Wednesday , January 27 2021

New seats in Amazon: Public subsidies provoke criticism



While New York and the suburbs of Washington enjoy two new offices in Amazon, the debate erupts in the United States over the billions of dollars of incentives offered by these communities to attract the giant of an online business.

New York's Long Island County and Crystal City in Virginia, on the edge of the US capital, are lucky winners of a long competition month to attract two mega sites where Amazon promises to create a total of 50,000 jobs, with investments of 5 Billion euros (4.4 billion euros).

But Haman does not impress opponents, who warn that the amount of tax and government incentives ($ 3 billion to New York and $ 2.5 billion to Virginia) could erode the economic benefits the company brings.

It is accepted in the United States that a group looking for a place is looking for incentives. According to a report by the Brookings Institution, about $ 90 billion is offered annually to businesses by states and local governments.

Michael Fern, an expert on business transitions at the University of George Mason in Wergh. Believes that these incentives rarely make a difference in group decisions.

"The decisions of foreign companies are based on factors that have a deeper impact on the company's profits, such as the availability of skilled labor," he says.

He notes that Amazon could have received even more tax benefits if it crossed the Potomac River to settle in Maryland, north of Washington, where it was offered more than $ 8 billion, or Newark near New York, which put $ 7 billion on the table.

– "Profit Company"

Such financial support is criticized by those who say that Amazon should not be a "profitable enterprise".

"One of the richest companies in history should not get taxpayer support while too many New York families are struggling to make ends meet," protested the Democratic senator from New York. York Kirsten Gilbernd.

On the right, the subsidies given to Amazon have passed. "Arrangements like that of Amazon or other big groups are absolute kronen, that's shocking!" Conservative economist Véronique de Rugy wrote in the National Review.

For Mr. Fern, these subsidies distort the economy. According to him, cities should focus on improving education and infrastructure rather than manna provided by a company to make places to live and work attractive.

But Tom Stringer, of BDO's real estate consultancy, says broken people can not read the fine print, saying structured contracts like "pay when and when."

"If Amazon does not provide (guaranteed terms), it does not enjoy the financial benefits, and taxpayers are well protected," he told AFP.

Nevertheless, the issue of public subsidies has become a major concern not only for Amazon but also for Foxconn, a Taiwan-based electronics company, Apple's subcontractor in particular, which promised to build a factory in Wisconsin.

The deal with Foxconn provides subsidies of $ 3 billion – up to $ 4 billion – to create 13,000 jobs. This amounts to a grant of more than $ 200,000 per job created, compared to about $ 20,000 per job for Amazon.

The Foxcon deal, announced by President Donald Trump, contained "very unusual" elements, unlike those of Amazon, Stringer says.

Wisconsin Governor Scott Walker, who ran the deal with Foxconn, was not reelected this month because of worries about rising costs and a possible decline in jobs created.

Other major groups began to identify the problems arising from the tradition of public subsidies.

Walt Disney Co. sent a letter this year to Anaheim, California, calling for an end to tax losses on the grounds that they created a "harsh climate."

Tax incentives are nonetheless "paramount" to attract businesses to boost economic development, real estate expert Tom Stringer promises. "It's scorning the world to say they do not make a difference."

But the communities must be "tough in the negotiations so that both sides will enjoy these agreements," concludes Darrell West, head of government studies at the Brookings Institution.


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