New York and Virginia are the losers. Tim Carney writes that New York and Virginia would have been better off not giving Amazon subsidies to put new headquarters in each of the states:
One study of firm-specific subsidies in Kansas found that most subsidy recipients, in an anonymous survey admitted that they hired zero extra people thanks to the subsidies. A 2014 study of hundreds of studies on incentives found a slight negative effect on employment in the short term, and no effect in the long run.
The money Chicago spends to lure Boeing, or Maryland spends to lure Lockheed Martin, is money that the governments must make up for through tax hikes or cuts in spending for legitimate government purposes, such as schools, roads, and police.
Liberal Rep.-elect Alexandria Ocasio-Cortez on Tuesday expressed outrage that New York had paid so much to lure into Long Island City a company owned by the world’s richest man. The socialist politician was right.
Amazon is a for-profit company. It can fund its facilities through its profits or anticipated profits manifested in loans or investments from private lenders choosing to finance Amazon. Public funds, on the other hand, should be for public goods. An Amazon job is not a public good—it’s payment in return for a private good. That a corporate headquarters might have positive spillovers into the surrounding community is not a reason to subsidize it. Capitalism, as a whole, has massive positive spillovers, but in America we generally think the government’s job is to create a level playing field where the rule of law and a decent infrastructure allow companies to flourish—or not. [...]
A state would do better—in the long run for sure, but probably also in the short run—by offering a broad, level, open playing field. If Cuomo had $3 billion in tax cuts to give, why not reduce the state’s 6.5 percent corporate tax or cut the sales tax?
[Timothy P. Carney, “The Amazon Headquarters Search Is Done: New York and Northern Virginia Lose,” American Enterprise Institute, November 14]
