Cities, counties and states positioning themselves to become the next host of Amazon’s second headquarters, known as Amazon HQ2,. such as Montgomery County, Maryland, Northern Virginia, and Atlanta, Georgia, may be engaging in what might be called “corporate welfare.”
A Millennial grassroots non-profit, Generation Opportunity, part of the Koch-affiliated non-profit network of organizations, published created a digital ad railing against corporate welfare geared towards Amazon HQ2. In the ad, several city pitches were highlighted, showing how far city officials would go to offer benefits to a successful and wealthy corporation.
You can view the ad below:
Studies have shown that corporate welfare does not boost the local economy. As the Mercatus Center, a free-market academic think tank, pointed out in 2012, corporate handouts and tax breaks make corporations less efficient because they end up “distort[ing] the entire economic system by altering spending on goods and services; distorting capital allocation; changing the distribution of income; and encouraging lobbying and rent-seeking to maintain and expand these provisions.”
Mercatus’s report gave an example, which is applicable to Amazon and their HQ2 push:
[C]orporations must divert significant resources away from pro-growth activities to the non-productive—but critical to compete with other U.S. corporations— activity of fighting for more and bigger tax breaks.