Thank God Arizona Not In The Running For Amazon (part 2)

Can you imagine the insult to Maryland businesses that $5 billion of their hard-earned money as they struggle to make their businesses work is going to be just handed over to another business because that business creates better press releases for politicians?

In one of the most aggressive attempts to cajole Amazon into selecting their state as the location for the e-commerce giant's second headquarters, the Maryland General Assembly just passed a bill offering the company a $5 billion incentive package should Amazon choose to settle in Maryland's Montgomery County.

Montgomery County is competing with Washington DC, Northern Virginia and 17 other areas that made Amazon's HQ2 "short list", which was released earlier this year. Specifically, Amazon is eyeing the site of the former White Flint Mall.

The "Promoting ext-Raordinary Innovation in Maryland’s Economy," or PRIME (yes that misplaced capitalization was intentional) would require Amazon to create at least 40,000 qualified jobs (with an average comp of at least $100,000). The company would also need to spend $4.5 billion on "eligible costs" like capital projects, the Baltimore Business Journal reported.

Note that governments pretty much never police these jobs or investment requirements after the fact.  High-profile businesses in states from New York to Michigan to California have pocketed the money and then failed to add the promised jobs or investment without a hint from anyone the money was going to be taken back.


  1. pbft:

    I suspect that if any of the competing sites spent the same amount of money lowering corporate tax rates, reducing permitting headaches, and otherwise improving the business climate, they'd get at least as much growth from non-Amazon businesses. Rather than one company adding 40,000 jobs you'd more likely see a thousand businesses adding 40 jobs each. I guess that doesn't make as nice a campaign slogan.

  2. SamWah:

    I can certainly see a lot of campaign ads to challenge those who voted for this.

  3. Glen Raphael:

    To be fair, only 2 billion of the 5 involves "giving hard-earned money".

    The 2 billion on "infrastructure improvements" costs actual money as that part takes taxpayer funds they have now (which might have been spent on something else) and instead uses it to beef up local roads/water/power/transit in ways that mostly help the new entrant. Whereas the other 3 billion just involves politicians pledging not to charge the new entrant *quite as much* as they otherwise might in sales/property/income taxes. That part involves spending purely hypothetical money; it's choosing not to tax *extra* revenue that they don't currently have anyway, so there's no net cost to current taxpayers.

    One might argue in response that the new firm will do things that cost the state money so if they don't pay their fair share in taxes that eventually makes existing taxpayers worse off. Which is true but...what is the nature of that new cost? Mainly it's the impact on infrastructure, hence already covered in the 2 billion - we don't want to double-count.

  4. sean2829:

    This is as much a rich get richer story as anything else and it follows a tradition of subsidizing affluence in MD. That’s how Baltimore got an NFL team after all. Montgomery County is the wealthiest county in the state, only rivaled by Its next door neighbor, Howard County. White Flint is near the I270-I495 intersection, one of the most congested regions around the Washington beltway. 40,000 more commuters is just what it needs. I will admit I love the irony that the location is the old White Flint Mall, a retail center it probably put out of business.

  5. Thane_Eichenauer:

    You might. I would have a hard time imagining such after Amazon established HQ2 there because the cost is unseen but the benefit is right there.