Amazon: deal or debacle?


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Is giving Amazon a 5-year sales tax exemption in exchange for locating a distribution center in SC a good idea, or not?

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Amazon: deal or debacle?

  1. 1. Amazon:<br />Deal or debacle?<br />
  2. 2. “Project ASAP”<br />Free land (worth $1m)<br />Employee income tax credit ($3,250/yr)<br />Free worker training (worth $3.7m)<br />Fee in lieu of property taxes<br />Low wages<br />Non-union workforce<br />Lower cost of living/business<br />Lexington county “blue laws” repealed<br />
  3. 3.
  4. 4. “Project ASAP”<br />5-year sales taxes exemption<br />H3488 roll call vote: 71-47<br />NAY: Bowen, Thayer, White, Agnew<br />AYE: Cooper, Gambrell<br />
  5. 5. What the Agreement Said<br />“...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].”<br />Incentive and Inducement Agreement, §3.1.3 (<br />
  6. 6. “They did and reasonable people didn’t buy it.”<br />Rep. Bill Taylor, R-Aiken<br />
  7. 7. Amazon vs. Texas<br />5 year tax break expired<br />Texas billed Amazon for $269 million<br />Amazon refused to pay and threatened to close shop<br />
  8. 8. Amazon vs Colorado<br />“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.”<br />Seattle Times, 5/12/2010<br />
  9. 9. Does “Economic Development” Pay?<br />
  10. 10. “Companies are more interested in the state fighting union 'bullying' and remaining a right-to-work state.”<br />The State, 5/2/2011<br />
  11. 11. Then and Now…<br />‘80s and ‘90s<br />15th fastest growing economy<br />5.2% unemployment<br />Today<br />$2.5b in incentives over more than 20 years<br />Recruited 60k jobs<br />
  12. 12. Now…<br />Lost 120k jobs<br />9.4% unemployment<br />12 slowest growing economy<br />44th lowest per capita income<br />
  13. 13. “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.”<br />Ashley Landess, President, SCPC (4/20/2011)<br />
  14. 14. SC Investment Track Record<br />
  15. 15. $17m incentives to Air South<br />Recruited in 1994<br />Bankrupt in 1997<br />700 jobs lost<br />
  16. 16. Marine Energy Systems<br />Recruited in 1997<br />Bankrupt in 2000<br />700 jobs lost<br />
  17. 17. $25m+ to Western Star Trucks<br />Recruited in 1998<br />Closed down in 2000<br />
  18. 18. $26m to Inspiration Network<br />Recruited in 2009<br />Layoffs, wage freeze, ceases 401k contributions after less than 2 years<br />
  19. 19. Innovista research park<br />$100m facility, unfinished and mostly empty<br />
  20. 20. $40m in hydrogen research<br />Two fuel stations, two cars in the entire state<br />
  21. 21. Freedom vs Socialism<br />
  22. 22. “The highest level of prosperity occurs when there is a free market economy and a minimum of government regulations.”<br />Dr. Cleon Skousen,The 5000 Year Leap<br />
  23. 23. Natural Law applied to business = free marketRuler's Law applied to business = corporate incentives<br />
  24. 24. “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<br />
  25. 25. “I thought economic development was a core function.”Rep. Tracy Edge (R-Horry) to The Nerve on 3/28/2011<br />
  26. 26. An Alternative<br />Repeal ALL sales tax exemptions(we exempt more than we collect)<br />Lower the sales tax rate to around 3%<br />Lower the corporate income tax<br />Lower rate, broader base = more stability<br />More business-friendly environment<br />