January 13, 2018
Corporate and civic leaders throughout the Washington metropolitan area are ecstatic about Amazon’s decision to locate one of its two new headquarters to Crystal City. In announcing the deal, outgoing Arlington County Board Chair Katie Cristol boasted that Amazon’s decision was “a validation of our community’s commitment to sustainability, transit-oriented development, affordable housing and diversity.”
Victor Hoskins, director of Arlington Economic Development, remembers shouting “yahoo!” when he heard the news.
George Mason University professor Stephen Fuller declared: “The benefits are so humongous. This is really big. Nobody has really covered how big this is for a region like the Washington region”.
Fuller now estimates a $26 million annual net tax benefit to the County or half his original published estimate of $52 million, which assumed twice as many jobs created at HQ2. This is substantially less than the County’s unsubstantiated estimate of $32 million.
Yet even Fuller’s reduced amount overestimates the net tax benefit, since his calculations on the Amazon deal underestimate per pupil school costs by $3,000 per year. Table 6 in Fuller’s report on the Amazon deal assumes a per pupil cost of $18,015 per year, whereas numbers published in Exhibit 4 and Table K the 2017 Comprehensive Annual Financial Report (CAFR) indicate a per pupil cost of $21,313 per year.
The Amazon deal is also inequitable. For one thing, according to Bernie Sanders, Amazon reaped $5.6 billion in profits, yet paid no federal taxes in 2017.
Furthermore as a result of recent changes to the IRS tax code, Amazon is expected to realize $789 million in future tax savings from the federal government. In addition, Amazon is favored to win a $10 billion contract to implement DoD’s Joint Enterprise Defense Infrastructure (JEDI), i.e. cloud network, despite opposition from Donald Trump, who doesn’t like the coverage he gets from the Amazon owned Washington Post.
This is on top of $800 million in previously awarded DoD contracts.
With no federal taxes paid in recent memory and billions of dollars in federal revenue, how can Amazon justify extorting $2 billion in relocation incentives from New York and Virginia? The $573 million bounty it will receive from Virginia for installing 25,000 workers in Crystal City amounts to one percent of the state’s annual operating budget. Those taxpayer funds could be better spent elsewhere in the state.
The Washington Post got one thing right though. It quoted Virginia Gov. Ralph Northam (D), who “described the package as ‘a new model of economic development [read corporate welfare] for the 21st century’.”