2 more watchdogs urge rejection of Amazon tax breaks

·4 min read

Aug. 10—Two more watchdog organizations are urging the Niagara County Industrial Development Agency to reject Amazon's requested tax incentives for its Niagara distribution facility.

Reinvent Albany and the American Economic Liberties Project have issued letters to the agency saying its proposed Payment In Lieu of Taxes agreement represents one of the single largest handouts to Amazon in U.S. history. The letters cite the body of research indicating that tax breaks are not a significant factor in where Amazon decides to build warehouses.

"As any public finance expert can tell you, there is no such thing as 'free money,' " Reinvent Albany policy analyst Tom Speaker said in his letter. "Whether on budget or off-budget, any subsidy for an e-commerce vendor is a bad investment of taxpayer dollars."

Amazon requested about $123 million in subsidies for its proposed facility at 8995 Lockport Road, which include $94 million in property tax abatement, $26 million in sales tax breaks, and $3.55 million in a mortgage recording tax exemption. Amazon would make PILOT payments totaling $49 million over a 15-year period, then pay $9.5 million a year after that.

The development has support among some local Western New York business organizations and unions for the jobs and construction work it would bring to the area while many dissenters, including those who live near the proposed site, are against it due to increased traffic from Amazon's vehicles, the low pay for the warehouse jobs in the facility, and the decreased quality of life for residents.

The American Economic Liberties Project letter is co-authored by OPEIU Local 153, the Amazon Labor Union, New Yorkers for Fiscal Fairness, Good Jobs First, Strong Economy for All, and Fight Corporate Monopolies.

"This is the latest instance of Amazon using secrecy and corrupt backroom negotiations to force a harmful deal onto a local community, with the backing of local politicians," said Pat Garafalo, the director of state and local policy at the American Economic Liberties Project. "There's simply no reason for Niagara, or any locality, to subsidize Amazon's local business model, which is based on burying small businesses and churning through workers. Instead, officials should be mandating that Amazon pay fair wages and provide a safe environment for its employees."

Cited research from Tim Bartik, an economist at the Upjohn Institute for Employment Research, calculates that the tax breaks would cost $8,200 per job, per year. The research indicates business subsidies that cost more than $5,000 per job, per year do not produce substantial benefits for the economy and it would be better for governments to invest in programs that are less costly, such as neighborhood development ($1,300 per job, per year) or customized job training ($3,000 per job, per year).

Reinvent Albany's letter cites a report from the national watchdog organization Good Jobs First, which also recently weighed in against subsidizing the proposed warehouse. That report said Amazon chooses warehouse locations based on the number of Amazon Prime subscribers in the area and access to highway infrastructure, and a survey done by Area Development, a leading corporate site and facility planning resource, in 2021 showed that subsidies were ranked below highway accessibility, availability of skilled labor, and quality of life in where deciding to locate.

"With a large base of Prime subscribers and a reputation for swift delivery, it is extremely unlikely that Amazon would build a warehouse in Canada to service its Niagara customers," Speaker wrote.

Four co-authors of the Americans Economic Liberties Project letter wrote further that Niagara County taxpayers should not subsidize another warehouse given that the child poverty rate in the county is 20% and the workers will be paid $15 an hour.

"This is not economic development, it is a gross misuse of local tax dollars and county resources and a slap in the face to residents," said Ron Duetsch, director of New Yorkers for Fiscal Fairness.

According to Good Jobs First's online Amazon subsidy tracker, $123 million in tax breaks would be one of the largest such subsidies Amazon has received in the United States, lagging only behind subsidies granted in Arlington County, Virginia, Markham, Illinois, the State of Texas, Hermison, Oregon, and Gates, New York.

Speaker said it is baffling to him that NCIDA is considering giving $123 million in tax breaks to a company that's worth $1 trillion, whose profits rose more than 200% during the pandemic and whose founder, Jeff Bezos, has an estimated net worth of $167 billion. Amazon itself received more than $4.7 billion in subsidies worldwide, $4.1 billion of which came from across the United States.

"Niagara County IDA's mission is to shrewdly invest limited public funds — including tax expenditures — in sustainable, affordable ways to encourage the creation of good new jobs," Reinvent Albany's Speaker wrote. "This Amazon warehouse subsidy is a bad deal for Niagara taxpayers and undermines public confidence in the fairness of the tax code and government decision-making."

The NCIDA board of directors is scheduled to vote on the Amazon PILOT agreement Wednesday morning.