Back in 2017, nearly 250 cities across the country submitted proposals to Amazon in an effort to court the company for their newest headquarter location, HQ2. States and local city governments promised Amazon the world with tax breaks, office space, and bullet trains in an effort to entice the corporate giant to locate in their areas. New Jersey even offered up to $7 billion dollars in taxpayer money for Amazon to build in the state.
Between 2017-2019, Amazon’s process for selecting their next location became somewhat of a bloodsport with the top twenty, ten, and two states – New York and Virginia – competing and offering top dollar to the company. The country seemed to wait with baited breath for Amazon to decide where it was going to locate its new campus.
After a hard-fought battle, Arlington was chosen as the final winner for the location of Amazon’s HQ2. In 2019, both Arlington County and the State of Virginia approved two different deals that total over $1 billion dollars in tax breaks for the corporate giant.
In 2019, the Arlington County Board of Supervisors approved a $573 million dollar incentive package in exchange for Amazon’s 25,000-person office on the condition that Amazon occupies a minimum amount of office space per year. The local package also makes Amazon eligible for up to $23 million in tax incentives, which is set to come out of Arlington’s hotel-tax revenue fund.
In the same year, the Virginia General Assembly passed SB1255 and approved $750 million dollars in tax incentives for Amazon over fifteen years. Included in the package were workforce grants that stipulated Virginia taxpayers would pay $22,000 in grants for every employee on the condition that Amazon create tens of thousands of jobs that had an average pay of at least $150,000 a year. The first of these grants was not scheduled to be dispersed to Amazon until 2024 at the earliest.
That’s right – the state of Virginia is paying $22,000 in cash for every new Amazon HQ2 employee with an average income of $150,000 – but it gets worse. Upon further looking into the details of the Amazon deal, Virginia Justice Democrats uncovered that embedded in this deal is how the average is calculated.
The average that Amazon is using is a simple average, where all employee salaries are added up and divided by the total number of employees. This includes employees that are making upwards of $500,000. There’s also a cap on how much of any one person’s salary can be calculated in the average. In 2023, that amount is $902,159. Meaning that if employees at Amazon’s HQ2 are making upwards of $1 million annually, they will only be counted as making $902,159 for purposes of the average this year with the cap increasing each year.
The annual median income of Virginian’s is $36,895 per person meaning that Virginian taxpayers are not only footing the bill of high income earners, but we may be doing so for employees making nearly 25 times their annual salary or more.
In March of 2023, Amazon announced that they put a pause on the second phase of their HQ2 construction, citing economic uncertainty and their financial losses at the end of 2022 – but not before requesting a check from the state. In late March, Amazon requested $153 million of their cash grants for the 6,955 employees that it hired. Governor Youngkin has proposed giving Amazon half that amount, around $78 million, as soon as July 1st.
Amazon got a sweetheart deal from the state of Virginia and promised us the moon in return – a booming economy, increased travel, and new investments. Instead, Virginia taxpayers are footing the bill and paying the price.
The Amazon deal exemplifies trickle-down economics at its finest – bringing in a major corporation with the idea that it will boost the local economy and increase the salaries of those who live around it.
Instead, we are forking over state and local tax funds to subsidize high income earners when the funds could be invested in housing improvements, workforce development, and developing green jobs – not to mention Amazon’s poor record on labor protections.
States and localities should be ashamed of this irresponsible behavior that jeopardizes vulnerable populations and almost guarantees that people will be priced out and displaced from their homes and communities. In 2019, only 21 legislators in the General Assembly voted against this deal.
It’s time that Virginian’s stop footing the bill for multi-billion dollar companies that don’t invest in the local communities and instead extract wealth from the area. We need to hold elected officials accountable to the people of Virginia and elect more progressives to office; progressives who are willing to stand up to corporations and hold them accountable for their actions and impact on our state.