Tax Analysts Blog

Amazon Does the Right Thing

Posted on Jun 3, 2015

Something surprisingly good happened recently in the little city of Shakopee, Minnesota (population 37,000). Amazon was talking about building a distribution center there. Shakopee political leaders were so excited about the prospects of Amazon creating 1,000 full-time jobs and making a substantial investment in the area that they contemplated providing significant incentives to the e-commerce giant. The original idea was to provide tax increment financing to pay for road improvements around the proposed site. They were also thinking of providing property tax incentives as part of the deal.

Obviously, the idea of any government -- let alone that of a small city -- giving money to one of the most successful businesses in American history is ridiculous. Tax incentives are, as I have been saying for 20 years, perniciously ineffective ways of fostering economic development. This situation resembled the legion of other tax incentive gambits: A company decides to invest in a particular place and negotiates "incentives," and then does what it was going to do anyway.

But not this time. Shakopee was prepared to provide direct incentives to Amazon. But Amazon told Shakopee it didn't want them. That's right -- Amazon said no to the tax incentives being offered. Why? Maybe Amazon decided that it would be a good corporate citizen and pay its proverbial fair share. It apparently didn't ask the Minnesota Department of Employment and Economic Development for money either (which it probably would have received). If that's the case, good for Amazon.

Then again, maybe Amazon realized there was opposition in Shakopee to giving tax dollars to a fabulously successful company. Amazon might have thought it wasn't worth the political hassle. After all, not much money was at stake (less than $2 million). I would like to think Amazon is being a good corporate citizen, but I really like the idea that it may have backed off because of potential political opposition to the incentives. Only politicians can stop the scourge of incentives. So if political hassles lead to fewer tax incentives, let's have more political hassles.

In any event, kudos to Amazon.

This post is an excerpt of an article that appeared in State Tax Notes.

Read Comments (1)

emsig beobachterJun 2, 2015

Could this be the beginnings of the real "Citizens United"?

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