Politics & Government

Race To The Bottom: NJ's Quest For Amazon HQ Is 'Insane,' Critics Say

New Jersey's frenzied attempt to woo Amazon includes astoundingly large tax breaks. Here's why that idea is "insane," critics say.

ESSEX COUNTY, NJ — If Amazon chooses to locate its new headquarters in Newark, New Jersey, one of the wealthiest corporations in the United States will get even richer thanks to an estimated $7 billion in tax breaks that are being dangled in front of the company as incentives.

But despite a massive, bipartisan push from Garden State heavyweights such as Gov. Chris Christie, U.S. Sen. Cory Booker and Newark Mayor Ras Baraka, not everyone is thrilled about the plan to offer the corporation an incentive through the state Economic Development Authority (NJEA) that could reach $5 billion over 10 years.

It isn’t just state tax dollars that are at stake. The $5 billion NJEA credit would be in addition to a potential Newark municipal property tax abatement that could be worth $1 billion, as well as a city wage tax waiver worth an estimated $1 billion over 20 years.

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On Monday, two radically different New Jersey think tanks came together at a press conference in Trenton to announce their opposition to “New Jersey’s tax subsidy insanity.”

Although the two groups that hosted Monday’s conference have often clashed regarding state and national policies, the New Jersey Policy Perspective (NJPP) and Americans for Prosperity-New Jersey (AFP-NJ) have found a surprising common ground… their disdain of New Jersey’s offer to Amazon.

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“The groups convening today’s press conference don’t agree on much when it comes to tax and economic policy, but we are in absolute agreement that offering $7 billion in tax breaks to a single corporation is terrible policy and a big step in the wrong direction,” said Jon Whiten, NJPP vice president.

“In order to succeed in the long run, Amazon's new HQ2 needs sound public investments - like efficient and affordable public transit, new affordable homes and more - not enormous tax breaks,” Whiten said. “It's appalling that eight years into a record-breaking surge in overly generous corporate subsidies, New Jersey's political leaders haven't learned their lesson, and are instead leading this national race to the bottom.”

GETTING AMAZON’S ATTENTION

For its part, Amazon has pledged that it will invest more than $5 billion in construction at the new facility.

Supporters of the offer to Amazon have also argued that the company will bring a much-needed commodity along for the ride… jobs.

Christie said that if New Jersey lands the new HQ, it could mean as many as 50,000 new jobs for the state. It would also lead to the creation of a larger consumer base and direct opportunities for local small businesses and vendors to grow and thrive, he added.

“Adding tens of thousands of dedicated and community-oriented Amazon employees and their families will also further enrich our area neighborhoods and schools,” Christie said.

New Jersey Senator M. Teresa Ruiz has said that hosting Amazon would be a “big win” for the city and will also “benefit the entire state, creating tens of thousands of jobs, generating billions in investment and contributing significantly to our economy.”

Several of the plan’s supporters have noted that even without the proposed tax breaks, Newark already has many of the key factors that should be attractive to Amazon.

  • Cory Booker: Newark has a “robust transportation network, a highly-educated workforce, and a central location with strong anchor institutions.”
  • Ras Baraka: “From our data infrastructure, which offers cutting-edge bandwidth and the fastest internet speeds to our unmatched logistical infrastructure with trains, roads, rails, airports and seaport, we can help Amazon move its people and products like no other city can.”
  • U.S. Rep. Donald Payne Jr. – “[Newark Airport], freight rail, a busy seaport, and public transit puts the city ahead of the pack.”

Critics of New Jersey’s $7 billion offer to Amazon agree, noting that tax breaks aren’t the only way to get the company’s attention.

“Instead of relying on taxpayer-funded subsidies to lure Amazon, Gov. Christie should rely on the strengths Newark already offers, like access to ports and freight corridors and its proximity to population centers like New York City and Philadelphia,” AFP-NJ State Director Erica Jedynak said during Monday’s press conference.

“New Jersey has one of the most educated workforces in the country,” Jedynak emphasized, warming up for a pun. “Our state is [already] a prime location for Amazon.”

‘A DEAL WE CAN'T AFFORD'

The idea of offering Amazon some of the largest tax breaks in the state’s history is obscene, especially those that want a fair playing field for all the state’s business owners, including mom and pop shops, critics of the plan say.

“Gov. Christie’s pitch shouldn’t rest on the backs of taxpayers,” Jedynak said. “We can create jobs and improve our economy by creating a consistent, stable business climate with less burdensome regulations and making it easier for folks to start a business.”

According to Jedynak, corporate handouts just skew the system.

“We must work to level the playing field and give all businesses the chance to succeed, not just the ones that draw headlines,” she said.

State Assemblyman John Wisniewksi, a Democrat from District 19, said that the Amazon “bidding war” will only put New Jersey on a downward spiral.

“While the proposal would provide good jobs in the region, it also robs the state of the very revenue needed to address the consequences of such growth and development,” Wisniewksi said.

“If we add 50,000 employees to downtown Newark, where’s the money to maintain and expand the system?” Wisniewksi questioned. “Who would pay for the additional wear and tear on roads or the additional police and firefighters needed to ensure public safety? The simple truth is that if we can’t afford $7 million to provide New Jersey’s low-income women with health care, then we can’t afford $7 billion in subsidies for Amazon, one of the world’s most successful businesses, and its president, CEO and chairman, one of the wealthiest individuals in the world.”

Speaking at Monday’s press conference, Thurston Powers, a legislative analyst at the American Legislative Exchange Council (ALEC), said that targeted tax credits and carve outs benefit the politically connected at the expense of other taxpayers.

If the Amazon-New Jersey deal goes through, the state’s employees, businesses and even retirees will be forced to pick up the slack through higher tax rates, Powers said.

“These politicians will glow in the praise of the very public jobs created and buildings erected by Amazon,” Powers said. “Untold will be the stories of the businesses that leave the state, the jobs lost, or the opportunities unpursued thanks to the higher tax rates imposed on everyone else.”

JUMPING ON THE AMAZON BANDWAGON

To complicate matters, Newark isn’t the only city clamoring for Amazon’s attention. While Christie and some of the state’s most powerful Democrats have thrown their weight behind the Newark proposal, other cities and counties in the Garden State are also asking Amazon to look their way.

Other Garden State cities and counties that have reportedly expressed interest in making bids for the new Amazon HQ include New Brunswick, Jersey City, Galloway Township, Egg Harbor Township and Atlantic City, as well as Camden and Mercer County.

It’s not just New Jersey that’s jumping on the Amazon HQ bandwagon, either. Elected representatives and governments across the nation have been putting together their own packages to offer the retail giant.

So far, the company says that it’s received proposals from 238 cities and government entities across North America.



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Photo: Flickr / Alan Levine


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