Amazon HQ2: Chicago offers tech giant $1.32bn of its worker's income taxes to host its new headquarters

Report by Good Jobs First non-profit organisation said such practices mean 'workers are, in effect, paying taxes to their boss'

Ben Chapman
Monday 27 November 2017 12:16 GMT

American cities have been accused of “surrendering” to corporations and using democracy as a “bargaining chip” in their desperate bids to woo Amazon.

The e-commerce giant said last month that it had attracted 238 offers from cities that want to be the location for Amazon’s second headquarters. The company says it will spend $5bn (£3.8bn) on the new base, known as “HQ2”, which will employ 50,000 people.

Several of the cities’ bids have been published, revealing the lengths that authorities are willing to go to lay out the red carpet for big businesses.

Chicago and the state authorities of Illinois have jointly offered to hand Amazon more than $2bn in tax breaks, including $1.32bn of its workers’ income taxes. The scheme, known as a personal income tax diversion, would mean Amazon workers pay full income taxes, but instead of the state getting the money to use for schools, roads and other public services, Amazon would keep it.

A 2012 report by the Good Jobs First non-profit organisation said such practices mean that “workers are, in effect, paying taxes to their boss”.

Even Chicago’s offer is dwarfed by the $7bn in incentives tabled by the Republican governor of New Jersey, Chris Christie, a former ally of President Donald Trump. The proposal includes paying Amazon up to $10,000 for every job it creates and comes despite the fact that New Jersey has around $60bn in unfunded pension obligations, according to CNBC.

Critics have said that Amazon does not need tax breaks.

The company’s share price has soared, boosting founder Jeff Bezos’ personal fortune by more than £32bn this year and recently making him the only person in the world worth more than $100bn.

Other cities have made up for lower cash incentives by offering Amazon unusually close access to the corridors of power.

Boston’s published bid includes the offer to create an “Amazon Task Force” of city employees who would focus on fulfilling the company’s needs.

Fresno, in California, has promised to put 85 per cent of taxes paid by Amazon into a fund which would be ringfenced from normal taxation and overseen by a board made up of city officials and Amazon representatives.

The rash of proposals have attracted criticism from US commentators, with Michael Hiltzik of the Los Angeles Times describing the spectacle as a “parade of municipalities draping themselves in their most alluring swimsuits”.

Danny Westneat, a columnist writing in The Seattle Times, a newspaper in Amazon’s home city, questioned whether some of the proposals are even legal, labelling them a “surrender” of democracy to corporate interests.

“A single company is viewed as such a shiny prize that some seem ready to wave the white flag on the whole ‘for the people, by the people’ experiment,” he wrote.

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies


Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in