When a large company decides to expand or move its headquarters, it takes many factors into consideration; the labor market, transportation, the “amenities,” which means that there are things that make employees want to live there (or at least not leave there), and bribery.
Bribery? Yes, absolutely.
It is impossible to make a sound business decision on relocating without being offered a bribe. Well, “offered” is not quite the right word to use in this instance because the corporation actually solicits the bribe and then the local government agrees to it.
The huge e-retailer Amazon has spent the last couple of years soliciting bribes from states, cities and for all I know, garbage districts in order to make a sound corporate decision of where to locate its second headquarters, which they call HQ2. At one point, they had some 238 government agencies offering incentives ranging from simple self-promotion to the $9 billion offered by the city of Newark, New Jersey (which, if the truth be known, would still be way shy of what it would take to lure me there).
They surprised everyone by not picking the highest bidder. They have chosen to make Arlington, Virginia, across the Potomac River from Washington, D. C., the location for the second headquarters. All this for the bargain bribe of about $742 million in incentives offered by Arlington and the Commonwealth of Virginia.
It’s not cold cash, as you would suspect a bribe to be, but whatever form it takes it will be ultimately paid for by the taxpayers, which will not include Amazon. That’s because Amazon, which is the 13th largest corporation in the world, doesn’t like to pay taxes, so they don’t. In 2018, they had their best year ever, bringing in some $11 billion in profits and paid absolutely no federal corporation tax. Nada. Zip. None. And if they are not paying income taxes to the IRS, they will not be paying it to the Virginia Department of Taxation.
Amazon, which is, I repeat, the 13th largest corporation in the world and run by the richest man in the world, Jeff Bezos, is the up-to-date equivalent of the mythical welfare queen driving to the store in her new Cadillac, although Amazon will drive a Boeing 777.
While the Amazon deal is huge, it’s common practice for companies to ask for, and get, corporate welfare from the governments. And, just like Amazon, they play state governments against one another to compete for their re-location.
One interesting battlefield was between Kansas City, Kansas, and Kansas City, Missouri, where a company could engineer a better offer from a local government simply by relocating over the state line. A couple of days ago, the Republican governor of Missouri and the Democratic governor of Kansas finalized an historic agreement that would deny companies tax subsidies if they just moved across the border in the greater Kansas City area.
American state and local governments spend $50 billion a year trying to lure businesses away from each other, usually without economic rewards to the winning bidder.
Finally, this rant of mine wouldn’t be complete without bringing up football stadiums and baseball parks. Sports teams convince local governments that if they don’t get a new stadium they will go where they can get one. “Obtaining money through a threat is the definition of extortion,” according to Fox Sports.
The cities pay for the stadiums, which means the local taxpayers foot the bill, and for a comparatively modest fee a corporation can buy “naming rights” and have the stadium named after themselves. I am waiting for the day when an NFL team plays their first game in “Taxpayer Stadium.”
Jim Elliott served sixteen years in the Montana Legislature as a state representative and state senator and four years as chairman of the Montana Democratic Party. He lives on his ranch in Trout Creek. Montana Viewpoint appears in weekly papers across Montana and online at missoulacurrent.com.