Amazon is fleecing taxpayers. Strangely, socialists are the ones saving us

Alexandria Ocasio-Cortez, darling of the left, has done a service to free enterprise.

This article, by Lawrence Solomon, was first published by the National Post

“AMAZON PULLOUT. Thanks For Nothing, AOC!” reads a billboard that went up in New York City’s Times Square this week, complaining that Alexandria Ocasio-Cortez is responsible for “25,000 Lost NYC Jobs. $4 Billion in Lost Wages. $12 Billion in Lost Economic Activity for NY.”

The billboard, sporting the hashtag #SocialismTakesCapitalismCreates, is paid for by the Job Creators Network, an advocacy organization funded by conservative foundations and corporations. They and the numerous other presumed champions of free enterprise who are lavishing praise on the billboard would have served their cause better had the billboard title been abbreviated to just “Thanks, AOC!” On Amazon, Ocasio-Cortez, the Democratic New York congresswoman and darling of the left, has done a service to free enterprise by vanquishing what would have become one of America’s most egregious examples of big business getting in bed with government.

There is nothing praiseworthy or capitalistic about governments giving Amazon or any company US$3 billion in tax breaks. A few conservative organizations — National Review and The Federalist among them — did, to their credit, back Ocasio-Cortez’s criticism of New York’s corporate-welfare offer. But many of those claiming conservative credentials who voiced their views, including Fox News commentators and Breitbart, for the most part sided with New York Governor Andrew Cuomo and New York Mayor Bill de Blasio in mocking Ocasio-Cortez for her belief that the US$3 billion could have been better spent elsewhere.

“There’s no money” to spend elsewhere, said de Blasio, who saw Amazon’s move to New York as a freebie: “And that $3 billion that would go back in tax incentives was only after we were getting the jobs and getting the revenue.”

Memo to Mayor de Blasio. There is no free lunch for New York, only for Amazon. Every advantage you and your political allies give Amazon acts to disadvantage Amazon’s competitors, reducing their profitability and the tax revenues they’re able to generate for you. That disadvantage is most dramatic in the retail apocalypse in bricks and mortar stores — in addition to the carnage seen to date, over one quarter of the remaining shopping malls in the U.S. are expected to go bankrupt in the next few years, representing the loss of thousands more stores and tens of thousands more jobs.

Amazon’s strength lies largely in an army of lobbyists skilled in gaming the system. According to Bloomberg, Amazon lobbies more government agencies on more issues than any other tech company, to ensure that government policies on taxes, on transportation, on the postal system, on everything important to its bottom line go its way. Amazon outcompeted bricks and mortar stores for two decades through lobbyists that convinced politicians to exempt taxes on the out-of-state sales of online merchandise. With the recent ruling by the U.S. Supreme Court that allows states to start taxing such sales, Amazon’s lobbyists will be turning their efforts to burdening its small competitors with regulatory compliance costs that maintain Amazon’s advantage.

According to the non-partisan Institute on Taxation and Economic Policy, while profitable major corporations have paid an average of over 21 per cent in federal taxes, over the last 10 years Amazon’s use of tax loopholes has lowered its average to just three per cent. In the last two years, during which it earned US$16.8 billion in profits, it paid no federal income tax at all, thanks to its use of unspecified tax credits and executive stock options.

Amazon’s army of lobbyists is skilled at extracting taxpayer subsidies for an astonishing number of its developments. Apart from the US$3 billion from New York that Amazon decided to abandon, in the last year alone it obtained US$750 million from Virginia for a headquarters, US$102 million for a Nashville logistics centre, US$30 million for a Boston robotics facility and US$5 million for a lowly North Carolina warehouse fulfillment centre. Plus the subsidies it receives from the United States Postal Service, whose package operation effectively operates as an arm of Amazon.

“Socialism takes and capitalism creates,” states the Job Creators Network, whose other motto is “The best defence against bad government policy is a well-educated public.” To live up to the latter motto, it need update the former to state: “Socialism takes, capitalism creates, and Amazon is on the take.”

Lawrence Solomon is executive director of Toronto-based Consumer Policy Institute. LawrenceSolomon@nextcity.com.

About Lawrence Solomon

Lawrence Solomon is one of Canada's leading environmentalists. His book, The Conserver Solution (Doubleday) popularized the Conserver Society concept in the late 1970s and became the manual for those interested in incorporating environmental factors into economic life. An advisor to President Jimmy Carter's Task Force on the Global Environment (the Global 2000 Report) in the late 1970's, he has since been at the forefront of movements to reform foreign aid, stop nuclear power expansion and adopt toll roads. Mr. Solomon is a founder and managing director of Energy Probe Research Foundation and the executive director of its Energy Probe and Urban Renaissance Institute divisions. He has been a columnist for The Globe and Mail, a contributor to the Wall Street Journal, the editor and publisher of the award-winning The Next City magazine, and the author or co-author of seven books, most recently The Deniers, a #1 environmental best-seller in both Canada and the U.S. .

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