Startling to me, anyway. None of the legislators on the committee seemed bothered.

Is there any public benefit to this secrecy?

There can be when vendors are bidding competitively for a state contract—say, road construction. Protecting proprietary financial or technical details in that context may encourage better bids and serve the public interest.

But stadium subsidies are different—there’s no obvious reason why secrecy is necessary or helpful. When public officials negotiate deals to hand out taxpayer money, the public deserves transparency. Teams may want discretion. State representatives may want to negotiate without tipping off competing states. But neither, in my opinion, is a good enough reason to give it to them.

Yet secrecy has become the norm. Kansas City Mayor Quinton Lucas won’t release the city’s proposal for a downtown stadium to the Royals—even though Clay County released its proposal. The city also kept its 2017 Amazon HQ2 bid under wraps, while many other cities disclosed theirs.

Judging by the lawmakers’ lack of reaction, non-disclosure agreements are now standard operating procedure. They shouldn’t be. Even if elected officials are fine being left in the dark, the public shouldn’t be.

The post Why Is the Department of Economic Development Keeping Secrets? appeared first on Show-Me Institute.

The immediate aftermath of Amazon’s announcement featured the kind of Democratic recriminations that are the thing of Republican fever dreams. On one side were establishment Democrats like Andrew Cuomo and Bill de Blasio, who like many politicians are conventional when it comes to tax incentive–laden economic development strategies; on the other side were Democrats like Alexandria Ocasio-Cortez, who viewed the tax incentives as denying revenue to state and local government services.

At first, conservatives on Twitter were “rooting for injuries” and joking about the Left’s internecine conflicts. But eventually the conventional wisdom on the Right seemed to coalesce around the Cuomo and de Blasio perspective on tax incentives. It’s crazy, they said, that AOC would have come out against a tax incentive package that would have brought (more) Amazon jobs to New York! Think of the jobs!

But while conservatives delighted in the aftermath of Amazon’s exit as an opportunity to proclaim Ocasio-Cortez’s economic ignorance, Ocasio-Cortez is more correct about the Amazon deal than she is wrong, and far closer to the path of good tax policy than many conservatives.

In fact, there is a larger seen vs. unseen consideration in the Amazon debate that centers not only on whether the average “economic development” project would go forward even without a tax incentive, but also on the overall impact of profligate tax incentive policies on governance objectives generally.

First, we cannot know for sure whether Amazon would have come to New York without, or with reduced, tax incentives, but we do know that the bookies who handicapped Amazon’s search always had Virginia and New York among the favorites for the HQ2s, in no small part because both already had highly skilled workforces, to say nothing of their preexisting proximities to power. In fact, many tax incentive offers to Amazon from other states far exceeded the value of New York’s. Amazon’s statement on its HQ2 withdrawal from New York can easily be read not as one ultimately about the cash, but about the public relations fiasco Amazon was about to endure at the hands of New York’s activist class.

The question of whether, or to what extent, incentives are necessary isn’t just an issue in the case of Amazon, either, and research into the incentives that include or imply “but for” language— “but for the incentive, the project won’t happen” —are helpful here. For example, a study by the W.E. Upjohn Institute published last year reveals that the vast majority of businesses that receive tax incentives under a “but-for” rubric likely would have pursued their projects even without the incentive: that many of these projects are getting tax incentives not because the project wouldn’t happen without them, but because business interests have become accustomed to receiving them and know how to work the system to get them. The result? As local tax incentives proliferate, fewer and fewer taxpayers become responsible for greater and greater portions of local government funding.

This failure of stewardship on the part of governments across the country costs state and local taxpayers billions of dollars annually. That impacts not only government services, including roads and education, but also the ability of a government to reduce taxes for everyone, if it so desired. The city of Kansas City, Missouri, where I’m from, redirects $90 million annually from its budget through tax incentives, but that doesn’t include the additional $45 million that those decisions also redirect from the city’s public schools and other taxing districts, who rely on these tax streams but have relatively little say in their diversions.

Joining this concern with Upjohn’s findings, it’s clear in the case of Kansas City that tens of millions of dollars every year aren’t going to kids, to roads, or to other necessary projects simply because some connected businesses want special taxing treatment for projects they would undertake even if they did not receive the incentives.

In some respects these revenue diversions are only now coming into sharper focus with the promulgation of new GASB accounting standards requiring greater transparency about the money that governments across the country are forgoing in the name of “development.” If you haven’t looked up how much your local and state government is giving away, you probably should; it will reframe the financial picture the next time those governments come to you claiming to be cash poor and looking for tax hikes.

Would some tax incentivized projects be withdrawn if there was no tax incentive? Certainly. Would most others proceed as planned? Evidence suggests that they would.

I’m not arguing that Amazon specifically would have come to New York with no, or fewer, tax incentives, as no one really knows the answer to that question; I’m also not arguing that New York government “deserves” to be funded at a higher level and that Amazon’s HQ2 departure will allow that.

What I’m arguing is that Amazon and other private companies play state and local governments against each other for their own financial benefit, and that politicians are usually more than happy to be played for the sake of donning their hard hats and planting a spade in the ground in front of a bunch of cameras.

What’s mystifying to me is that while national conservative pundits (rightfully) guffaw at the idea of ethanol and sugar cane subsidies and all the rest, that they may not view state and local tax policy failures as similarly deserving of unambiguous and pointed criticism. Perhaps in the context of the players involved – Amazon, Jeff Bezos, Alexandria Ocasio-Cortez, Bill de Blasio and Andrew Cuomo – it is simply too delicious to watch the conflagration of cultural and economic trainwrecks, and comparatively disadvantageous to say, however plainly, that both Amazon and New York will be just fine, and that these tax incentive deals are rarely in the interest of the taxpayers who subsidize them.

More to the point, conservatives would do themselves a favor by recognizing clearly, and repeating loudly, that tax incentives are not indicative of healthy “tax competition,” and that deals like the one struck between Amazon and New York are instead a showcase of a national policy disease that rides the paychecks of individuals and small businesses across the country, to dole out money to the enterprises of the well-connected.

Milton Friedman was right:

You talk about preserving the free market system. Who has been destroying it? The business community must take a large share of the responsibility. … You must separate out being pro-free enterprise from being pro-business.

New York was pro-Amazon; it wasn’t pro-market. And conservatives would do well to focus on the latter approach as their guiding principle on these and similar matters of local tax policy in the future, regardless of the state, and regardless of the players involved.

The post New York Shouldn’t Have Offered Amazon $3 Billion. No One Should Have. appeared first on Show-Me Institute.

Nine key organizations, including the St. Louis Economic Development Partnership, St. Louis Regional Chamber and St. Louis Development Corp., claim a role in economic development. They collect and spend some $78 million annually, mostly from businesses and taxpayers.

…Kansas City counts roughly 10 key entities focused on development, and spends $21 million, according to the review. Its organizations include the Unified Government of Wyandotte County/Kansas City, Kansas and Kansas City Area Development Council. Kansas City’s rankings for job growth (91st), wage growth (83rd), and high-tech gross domestic product growth (96th) were better than those of St. Louis.

Note that the combined $99 million spent in Kansas City and St. Louis is just on the staff and overhead of the organizations that offer economic incentives—it does not include the additional hundreds of millions of dollars for the incentives themselves! While Kansas City’s growth barely places us in the top half of the 200 cities studied, St. Louis fares much worse. The Lou ranks 152nd in job growth, 142nd in wage growth, and 99th in high tech GDP growth.

Despite faring slightly better than St. Louis, it appears Kansas City proper isn’t getting much for its efforts. If you look at the news release webpage of the Kansas City Area Development Council—the same folks that put together the still-secret regional bid for Amazon’s second headquarters—you’ll find ten press releases for 2018. Several of them talk about positive developments in the Kansas City “region,” but only one, TrialCard, is actually about new jobs within the borders of Kansas City, Missouri. The announcement projected 225 new jobs.

Well, maybe. A Kansas City Business Journal story at the time suggested those numbers are temporary:

The Kansas City center will get up to the 200-225 employee mark beginning around November, including temporary workers, and drop to between 100 to 150 after about February, (TrialCard VP Scott) Dulitz said. Over time, he said, activity—and the employee count—could increase.

As if to underscore the St. Louis Business Journal’s point about the money spent, the release included:

KCADC was proud to work with a number of regional partners in attracting TrialCard to the region including the State of Missouri, Missouri Partnership, City of Kansas City, Missouri, Economic Development Corporation of Kansas City, Missouri, Clay County Economic Development Council, KCP&L, Spire Energy, Cushman & Wakefield and CBRE.

The problems with Kansas City and St. Louis won’t be solved by lavish economic development incentives. Instead, city leaders need to focus on the basics: infrastructure, public safety, education and the like. There is no shortcut to success—no matter how much you spend.

The post Missouri’s Biggest Cities Spend $100 Million Annually Just to Give Away Money! appeared first on Show-Me Institute.

According to their November 29 piece, St. Louis and Kansas City spend a combined $99 million annually just in staff and overhead of various organizations to promote their respective regions. Not all of this is taxpayer money; some of it is from chambers of commerce, regional councils, and economic development corporations. But much of the effort probably results in publicly financed incentives such as abatements, tax-increment financing, tax credits, and the like. In short, we spend money to give away money.

For example, these were the organizations that put together the infamous taxpayer giveaways meant to lure the second Amazon headquarters to the Show-Me State. The bids were unsuccessful, but someone had to foot the bill for putting together the proposals.

To add insult to injury, Robbins and Kirn point to a study of economic growth in 200 U.S. cities by the Milken Institute. It shows that we appear to be getting little return on our investment. In the areas of job growth, wage growth, and high-tech GDP, St. Louis ranks 152nd, 142nd, and 99th, respectively. Kansas City does little better at 91st, 83rd and 96th, respectively.

Missouri needs to reform its tax credit and economic development incentive policies to make sure that over-eager cities aren’t handicapping themselves with expensive and apparently fruitless efforts. We’re spending money just to spend money, and we have little to show for it.

The post You Gotta Spend Money to… Spend Money? appeared first on Show-Me Institute.

More recently, Florida tweeted a warning to cities jockeying to play host to Amazon’s new headquarters. In responding to a Financial Times story on unpleasant working conditions in Amazon’s UK warehouses, Florida tweeted:

Psst HQ2 cities. You’re gonna subsidize this company to the tune of billions … Maybe think twice …

Florida is right. Amazon demanded lots of taxpayer subsidies from the cities lining up to woo them, including Kansas City. Show-Me Institute researchers have been warning cities about such subsidies for years, but I wonder if Florida offered this same warning to Kansas City, as the area development council paid him to assist on the Amazon bid.

The post Kansas City Dodged the #HQ2 Bullet appeared first on Show-Me Institute.

Previously, both cities refused to publicly release the details of their bids, including what tax incentives they were offering, claiming that Amazon required confidentiality. Some have questioned whether that is a legitimate claim. But regardless, both cities should, in the name of transparency, release the entirety of their proposals. Maintaining faith in government requires no less.

3:50 pm:  CBS-St. Louis/KMOX News has posted St. Louis’ Amazon HQ2 proposal.

The post Release the Amazon Bids! appeared first on Show-Me Institute.

Will Saint Louis (or Kansas City) surprise the business world in winning the Amazon Prize? I speak, of course, of the bidding war to decide what city, suburb, or close-in town – out of 238 contestants – will be selected as the site of Amazon’s second headquarters. In every important way, “HQ2” is supposed to equal its existing headquarters in Seattle. Amazon will announce its choice in the spring of next year. Both of our two biggest metro areas are in the bidding – with enthusiastic support from Gov. Eric Greitens and his team.

The potential payout dwarfs the Orteig prize, but so too do the costs to the cities and states doing the bidding. Amazon says it is prepared to invest about $5 billion of its own money at its new site and create up 50,000 jobs with an average annual compensation of more than $100,000 per job.

In Lindbergh’s case, Saint Louis businessmen put up $15,000 (to his $2,000) to underwrite the cost of building his airplane. As for HQ2, it seems clear that the costs to local and state taxpayers over a period of 15 to 20 years will run into the billions of dollars.

It’s a big and potentially wildly uneven trade-off, beginning with the fact that Amazon cannot guarantee 50,000 sustainable jobs – or even 5,000 jobs or 1,000 jobs. Who is to say Amazon will continue to grow at the same phenomenal pace that it has maintained over the past two decades? In the tech world, many once-hot companies have either fallen into bankruptcy (think Wang Laboratories and Digital Equipment Corporation) or stopped growing and faded into insignificance (think AOL and Yahoo).

Remember that the initial build-out of HQ2 is supposed to take 15 years. That is a long time, and it makes this competition a very different proposition than the Lindbergh flight. Less than three months after getting his final go-ahead from Major Albert B. Lambert (after whom Saint Louis’s airport is named) and other backers, Lindbergh had designed and built his Spirit of St. Louis monoplane and completed his historic flight from New York to Paris.

It is disturbing that city and state officials in Missouri have responded with such rapturous glee to the Amazon bidding – while maintaining that they must, in deference to Amazon’s wishes, remain mum about what they have offered in the way of tax breaks and other subsidies.

Nobody knows what Amazon will look like in 15 or 20 years. In that sense, HQ2 is a multi-billion-dollar pig in a poke. Whatever city wins the Amazon Prize, you may be sure that local and state taxpayers will, for a long time, be deeply in hock to trying to make a go of it.

The post “Lucky Lindy” vs. Jeff Bezos: Who Is the Better Bet for Missouri? appeared first on Show-Me Institute.

I also take exception to the Coastal notion that our cities are flatly uncompetitive, and the specific suggestion that Saint Louis is some charity case. In fact, there are very strong business cases for Amazon to consider both Kansas City and Saint Louis that have nothing to do with charity. And with respect, if Amazon doesn’t recognize and exploit those advantages, other companies will.

Make no mistake: I would love to see Amazon come to Kansas City and/or Saint Louis, and Show-Me Institute analysts have written about the advantages that Missouri’s biggest cities bring to the table for literally years now.

This isn’t to gloss over the cities’ problems, either, whether it be crime, governmental mismanagement, regressive taxation, or a whole host of other issues discussed on this site in the past. Too often city and state leaders try to hit home runs with tax incentives and paper-thin kabuki PR campaigns to compensate for the fact that they don’t consistently hit the singles and doubles that actually lead to economic wins—keeping residents safe, maintaining infrastructure, treating businesses fairly, and the like.

But no city, anywhere, is perfect; all cities fall short at times, and the process of local government reform and improvement is a continual effort.

What Kansas City and Saint Louis are world-class at—intermodality, centrality, cost, and livability—accentuate the fact that both cities, jointly and separately, should be in Amazon’s final conversations about advantageous sites. Two terrific papers written for SMI by Wendell Cox (the most recent being Kansas City’s, published last year) reiterate this truth and are available via the links below.

Whether Amazon comes to Missouri certainly remains to be seen, and the odds are against it. But win or lose, Kansas City, Saint Louis, and Missouri have a lot to offer to Amazon and companies like it, now and in the future. It’s those advantages that will direct these cities’ success going forward—not Amazon, not tax incentives, and certainly not political gimmicks.

KANSAS CITY–Genuinely World Class: A Competitive Analysis by showmesunshine on Scribd

HOUSING AFFORDABILITY: The Saint Louis Competitive Advantage by showmesunshine on Scribd

The post Ignore the Gimmicks. Here Are the Reasons Amazon Should Come to Missouri. appeared first on Show-Me Institute.

Moore is correct that metropolitan areas are falling over themselves to lure Amazon. In doing so, many will offer all sorts of taxpayer subsidized goodies such as tax credits, property tax abatements and tax-increment financing.  Philadelphia offered to forgo property tax for 10 years; New Jersey is offering 7 billion dollars of tax incentives. Here in Missouri, Saint Louis and Kansas City areas have both submitted proposals—but won’t share them with the public. If the past is any indication, they will likewise be loaded with such taxpayer giveaways.

Therein lies the problem. Big companies seek and get a great deal of public assistance. Using the online subsidy tracker developed by Good Jobs First, one can see that the companies constituting the executive council of TechNet have received at least $1.2 billion in state and federal subsidies—almost five times more than the $250 million Moore calls for in additional federal education funding.

Like any company, Amazon doesn’t want to pay any more taxes than it has to. The problem is that subsidies such as those being offered for their new headquarters actually divert money away from schools, libraries and other basic services funded by property taxes. The size of the various Amazon proposals only multiplies the effect. Most of those hired to work at the new headquarters would likely be drawn from elsewhere, placing additional demands on school districts in the form of hundreds of new children—while granting the districts no additional resources. This is in addition to the stresses placed on infrastructure and other services, such as and policing.

Because federal funding for education makes up only a small portion of any school district’s budget, the terrible irony is that even with the increase in federal funding Moore calls for, the school districts in the city that “wins” Amazon’s second headquarters may still be worse off because of the loss of local property taxes.

Seventy-three civic organizations responded to these realities by writing an open letter to Amazon CEO Jeff Bezos demanding that Amazon pay its taxes—including on “building materials, machinery and equipment.”  The letter also includes the following:

If you want a highly-educated local talent pool you must pay all of your property taxes to fund our schools, public safety, infrastructure and other public goods and services.

If tech leaders like those at TechNet want to increase education funding of any kind, they should stop asking national, state and local governments to subsidize their companies and start contributing their fair share to public coffers.

The post TechNet Companies: Want More Education Funding? Then Pay Your Fair Share. appeared first on Show-Me Institute.

The Kansas City Star editorial board has been critical of the secrecy, noting in an October 6 column that the agreement is

aimed at keeping a lid on Amazon’s proprietary information — not the cities’ best arguments about why they would be perfect for HQ2. Other contender cities that are playing by the same Amazon-imposed rules have managed to make more information public.

The state of Missouri, without favoring either Kansas City or Saint Louis, issued what can best be called a brochure for doing business in the Cave State. (It’s been called a proposal, but that is a generous description of the 13-page slide show.)

Until we know the details, we’ll just have to sit and wait to see what commitments municipal leaders have made on behalf of taxpayers. If the past is any indication, they will include generous taxpayer subsidies in the form of abatements, tax credits, and tax-exempt freebies wherever possible. Philadelphia is offering ten years of property tax abatement. New Jersey’s bid included $7 billion in tax incentives.

The question for taxpayers will be whether the benefit is worth the investment. Research suggests this is rarely the case. One economist from Mizzou, Saku Aura, put it bluntly:

As a Missouri taxpayer, I really hope Amazon doesn’t come here. The place that most grossly overestimates the benefits from a large company moving is going to be the one who’s going to get it. If they choose to come to Missouri, to me that would almost imply that we ended up being the biggest sucker among the 50 states.

Is Missouri being played for a sucker? Richard Florida, an urban studies theorist focusing on social and economic theory seems to think so. According to the St. Louis Post-Dispatch, Florida said, “the cities I talked (to) all know they are being taken and resent it.” Among those cities would be Kansas City, as Florida was a paid consultant to its effort

The post Are Kansas City and Saint Louis Getting Taken? appeared first on Show-Me Institute.

In just 20 years as a public company, it has experienced a thousand-fold growth in sales – going from $148 million in 1997 to $138 billion in 2016 and a projected $160 billion in the current year. Adjusted for splits, the price of the stock has gone up 200-fold – from a high of $5 a share in 1997 to $1004 a share today.

To paraphrase the bard, Amazon doth bestride the narrow world of retailing like a colossus. Others quake at its every movement. Back in June, when the company announced the acquisition of Whole Foods, the stocks of other grocery chains plummeted – with Kroger falling 26 percent in the two days following the announcement and SuperValu down 16 percent. Wal-Mart fell 5 percent. Within days, Amazon’s market cap went up nearly as much as the $13.7 billion it agreed to pay for Whole Foods.

In many years of writing about business and economics, I can think of no other enterprise that has come so far so fast. Even so, waxing biblical in your 2016 letter to shareholders, you said it is still “Day 1” (the first day of creation) in the company’s evolution. When someone asked you at a recent “all-hands meeting” what Day 2 would look like, you answered:

Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.

Your words prompt me to warn you that Day 2 may be approaching much more quickly than you think. Surely you don’t want to turn Amazon into a subsidy junkie. If that happens, Day 1 will turn into Day 2 in the blink of an eye.

Right now, cities and states across the country are competing with one another to throw big money – taxpayer money – at Amazon in the hope of being chosen as the site for Amazon’s proposed second headquarters. With one hand, you dangle the promise of up to 50,000 jobs paying an annual average of more than $100,000 per employee. With the other, you rattle a tin cup, stating in your request for proposals:

Incentives offered by the state/province and local communities to offset the initial capital outlay and ongoing operational cost will be significant factors in the decision-making process . . . . Outline the type of incentive (i.e., land, site preparation, tax credits/exemptions, relocation grants, utility incentives/grants, permitting, and fee reductions) and the amount. The initial cost and ongoing cost of doing business are critical decision drivers (emphasis added).

A few years ago, Boeing Commercial Airplanes, your cross-town neighbor in Seattle, initiated a similar nationwide bidding war for production of its latest big new wide-body – the 777X. In the end, Boeing decided to keep production at its massive facility in Everett, Washington – but only after winning nearly $9 billion in tax breaks and subsidies from the state legislature. That worked out to more than $1 million per promised job, or about $50,000 per year per job over a 20-year period (the tax breaks do run out eventually).

Maybe that sounds great to you. From your perspective, it may seem like the equivalent of having local and state governments pick up half of the anticipated HQ 2 payroll for a long time.

But think of the downside of making Amazon and its people deeply dependent upon corporate welfare. Think of the gross unfairness of huge tax carve-outs for Amazon that are denied to other smaller businesses (which have to pay for their initial costs and ongoing costs out of their own hard-earned dollars). How do you want your company and its people to succeed – by winning in the marketplace . . . or by securing a fatter portion of government largesse?

Last but not least, think of the hypocrisy of preaching a gospel of “obsessive customer focus” as the key to maintaining “Day 1 vitality,” while gouging money out of taxpayers. According to Consumer Intelligence Research Partners, there are now about 85 million Amazon Prime members – that’s 68 percent of all U.S. households! As Amazon becomes increasingly ubiquitous, most of every dollar that Amazon takes out of taxpayer pockets will be money stolen (or lifted) from its own customers.

As one of your customers told me, “I am never in favor of using my tax money to build someone else’s business so that it can sell products to me and profit off me a second time.”

The post Beware the Perils of Corporate Welfare: An Open Letter to Jeff Bezos appeared first on Show-Me Institute.

While the details of Kansas City’s pitch remain predictably secret, other cities have made offerings, both substantive and gimmicky. Tucson, Arizona, tried to send Amazon CEO Jeff Bezos a 21-foot cactus. Stonecrest, Georgia, recently offered to name part of the town Amazon if chosen.

Not to be outdone, Kansas City Mayor Sly James took to the internet in a “desperate” attempt to get attention by spamming Amazon’s website with hundreds of fake product reviews each extolling the town.

This is all reminiscent of Google’s contest to choose the first city to host their Google Fiber service back in 2010. Like Stonecrest, for example, Topeka, Kansas, actually did change its name to Google. In the end, Google Fiber selected Kansas City, Kansas—our neighbor to the west—to offer its service. In doing so, they told The Kansas City Star, “We wanted to find a location where we could build quickly and efficiently. Kansas City [Kansas] has great infrastructure and Kansas has a great business-friendly environment for us to deploy a service in.”

Similarly, Amazon’s request for proposals includes that Amazon has a preference for “A stable and business-friendly environment.” While Kansas City is genuinely world class, our government is definitely not business-friendly. Property taxes and sales taxes are high, and on top of that the city charges a 1 percent earnings tax. The head of the Economic Development Council said that the city uses tax subsidies to mask the full impact of Kansas City’s regulations. Let’s not forget an unaccredited school district and a years-long spike in the homicide rate. Even one of the prominent consultants working on our Amazon bid, Richard Florida, does not include Kansas City on his list of top-five prospects.

Regardless of the outcome of this process, Kansas City must do a better job demonstrating it is a good place to locate a business. Government must be small and responsible, taxes low, and services efficient. That is not the city we are now, and gimmickry will not get us there.

The post Like Google, Amazon Wants Good Government over Gimmickry appeared first on Show-Me Institute.

Here we go again, I thought – another episode in the long-running story of local and state political figures being played for suckers in offering special tax breaks and subsidies to a major corporation with a much-ballyhooed plan for moving work to another city and state.

In 2013, Boeing decided to shop the production of a new airliner (the 777X) to other states after the local International Machinists Union in Washington state voted 2-to-1 to reject Boeing’s offer of an eight-year contract. Keen to wrest this piece of work away from Boeing’s giant facility in Everett, Washington, then-Missouri Gov. Jay Nixon and Saint Louis County officials were gung-ho participants in the bidding war, which involved 22 states and about twice as many cities.

They quickly put together a package that would award $3.5 billion in tax cuts and tax credits to Boeing, mostly over a 10-year period. A substantial portion of those tax credits would have been transferrable – meaning that Boeing could have sold them for cash to other companies wanting to shelter income in Missouri.

Boeing was promising up to 8,500 high-paying jobs. Though that may sound like a lot, it amounted to just 0.3 percent of total employment in Missouri. Where was the fairness (or the economic logic) in lavishing so much public assistance on one company – and less than half of one percent of the workforce – while implicitly increasing the tax burden on thousands of other companies and millions of other workers? In the end, Boeing decided to keep production in Everett – but only after the Washington state legislature approved $8.5 billion in tax breaks and subsidies for Boeing. The Seattle Times called it “the largest state-tax subsidy to one company in American history.”

History repeats itself – with Amazon replacing Boeing in what promises to be another bidding war for high-paying jobs. Once again when asked to jump into the game with tax breaks and subsidies, local and state officials – here in Missouri and pretty much across the nation – are all too ready to oblige. They do not question whether they should be in the game; they only ask: How high do you (Amazon) want us to jump?

Wherever it goes with its second headquarters, Amazon is plainly looking for a ton of corporate welfare – almost certainly in the many billions of dollars. Its request for proposals states:

A stable and business-friendly environment and tax structure will be high-priority considerations for the project. Incentives offered by the state/province and local communities to offset the initial capital outlay and ongoing operational cost will be significant factors in the decision-making process . . . Outline the type of incentive (i.e., land, site preparation, tax credits/exemptions, relocation grants, utility incentives/grants, permitting, and fee reductions) and the amount. The initial cost and ongoing cost of doing business are critical decision drivers.

In this case, what is good for Amazon is not good for the country – or for the state of Missouri. Let Amazon pay the “initial cost and ongoing cost of doing business” out of its pocket, just as other businesses do. Corporate welfare is a curse, not a cure.

The post Corporate Welfare: A Curse, Not a Cure appeared first on Show-Me Institute.

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