As more details are released about the new Amazon headquarters in Virginia and New York, citizens of Raleigh should breathe audible sighs of relief that we dodged the Amazon bullet.
From the start of the process, Amazon established itself as the party with all the leverage. Cities across the nation engaged in a nationwide talent show to draw the attention of the multi-billion-dollar company. Offers for landing the tech giant ranged from promises of a “blank check” in Maryland to 0 percent property taxes for 15 years in New Jersey. Wake County offered its largest-ever tax incentive to Amazon at $277 million to entice the company.
Ultimately, Amazon chose northern Virginia and Long Island as the spots to construct its new headquarters. These two states have given Amazon more than $2 billion in combined tax incentives. Amazon will massively benefit from these huge government subsidies that were used to lure the company, which had to contribute fairly little in return. These subsidies offered by the state government are not free of cost. The taxpayers are the ones who must pony up the price of such large incentives.
Closing on such deals sets a dangerous precedent for future companies looking to establish themselves in such cities. Companies will take notice of the tax incentives Amazon was offered and will request similar deals.
In a state such as North Carolina that desperately needs tax dollars to improve our government functions like education and infrastructure, a $2 billion tax break to an already extraordinarily wealthy company would be an incredible waste of opportunity.
In addition to being burdened with paying for Amazon’s tax subsidies, residents in these cities will have to bear the cost of having their cities rapidly converting to tech hubs. The influx of employees to these areas will cause the demand for housing there to skyrocket. Additionally, the property taxes in these cities are sure to be inflated by the appearance of the retail giant.
Raleigh has already entered what many describe as an affordable housing crisis, with the cost of homes in Raleigh being exorbitantly high. A struggling Raleigh Housing Authority is doing little to nothing to provide truly affordable housing options to lower-income people in the area.
Allowing Amazon to develop its new hub here would have greatly exacerbated the problem we are currently seeing. The prices of homes in Seattle, where Amazon’s main headquarters is located, have soared by around 73 percent in the past five years, with rent also rising by about 31 percent.
In a city that is already struggling to combat gentrification, the development of a headquarters for a mega-company like Amazon would ensure that gentrification has no end in sight. Amazon promised to bring 25,000 jobs with an average salary of more than $150,000 a year. Such a promise is great for highly-skilled workers, but for low-skilled workers, the vow only means higher costs of living with stagnated wages.
Amazon would have brought fortunes to many qualified workers in the area, but the presence of the company would have also devastated the lives of many small business owners within Raleigh. Small or medium-sized tech firms in Raleigh would have taken sizeable hits to their applicant pools with the entrance of Amazon into the city.
The costs associated with bringing Amazon to Raleigh would have been clearly defined. Taxpayers would have been subsidizing the company’s move-in, and low-income citizens would have economically languished for the foreseeable future.
The benefits of Amazon coming to New York and Virginia, however, are still nebulous and will continue to be until the process is actually materialized. Raleigh should be glad to have missed out on such a one-sided arrangement, but it should remember this lesson for the next time a mega-company expresses interest in our city.
