the high cost of subsidizing huge corporations

There are so many ways we subsidize obscenely wealthy corporations that don’t actually need the money other than built-in greed in the corporate structure.  For example:

Johnston explained how the process typically works: “You come in as Walmart or Home Depot or Lowes and say, ‘I want to build a store on that land, and the guy who owns it doesn’t want to sell it.’ ” In its eagerness to entice the company to build there, the local government might seize the land through eminent domain and then sell municipal bonds—essentially borrowing money—against the lease on the store. The chain then builds its store and parking lot and employs local people to work there. The bonds that the government issued, meanwhile, are repaid not by the company but through residents’ sales taxes. “When you check out of a Walmart that has this deal, and you pay eight dollars and change in sales tax, that money does not go to cops, library, schools, or parks,” Johnston told me. “That money goes to pay the bonds.” Approximately ninety per cent of Walmart distribution centers were built this way, according to Johnston. The situation is exacerbated by the fact that states, and even different municipalities within states, can compete with one another to offer the most generous subsidies and the lightest regulation, leading to an arms race of giveaways. “Often these things turn out to be complete frauds,” Johnston said. Multiple studies have shown that some short-term economic benefits may accrue to the community that has extended the tax breaks, but, over the long term, there is little positive benefit (and often none) because the practice saps money from public education and infrastructure, which is extremely harmful to a local economy.

While the article goes on to say how the Amazon deal might have been different, I don’t agree. The underlying premise, the leaching of local resources, still inflicts long term damage. Three billion dollars is an obscene amount of money to throw after a company that simply does not need it. Amazon could have just set up its offices there without the additional pay-off that would leach even more resources away from the community.

Does Amazon’s Retreat from New York Signal the End of Corporate Subsidies?

Does Amazon’s Retreat from New York Signal the End of Corporate Subsidies?

The company’s proposed headquarters in Queens was a more complicated case than most.

Source: www.newyorker.com/business/currency/does-amazons-retreat-from-new-york-signal-the-end-of-corporate-subsidies

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