Amazon: deal or debacle?

Amazon:
Deal or debacle?

“Project ASAP”
Free land (worth $1m)
Employee income tax credit ($3,250/yr)
Free worker training (worth $3.7m)
Fee in lieu of property taxes
Low wages
Non-union workforce
Lower cost of living/business
Lexington county “blue laws” repealed

“Project ASAP”
5-year sales taxes exemption
H3488 roll call vote: 71-47
NAY: Bowen, Thayer, White, Agnew
AYE: Cooper, Gambrell

What the Agreement Said
“...Subject to available resources and to the extent permitted by law, [Department of Commerce] agrees to use its good faith, best efforts to obtain legislation to renew and extend [the sales tax exemption].”
Incentive and Inducement Agreement, §3.1.3 (http://www.scsbc.org/UserFiles/scsbc/Documents/Amazon%20Agreement.pdf)

“They did and reasonable people didn’t buy it.”
Rep. Bill Taylor, R-Aiken

Amazon vs. Texas
5 year tax break expired
Texas billed Amazon for $269 million
Amazon refused to pay and threatened to close shop

Amazon vs Colorado
“Amazon reacted with punitive petulance, sending a deliberate message to lawmakers in every other state: Make us play by the same tax rules as other businesses and your state will be punished, too.”
Seattle Times, 5/12/2010

Does “Economic Development” Pay?

“Companies are more interested in the state fighting union 'bullying' and remaining a right-to-work state.”
The State, 5/2/2011

Then and Now…
‘80s and ‘90s
15th fastest growing economy
5.2% unemployment
Today
$2.5b in incentives over more than 20 years
Recruited 60k jobs

Now…
Lost 120k jobs
9.4% unemployment
12 slowest growing economy
44th lowest per capita income

“Cutting secret deals for well-connected companies doesn’t foster economic growth. If it did, we’d be one of the most economically vibrant states in the nation rather than one of the poorest.”
Ashley Landess, President, SCPC (4/20/2011)

SC Investment Track Record

$17m incentives to Air South
Recruited in 1994
Bankrupt in 1997
700 jobs lost

Marine Energy Systems
Recruited in 1997
Bankrupt in 2000
700 jobs lost

$25m+ to Western Star Trucks
Recruited in 1998
Closed down in 2000

$26m to Inspiration Network
Recruited in 2009
Layoffs, wage freeze, ceases 401k contributions after less than 2 years

Innovista research park
$100m facility, unfinished and mostly empty

$40m in hydrogen research
Two fuel stations, two cars in the entire state

Freedom vs Socialism

“The highest level of prosperity occurs when there is a free market economy and a minimum of government regulations.”
Dr. Cleon Skousen,The 5000 Year Leap

Natural Law applied to business = free marketRuler's Law applied to business = corporate incentives

“I want to take the calculated riskto dream and build,to fail and to succeed.I refuse to barter incentive for dole.”The Republican Creed

“I thought economic development was a core function.”Rep. Tracy Edge (R-Horry) to The Nerve on 3/28/2011

An Alternative
Repeal ALL sales tax exemptions(we exempt more than we collect)
Lower the sales tax rate to around 3%
Lower the corporate income tax
Lower rate, broader base = more stability
More business-friendly environment

Amazon: deal or debacle?

by Jonathon Hill on May 10, 2011

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