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Amazon wins record US tax breaks to expand delivery network

Amazon wins record US tax breaks to expand delivery network

NurPhoto | Amazon

Amazon has won a record amount of tax breaks this year as local officials try to lure the online shopping giant to expand its one-day or same-day delivery networks in their areas.

According to data from Good Jobs First, an economic development watchdog based in Washington, DC, Amazon has so far secured about $650 million in sweeteners from local and state governments in 2021, a mixture of grants, tax exemptions, and other incentives. This was likely to be a conservative estimate, the group said, because of the secrecy around some of the deals.

With three months still to go, 2021 already has the largest yearly tally since Good Jobs First began collecting the data in 2000, excluding incentives for non-logistics projects, such as filmmaking and office development, and the more than $750 million package Amazon was awarded in 2019 to build its “second” headquarters in Arlington, Virginia.

The bumper deals for Amazon’s delivery network come as local authorities grapple with rebuilding their economies and job markets in the wake of the coronavirus pandemic, a crisis that has seen Amazon’s profits soar because of its pivotal role in distributing goods during lockdown and beyond.

“I was hopeful public officials would step back and say: ‘We’re in such a difficult situation, we have to stop subsidizing very wealthy companies,’” said Kasia Tarczynska, research analyst at Good Jobs First. “Unfortunately, it’s the opposite.”

“Amazon should stop asking for any kind of incentives,” she added.

Amazon has defended the practice, pointing to its record of job creation and saying that in many cases it was taking up offers that were on the table for any business, not just Amazon.

“These incentives are typically available to any firm that meets the criteria and companies do not receive a penny until after they have created jobs and made capital investments,” Amazon said. “In 2020 alone, Amazon invested $150 billion in the US, opened more than 100 sites and created more than 400,000 jobs across more than 40 states.”

The company also referred to statements from the Progressive Policy Institute (PPI) describing Amazon as its top “investment hero.” Like several other large companies, Amazon is a donor to PPI. The think tank would not disclose how much it had received from the company but said its research was based on “published financial data and [used] a clearly-documented methodology.”

Including breaks relating to corporate offices, Whole Foods grocery stores, Zappos warehouses, the company’s movie and television productions, and even a fashion studio in New York City, Amazon has received “at least” $4.1 billion in incentives since 2000, Good Jobs First has calculated. Secrecy makes a precise tally difficult. In some cases, tax breaks are voted on prior to confirmation that the beneficiary will be Amazon, and in other cases dollar amounts are never disclosed.

The e-commerce giant is aggressively adding warehouses as it seeks to cut delivery times in more markets across the US. The company’s capital expenditure has rocketed from $16.8 billion in 2019 to $40.1 billion in 2020. As of the end of this year’s second quarter, Amazon said capex had reached $26.4 billion.

Meanwhile, the company has petitioned local officials for incentives, often via third-party development companies.

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