Over $185 million in tax revenues have been redirected from Washington, DC’s city treasury to fund economic incentives for tech industry firms, but much of the money looks to have gone to firms already in the city without the incentives, a city audit finds.
In Nashville, the $102 million offered Amazon to locate a 5,000-person employee facility in the city is proving less than universally popular, with local unions and council members clamoring for the city, which has committed $15 million of that amount, to care for its own workers first.
While tax abatements for corporate relocation are widely known, another way to avoid taxes is to seek lower property tax rates based on “comparable” stores that are no longer in operation.
After a 14-month economic development scrum, Amazon will split its second headquarters between New York City and Washington, DC, potentially employing up to 25,000 in each city. Nashville, too, will get an operations center, which will employ 5,000. In exchange, Amazon is collecting nearly $3 billion in public subsidies.
The city of Nashville agrees to an informal freeze of tax abatements while a task force works to devise policies that protect school financing from being diverted to attract corporate employers.
Borrowing against future property tax revenue (known as tax-increment financing) in the name of jobs may be the most prevalent form of economic development subsidy. Corporations benefit, but local government and communities often are left paying the bills.
The costs of winning the competition to become Amazon’s second home remain largely unexplored, and this makes public debate urgently necessary in the locales where the prospect is still in play.
Evidence continues to pile up that tax abatements and related “economic development incentives” cost the public dearly, with limited offsetting benefits. A reaction against these practices is starting to build, but that hasn’t stopped the flow of billions yet.
