This City Hall brought to you by Amazon

"It feels like a dicey moment for the 'civic black hole.' Also known as democracy."

There's rising worry that corporations are taking over America. But after reviewing a slew of the bids by cities and states wooing Amazon's massive second headquarters, I don't think "takeover" quite captures what's going on.

More like "surrender."

Chicago has offered to let Amazon pocket $1.32 billion in income taxes paid by its own workers. This is truly perverse. Called a personal income-tax diversion, the workers must still pay the full taxes, but instead of the state getting the money to use for schools, roads or whatever, Amazon would get to keep it all instead.

"The result is that workers are, in effect, paying taxes to their boss," says a report on the practice from Good Jobs First, a think tank critical of many corporate subsidies. [...]

The most far-reaching offer is from Fresno, California. That city of half a million isn't offering any tax breaks. Instead it has a novel plan to give Amazon special authority over how the company's taxes are spent.

Fresno promises to funnel 85 percent of all taxes and fees generated by Amazon into a special fund. That money would be overseen by a board, half made up of Amazon officers, half from the city. They're supposed to spend the money on housing, roads and parks in and around Amazon. [...]

Is it even legal to give a company direct sway over civic spending like that? When asked about it, Fresno's economic-development director threw the public interest under the bus.

"Rather than the money disappearing into a civic black hole, Amazon would have a say on where it will go," he told the Los Angeles Times. "Not for the fire department on the fringe of town, but to enhance their own investment in Fresno."

You poor fools out on the fringe of town. All this time you've been paying your taxes, thinking it was for the broader public good. Suckers.

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23 Responses:

  1. robert_ says:

    Essay question: when are the people going to rise up against this corporate takeover?

    • extra88 says:

      Never. Once Walmart came to each town, all the artisanal torch and pitchfork shops went out of business.

  2. B says:

    I loved the outrage over this article - great work encyclopedia browns, without groundbreaking research like this giant corporations would never get away with paying less tax! And by "love" I mean "this is literally how all tax deductions and incentives work, period." The difference between this and Apple paying no income tax is (a) it's a little more transparent and (b) appears to (maybe) require Amazon actually employee local workers to get a benefit.

    It really appears as if no one realized all corporate tax breaks are not paid for by some mythical pot of money / BTC printing press - they are _subsidies_ paid for by the taxes everyone else pays. Winners win, losers subsidize (hint: we're mostly losing). Amazon might be brazen but it's literally no different than the taxpayers funding Levi's stadium - money for schools, or money for sports stadiums? Money for infrastructure, or to make Bezos richer?

    • jwz says:

      There is no outrage more shallow than your "Pffff, I kinda knew that already" outrage.

      Is it your position that there should be no reporting on specific egregious acts in any case where your personal cynicism has already led you to predict that "something like that was probably gonna happen anyway"?

      • B says:

        Not "kinda knew," "absolutely knew." This is no different than Foxconn opening a plant in Wisconsin - the state gave them a 3bn subsidy. By "one measure, the subsidy from Wisconsin taxpayers could more than cover the salaries Foxconn will pay its workers" and "voters might wish to ask just why each Wisconsin household is stuck with a nearly $1,200 bill to subsidize a company." Note the source of the subsidy - the taxpayers. Closer to home, you may have heard of the "CA Film Credit." The one where the state subsidizes film and television production - each resident of the golden state (you and I) contribute about $8 a year to a broke movie studio. Every man, woman, child.

        I do think journalism like this is very important - but it's not exactly hard to find. MSM, NPR, alt media, some pulitzer prizes, it's not unicorn journalism. My main position is really "a well-informed citizen should absolutely know this already." You can still be outraged, but the level of shock and awe I saw trend over this particular way of phrasing "subsidy" was truly heartbreaking. Seriously, it means no one is paying attention, because these are not back room deals. They announce them with great fanfare! Subsidies which basically _never_ make sense (which you know, having posted about the Super Bowl and other norcal boondoggles).

        Anyway, I just wish this article didn't literally shock to so many people. Because you can be an informed and involved citizen, voting, communicating with your representatives, and making a little bit of a difference. And lest that be some sort of joke, it's not - from my view in San Diego I saw the people vote against giving 1bn to the football team for a new stadium. The team left, but oh well, guess who didn't give away 1bn to a billionaire? The taxpayers in San Diego. You can fight back, even if it's just a little. Just stay informed and engaged...

        • margaret says:

          The Chargers not getting subsidized had more to do with them sucking-ass on the field while antagonizing the citizens of the non-sports-town San Diego off the field than some kind of tax-payer revolution.

          For anyone else that cares to be as well informed as B, who seems to have been pre-non-outraged-by-non-unicorn-journalism by sitting on his sofa and watching the Nov 5 2017 episode of Last Week Tonight with John Oliver, from whence he extracted his two examples:

          • B says:

            FWIW yes the Chargers sucked and yes, their owners were greedy, but it really was a relatively successful (and rare) voter rejection of a sport stadium giveaway. No different than Levi ("oh it's just a hotel tax! you won't pay a dime") except it (a) intersected with the needs of the convention center and (b) hotel tax revenue is...drum roll...just general revenue that can be used for anything. And the voters rejected it - good for them (us).

            Maybe it's just me but I have seen literally thousands of posts about the damned "amazon stealing income tax from the peasant workers" article. I guess it's good the people want to pick up the pitch forks, but seriously, it's a little late and you haven't been paying attention. So the outrage comes off a little hollow - oh maybe now we'll pay attention, how DARE they? In case no one noticed the entire federal tax code is also in play right now - maybe you should read some of those articles and make a few calls as well, not sure but maybe it might impact you? Otherwise you'll be in for a few more shocked, shocked, who could have ever known? articles next year.

            • jwz says:

              Look, you sound pro-pitchfork? Great! More people are feeling pitchforky. Maybe complaining about them being late to the party isn't the most important thing to focus on.

              • B says:

                Probably right - but from my perspective a much better argument can be made holistically, using all of the data and acknowledging this is not some new-fangled issue. If I lived in in Illinois and called my representative furious about the income tax part of the incentive ("Amazon stealing the workers paycheck! Boston tea party!") the argument is a lot worse than "you know, the last 100 times a business got a tax break the business won and the taxpayers lost." If this is a spring board, great. But it just saddens me because it means seriously, lots of people are clueless and don't even know what they are trying to spear with the pitchfork.

              • Penguin Pete says:

                I think I'm getting a pitchforky feeling... wait, no... my mistake, it's a tridenty feeling. Close enough.

  3. Tim says:

    I'm amazed (but obviously shouldn't be) that this play is still available after Boeing did much the same thing in 2001 (and 2003).

  4. Thomas Lord says:

    tl/dr: the wage-labor-has-no-value future that robots will bring about is already here. even as the whole enterprise of the capitalist epoch crumbles under the looming threat of 100% malemployment, cities are still run by and populated by people so desperately invested in the Fetish that they are trying to pay capitalists for jobs!

    PAY THE CAPITALISTS TO MAKE US WORK SO THAT WE CAN ALL CONTRIBUTE TO FREEDUJMB. THANK YOU. THAT IS ALL.

    • MattyJ says:

      But someone has to fix the robots!

    • ennui says:

      if the robots were about to take over, the relative market value of Intel's x86 and FPGA chip production would be inverted. I really don't understand why you latter-day-marxists are drinking the same koolaid re:robots as the webshit billionaires. even Elon Musk's wunderauto; if you drill into the worker injury report at Tesla that was put out last year, you see a lot of repetitive stress injuries (where are the robots?) and the magic phrase: "the line never stops" ie. the car of the future is being made with the best of 1970's American car manufacturing philosophy with the totally predictable quality shitstorm. meanwhile, Tesla destroyed it's high tech German industrial automation subsidiary, and purchased the production line for it's new-car-of-the-future from an established auto industry contractor, fucked that up, and then purchased (one of) the contractors in attempt to salvage the situation. Point being: if you thought what you needed was the will to make it happen (and the ability to raise virtually infinite amounts of capital) in order to fully automate production, Musk was your man and it just isn't happening. because the last 30 years of "tech" have been about building a firewall around the oligopolies of capitalism-as-it-is ie. "the web," while industrial manufacturing has puttered along with incremental improvements in productivity.

      the whole existence (and market cap) of Amazon makes a mockery of the idea that we are on the cusp of a revolution in production.

      • Thomas Lord says:

        I really don't understand why you latter-day-marxists are drinking the same koolaid re:robots as the webshit billionaires.

        My comment was meant to be true but mostly to be jokingly expressed. I didn't mean to get all serious. But I will reply to your comment more seriously... But at least I will mention Snowpiercer.

        Listen, I agree with everything you say about (for example) Musk not really eliminating labor so much as making the remaining jobs suck a lot.

        The Marx view in Capital (and elsewhere) is not that automation takes over, but that the ratio of non-labor capital such as machines to labor capital tends to grow and keep growing. This is the same thing as saying that the quantity of labor in each unit of output tends to fall. That therefore at the same time capitalist abundance has produced an enormous world population -- such as we have -- the quantity of labor needed to produce the entire consumption of that population is tiny relative to the size of the population. That therefore the capitalists are beset by a constant series of crises, all of which relate in some way to this huge amount of "superfluous labor power".

        You know what movie really nailed this, in my opinion? Snowpiercer. In the back of the train a basically prison population - a majority even - so useless they are the toys of middle-class sadists and are pushed even into canabalism. In the middle, various degrees of middle class life. At the front a bourgeoisie. But is the train a fully automated class society? No: remember that it relies utterly on, for example, that little kid the heroes rescue from the bowls of the engine -- the kid doing the worst kind of grueling industrial labor, etc.

        So that's kind of what Musk is an early example of.

        Indeed - look around - the state is having a very hard time keeping people well employed (and the carceral state thrives). In the US, real wages have declined to the point where successive generations of workers are becoming less healthy and more impoverished, a reversal of the opposite trend that accompanied reconstruction after WWII.

        At the same time -- and again, this is Marx's prediction -- the bourgeoisie are shrinking through their own process of cannibalistic consolidation. In some sense, the personified bourgie are increasingly unimportant -- the logic of their management of capital increasingly deterministic. It is just the abstract monster that emerges from the wage relation vs. the conditions of the people.

        The irony is that exactly as we reach the point of productive abundance, we also reach the point where distribution starts to break down. Capital, without room to expand, tends to stop circulating.

        A sensible people would recognize that jobs are the problem here (hence wages, ownership, and so forth). They might rapidly decide to impose a 20hr work week on the boss. Then a 10 hour week. Such an imposition would certainly break the money system, at some point and really it would be people working a few hours at things that matter because, hey, it keeps groceries on the shelves. Come get some.

        But we are trained to love us some jobs and to sign up for as many hours as we can get. Hence why we're basically willing to do the nonsensical thing of trying to pay the bosses to provide jobs.

  5. One episode of a cartoon I watched as a kid always stuck with me. It was so bizarre and made no sense at the time. It was of all things, an episode of Duck Tales, where multi-billionaire, Scrooge McDuck goes 40 years into the future to find crazy price gouging, abusive monopolistic control of transportation, and workers being charged a “privilege of working for us” tax by scrooge’s now grown nephews.

    With an air date of ‘87, this is predicting the future of 2027. Not far off, it seems.

    http://disney.wikia.com/wiki/Duck_to_the_Future

  6. Tom says:

    So in all seriousness, how close is this to essentially being a loophole to recreate the company town? If the employer is allowed to keep the tax money paid by their employees, the net effect of that isn't too much different than what Pullman Corporation did, fixing the cost of goods, services, and housing in their town to where the employees had a cost of living virtually equal to their take-home pay.

    Only you can't exactly get away with that today because people can just shop for things on Amaz-----------aaaahhhhh crap.

    • Nick Lamb says:

      It's potentially much worse than a company town in several ways.

      The company towns were an investment. That has the consequence that if you extract all the resources from the investment you destroy it. Pullman could and did treat its residents badly, but past a certain point the town would fail and the money spent building it would have been wasted.

      Amazon needn't concern itself with that. If Fresno destroys itself propping up Amazon, that's too bad for Fresno, Amazon moves to a different city and gets more bribes. Costs (of people existing) are externalized, benefits (more sales, nicer place for workers to live) accrue only to Amazon.

  7. ennui says:

    A city with tax revenue is like a mule with a spinning wheel...

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