[Excellent analysis of the real impact of Amazon HQ2 coming to your town. The true impact of the latter day Citizen Kane ain’t what it’s cracked up to be. Same with Google and Facebook.]
Despite arguments in support of economic development subsidies, both theory and experience suggest that cities and states are throwing their money away when they court Amazon’s favor through subsidies. Even subsidies worth billions of dollars are unlikely to sway Amazon’s decision. Worse, these kinds of targeted economic development incentives fail to produce economic growth.
In this study, we examine the publicly-known subsidies offered to Amazon as enticements to locate its second headquarters. We show that these subsidies are unlikely to alter the location decision of the company, or lead to economic growth for the communities that offer them. We illustrate the tradeoffs that these subsidies would require in terms of forgone tax cuts and alternative uses of these funds for public services, like safety and education. Lastly, we offer examples of institutional reforms—constitutional gift clauses, direct democracy, and interstate compacts—that could reduce the number of corporate subsidies in the future.
Read the post on the Mercatus Center