Is Amazon Kern County’s newest welfare queen? According to the Nov. 2 article ("Kern proposes $3 million hiring incentive for Amazon"), “The incentive package would give annual refunds to one of the world’s most valuable companies in an amount equal to half its combined property, sales and use tax bills for 11 years.”
In exchange, Amazon would be required to create 1,000 new jobs for Kern County residents. That sounds pretty good on the surface. The question is, is this the best way for a county government to develop the local economy? And, it turns out, Amazon is only the second recipient of the Advance Kern Incentive Program created by the Kern County Board of Supervisors in 2017. The other is L’Oreal USA, with a $2.3 million tax rebate package, this one only creating 155 jobs. Yes, of course, it’s wonderful that the county has new businesses and new job opportunities, but at what cost? If this is the second company, that means there are potentially more in the pipeline.
We must ask ourselves, first, why do companies need to get tax breaks? Aren’t they going to build a factory and employ people regardless because their business model is responding to market demand? And second, if the county can afford this, why did it put a 1 percent sales tax increase proposal on the ballot, which ultimately failed? This is true corporate welfare at its best: Business gets a break, the average working Joe pays more.
The definition of capitalism and free markets is that businesses can compete with each other on a level playing field, unencumbered by too much government interference. Ha — companies don’t want government interference when it comes to safety and environmental concerns put in place to protect citizens, yet somehow government interference is fine when it involves a taxpayer handout. Additionally, how is it an equal playing field for a large company like Amazon to get a $3 million tax break, but for smaller distribution companies to get no tax break?
In David Cay Johnston's book, “Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill),” he shares many examples across the country of deals just like the one Kern County is involved in with Amazon. The biggest and most famous company he profiled was Walmart. Johnston writes, “Sam Walton practiced corporate socialism. As much as he could, he put the public’s money to work for his benefit, taking every dollar of government welfare he could get.” In that chapter, we learn that Walmart received its tax breaks from many states and counties through the method of keeping the sales taxes it collected. While customers at the checkout counter believed their tax dollar was going to their state and county to fund schools and roads, instead it went into Sam Walton’s pocket. According to Mona Williams, a Walmart spokesperson in an interview with the New York Times, “Over the previous decade Walmart had collected more than $52 billion in sales taxes from its customers.”
Citizens of cities, counties and states have collectively decided through their vote that taxing themselves is worthwhile for the common good, and that since businesses and corporations also use services such as fire and police, roads and bridges, water and sewage, these businesses and corporations must also be taxed.
Giving tax incentives to businesses can be a slippery slope and not necessarily beneficial. Richard Florida, senior editor at The Atlantic, in his article, “Handing out tax breaks to businesses is worse than useless,” details a new study, “exposing the futility of the $45 billion that states spend on economic development incentives.” And, one of the most conservative groups in the nation, Americans for Prosperity, in the article, “Amazon’s HQ2 and the Hidden Cost of Corporate Welfare,” cites which cities are in the running. The article states, “Fortunately, some cities are refusing to provide taxpayer-funded incentives in the bidding war.”
Rather than make money the old-fashioned way, by selling a product at a lower price, or of better quality, this new method industry has devised to make money — extorting a community, a “pay up or we’ll take our business somewhere else” mentality — is a sight to behold. This is what some call capitalism? It sounds like thuggery to me.
Though it is probably too late for the Amazon deal, I urge the Kern County Board of Supervisors to reevaluate its economic incentive policies.
Patsy Ouellette, of Bakersfield, is a retired teacher.