Watchdog Urges Niagara County IDA To Give No Subsidies To Amazon Warehouse

Reinvent Albany urged the Niagara County Industrial Development Agency to reject a deal giving a proposed Amazon warehouse $123 million in tax breaks, and would be one of the largest single handouts to Amazon in US history. The group cited the wide body of research finding that Amazon warehouses do not benefit the local economy, as well as research by Good Jobs First showing that tax breaks are not a significant factor in where Amazon decides to build warehouses. Multiple advocacy groups and unions have come out in opposition to the project.

The letter is here and below.

August 5, 2022

VIA EMAIL

Niagara County Industrial Development Agency

To the Niagara County Industrial Development Agency:

Reinvent Albany urges you not to provide the proposed Amazon warehouse with $123 million in subsidies. We advocate for government transparency and accountability and fact-based decision making. 

As any public finance expert can tell you, there is no such thing as “free money.” Whether on budget or off-budget, any subsidy for an e-commerce vendor is a bad investment of taxpayer dollars. Multiple studies have shown that when Amazon warehouses are built, warehouse wages actually drop, and new fulfillment centers do not produce a significant rise in broad-based employment. Niagara County’s tax dollars would be better spent elsewhere.

Tim Bartik, an economist at the Upjohn Institute for Employment Research, has calculated that business subsidies that cost more than $5,000 per job per year do not produce substantial benefits for the economy. It is far 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). The tax breaks proposed by Amazon – $123 million for 1,000 jobs over 15 years – would cost $8,200 per job per year, which would have little to no economic impact.

Research has also shown that subsidies are not a deciding factor in where Amazon locates its warehouses. The watchdog organization Good Jobs First has demonstrated that Amazon chooses warehouses based on the number of Prime subscribers in the area and access to highway infrastructure. One corporate survey also found that when deciding where to locate, companies rank subsidies under highway accessibility, availability of skilled labor, and quality of life. 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.

It is baffling to us that you are seriously considering giving $123 million in tax breaks to a trillion-dollar company whose profits rose more than 200% during the pandemic. Amazon’s founder, Jeff Bezos, has an estimated net worth of $167 billion and is currently the third-richest person in the world. NCIDA cannot justify giving the company such a large sum, which would be the fourth-largest Amazon warehouse subsidy in US history.

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. 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.

Sincerely,

Tom Speaker
Policy Analyst
Reinvent Albany