like economic incentives, but not at the expense of the rest of the taxpayers, existing businesses, and job seekers. So it’s not a shell game.
Cutting taxes and red tape for all is an all-comers incentive. It’s good for untold numbers of business ventures, jobs, and investment across the state. It’s good for large corporations like Amazon, but more important, it’s good for the little guys, too. And they’re the ones carrying the freight, even if no one notices.
They may be overlooked, but 99.7 percent of all businesses are small businesses, sole proprietorships, and “Mom & Pop” ventures. They create jobs and power the economy — but they do it quietly.
Unlike Amazon, these businesses don’t create big, splashy headlines when they start, grow, expand, make hires, etc. Their effects on the economy, impressive as they are, only become evident over time or in compiled statistics rather than corporate press releases.
Here’s the rub: If we are to believe that North Carolina’s taxes are too high for the likes of Amazon, then we have to believe they’re too high for Mom & Pop, too.
A new Amazon headquarters in North Carolina would be welcome and wonderful in the abstract. It would be great if Amazon were to choose this state on all its merits save one. That one, however, seems to be the one that matters most to Amazon: how malleable its political class is to corporate pressure for government goodies.
In that case, no thanks.
Jon Sanders (@jonpsanders) is director of regulatory studies at the John Locke Foundation.