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Incentive Packages to Big Incumbent Firms Hurt Local Start-Ups



(p. A1) When New Jersey announced a $7 billion package of tax incentives to try to lure Amazon's second headquarters to Newark, local officials saw a chance to jump-start a city that has long struggled with poverty and joblessness.

Many economists, however, saw something else: a failed development strategy that they had hoped was falling out of favor.


. . .


(p. A15) Gina Schaefer, who owns a dozen hardware stores in the Washington area, said she did not mind paying taxes, and had learned to deal with the bureaucratic hurdles that come with running a small business in the area. But she said it was frustrating to watch local governments -- three of the 20 finalists for the Amazon project are in the Washington area -- roll out the red carpet for a multibillion-dollar corporation. Suddenly, she said, her tax dollars could be flowing to one of her most daunting competitors.

"There are no incentives for those of us who are already here," Ms. Schaefer said. Alluding to Amazon's chief executive, Jeff Bezos, she added, "Why should the richest man in the history of the world get money to open his business?"

Indeed, tax incentives tend to flow overwhelmingly to big, established companies, rather than to the local start-ups that research has shown are a more significant source of job growth. And some who have studied the issue say incentives rarely work: Companies will play cities and states off one another to save money, but ultimately base site-selection decisions mostly on other factors.



For the full story, see:

BEN CASSELMAN. "Risks for Cities In Sweetening Amazon's Pot." The New York Times (Sat., JAN. 27, 2018): A1 & A15.

(Note: ellipsis added.)

(Note: the online version of the story has the date JAN. 26, 2018, and has the title "Promising Billions to Amazon: Is It a Good Deal for Cities?")






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