Time to Stop Subsidizing Amazon
Amazon Prime Day has come and gone, and the tech giant’s big HQ2 reveal is just around the corner. This is a company that knows how to generate buzz, even while withstanding 280-character body blows from the president.
But Amazon’s constant display of fireworks for consumers and investors and the president’s predictable barrage of criticisms have something in common: They are distractions from an issue that deserves a lot of attention.
Massive sums of corporate welfare factored into the rapid expansion of Amazon’s all-inclusive subscription service and the company’s platform in general over the past few years — all at the expense of local communities. Lawmakers around the country must think long and hard before giving another penny to the third-richest company in the world.
Here’s a red flag: While analysts say the true value of the Amazon Prime bundle — Prime Pantry, Prime Music, Prime Photos, Prime Reading, Prime Video, Prime Wardrobe — is over $780 per year, members pay only $119. How is Amazon able to effectively give away more than $660 to 100 million Prime members every year without destroying their business model? The answer has a lot to do with the fact that the company has received $1.5 billion in taxpayer subsidies at the state and local level since 2000.
Reams of taxpayer dollars have ended up in Amazon’s coffers as a result of the tech giant’s vast lobbying apparatus, which has opened a direct line of communication to local public officials and facilitated endless sweetheart deals and special treatment. From 2000 to 2017, Amazon spent at least $9.8 million on state lobbying and made over $6 million in campaign contributions. In fact, according to company reports, Amazon spent a total of almost $14 million on non-federal “government relations efforts” from 2013 to 2017. All told, Amazon has lobbied more government entities than any other tech company over the last five years.
Meanwhile, local communities and small businesses have paid a steep price for Amazon’s strong-arm tactics. Taxpayers have lost out on more than $700 million in sales-tax revenue, money that could be used to improve schools, modernize transportation systems, and expand access to health-care services. Amazon’s unwillingness to pay its fair share has decimated good-paying jobs and small businesses — especially small retailers, which are closing at alarming rates. And despite the tech giant’s claims that its warehouses and fulfilment centers add local jobs, it is cold comfort coming from a company that pays its employees an average salary of less than $29,000 per year. Moreover, the data clearly show that private-sector employment does not increase after Amazon moves into town.
When small businesses resort to selling their wares on Amazon’s e-commerce platform, they face exorbitant fees that make it impossible for them to compete against big brands. Third-party sellers have also complained for years that the tech giant uses data about sales trends to manipulate and drive down prices. This all raises the question: Who exactly is Amazon talking about when it says that Prime and its e-commerce platform in general is a boon to small businesses?
During a time when Amazon is fishing for unprecedented amounts of corporate welfare for its second headquarters, often called HQ2, Prime Day ought to serve as a wake-up call for state and local lawmakers. Taxpayers have forked over enough of their hard-earned money to the third-richest company in the world to help make its flagship subscription service possible in the first place. Amazon generated more than $177 billion in revenue last year alone, and they can most certainly afford to build a second headquarters on their own dime.
It is time for public officials to stand up to Amazon on behalf of local communities and small businesses. Enough is enough.
Robert B. Engel is the chief spokesperson of the Free & Fair Markets Initiative, a nonprofit coalition focused on supporting a modern, fair marketplace that serves the best interests of small businesses, local communities, and everyday Americans.