House Democrat defends Virginia's tax incentives for Amazon
As taxpayers in Virginia prepare to pay out hundreds of millions of dollars in incentives and subsidies to Amazon for bringing thousands of new jobs to Arlington, one House lawmaker defended the deal Wednesday as one that could boost the entire D.C. metropolitan area for years to come.
“We’re going to see a boon in employment, not just at Amazon but in a number of sectors,” said Rep. Anthony Brown, D-Md. “So, I think its going to be a good deal not only for Virginia but, as a Maryland legislator, I’m confident its going to be a really big benefit for the residents of Maryland and the District of Columbia.”
Amazon made its long-awaited HQ2 announcement Tuesday, revealing it will split the $5 billion it planned to spend on a second headquarters office between Long Island City in New York and the Crystal City neighborhood of Northern Virginia. It will also build a new operations center in Nashville that it says will create 5,000 new jobs.
As part of the deal, the three states are offering Amazon billions of dollars in tax incentives and other enticements that critics say a company worth $800 billion could not possibly need.
“I know it creates a lot of debate: should we be subsidizing a large multibillion, multinational corporation?” Brown said. “But I think more important is, should there be a strong partnership between that corporation, their presence in the community and local and state government, and I think the answer is yes.”
Virginia committed to paying Amazon more than $500 million over 12 years if the company delivers on its promise of 25,000 new jobs with an average salary of $150,000 or more. Amazon could get additional money based on the revenue produced by hotel taxes in the area. The state will also invest in workforce development programs and in improving the infrastructure around Amazon’s new offices.
According to Brown, the tax revenue generated by Amazon and the economic activity it creates should more than make up for the cost of the incentives.
“It’s a difficult question. I get it,” he said. “It does take a balancing act, and I think it’s important for state and local officials to really make a strong case to the taxpaying public why it makes sense.”
Amazon executives have stressed their choice of Virginia and New York was not driven by the tax benefits it was offered—and it did turn down significantly bigger incentives from other states—but instead, the prime attraction was the skilled talent pool available that other finalists could not match.
Although the Amazon deal has drawn enormous media attention and sparked growing outrage among some residents in New York and Virginia, such incentives are often given to corporations that bring new business and jobs to a community.
“Amazon is looking for a location where they’ve got a high-quality, competitive workforce, where families can come, they can live in great neighborhoods, and they do want to have a good relationship with the government,” Brown said, “so I think the tax incentives and subsidies that are offered are often more of a reflection of a local government’s willingness to be a partner with the business.”
Amazon’s 14-month search for a home for its second headquarters attracted bids from more than 200 cities around the country, but the company surprised many this week by choosing two locations. Illinois had reportedly offered $2.25 billion in tax incentives to woo HQ2 to the Chicago area, and the city was one of the 20 finalists announced earlier this year.
“I’m disappointed they didn’t choose Illinois. I think we made a great offer on that, but we live in a free enterprise system,” said Rep. Darin LaHood, R-Ill., adding that it is now up to the citizens of New York and Virginia to decide whether the handouts to Amazon are worth it.
“They made the decision on those tax incentives to give those away, but obviously somebody’s got to pay for that,” he said. “I think the people that live in those areas will express their views on it.”