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Ten Harmful Consequences of Handouts for Amazon

By: Chris Edwards
The Cato Institute


Amazon has chosen New York City and Arlington, Virginia, for new corporate headquarters after the cities ponied up more than $2 billion in subsidies to the retail giant.

Workers in the two cities will be winners as labor demand gets boosted, but business subsidies make losers of taxpayers, other businesses and good governance.

The subsidies to Amazon are a microcosm of the huge “incentives” industry that has spread like cancer through state and local governments in recent years. A New York Times investigation uncovered $80 billion of annual business subsidies across the nation through 1,874 state and local programs.

Some New York and Virginia workers will be winners from the Amazon deal, but here are 10 reasons why business subsidies are a loser for citizens overall:

Fairness. With Amazon adding thousands of workers, hiring will be tougher for other tech firms in New York City and Northern Virginia. That would be OK if it was a free market, but the subsidies give Amazon an unfair edge. The subsidies will also give Amazon a leg up on competitors for its products and services.

Alternatives.
New York and Virginia would have generated more durable growth by cutting business taxes across the board by $2 billion. That would have boosted investment by many businesses, and thus created more balanced prosperity. New York may have landed Amazon, but its high taxes are driving away other firms.

Read the rest at The Cato Institute.

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