PRESS RELEASE: What’s Not to Like About Amazon In Arlington, Part 1

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’.”

One thought on “PRESS RELEASE: What’s Not to Like About Amazon In Arlington, Part 1

  1. Robert January 13, 2019 at 7:28 am - Reply

    “The $573 million bounty it [Amazon] will receive from Virginia for installing 25,000 workers” equates to $22,920 per employee. If the state can “give” $20+K per employee to Amazon, it can do the same for every other business in Virginia. This is one of the reasons that I am opposed to these corporate freebies. Likewise, I am opposed to giving similar incentives to professional sports teams such as the NFL and NBA.

    With a substantial state debt, many in the government probably believe that the influx of 25,000 new residents will help them solve their financial problems. “Virginia has $35.8 billion available in assets to pay $41.2 billion worth of bills. The outcome is a $5.4 billion shortfall and a $1,900 Taxpayer Burden.”
    https://www.truthinaccounting.org/library/doclib/VA-2017-2pager.pdf

    Many of the economic and social problems of Virginia are due to the world view/ideas/philosophies of the people who run the state. So, what should the state do to fix these types of problems? Although it may not always be obvious, we can still get a good idea of what we should not do. States like Illinois and Connecticut are two of the worst states while Washington D.C and Detroit are two of the worst run cities. OK now, so what do these paragons of mediocrity have in common? Answer: well … for one thing, they all have long histories of being run by Democrats.

    At the risk of pointing out the obvious, Virginia could pay-off its debt tomorrow, but until it changes its policies, this will only be a temporary fix. It might be 20 years from now (or more) but eventually the state would be even worse off than it is now. The state needs to take immediate steps to significantly reduce it expenditures.

    Virginia does not have a revenue problem; it has a spending problem. Thus, the state would be postponing the inevitable.

    As we see by this linked web page, the biggest expenses in the state budget are Health Care (at 38%) and Education (at 20%). https://www.usgovernmentspending.com/virginia_state_spending_pie_chart
    Health Care – the biggest contributor to Health Care is Vendor Payments (Welfare).
    Education — the biggest contributor to Education is Pre primary thru secondary education.

    So, how can the state reduce it expenses?
    • Some ways are a no-brainer. For example, it needs to stop giving non-U.S. citizens the same benefits as U.S. citizens. (This would include such things as a free education and a driver’s license.)
    • Some will argue that these types of benefits – such as free health care and a free education – are rights. This is incorrect. We have a right to “unreasonable searches and seizures” and freedom from “cruel and unusual punishments….” The government can take away our rights but these rights do not come from the government. If the government goes bankrupt, we still have our rights but the government cannot give us these benefits.
    • The government needs to drastically cut back its welfare payments. To quote Ron Paul, “As we know well, when the government subsidizes something we get more of it.” https://en.wikiquote.org/wiki/Ron_Paul

    Some people would argue that it is cruel to deprive people of these benefits. These recommendations do not prohibit any person or organization in the private sector from giving money to help these people. And, of course, there are some parts of the country that have no problem with their giving free benefits. For examples, nearby Maryland and Washington D.C. both seem to have generous benefits.

    However, there are also ways that the state can bring in more money.

    Instead of a very expensive “bounty,” Virginia should make itself very business friendly through its laws and a skilled workforce. So, how does the state get a hard working, highly motivated workforce? There is a two-pronged approach:
    (1) Encourage those people who are difficult to train and who are violent to leave the state. (Moving to Baltimore and Washington D.C seem to be a couple of good options.)
    (2) If this is done, it will encourage an influx of people who are more than capable of quickly learning complex tasks, who are willing to learn and will do a good job.

    The state doesn’t need more violent people who can only learn a few rudimentary tasks, who hate the United States and believe that they are entitled to all kinds of freebies.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.