SJSU Local Governments and Incentives Development Programs Essay

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Why Local Governments Should Incentivize Business to Move into Their Municipality In 2019, freshman Congresswoman Alexandria Ocasio-Cortez made national news by leading a revolt against the plans of Amazon to build a headquarters in New York City. Her contention was that in giving tax breaks to Amazon to over a billion dollars would have meant less money for the crumbling subway system in New York. However, her criticism was short sighted, as the benefits of having a highly successful company such as Amazon would have far outweighed the negatives of the tax break. When you consider the number of employees Amazon would have hired, the taxes they would wind up paying, especially long term, and the investment in the community that they would have made, you can see the benefit of incentivizing businesses to come into your municipality. Consider, first of all, the fact that Amazon would have hired a vast number of employees. And, the majority of them would have either been local NYC residents, or out of town individuals who would have moved to New York, bought homes, paid taxes, and invested in the New York Community. For every person that would have been low wage, there would have been a lot more who were making a very nice living for themselves. But now, that money is not there since there is no Amazon headquarters. And then you think about the number of taxes Amazon would have ended up paying. You do have to consider the fact that thirty years ago, there was no Amazon, and perhaps buying and shopping patterns will change, but right now, Amazon is one of the largest companies in the country. The taxes they will end up paying will be much more than the benefits they receive at the onset. And, when you consider where those taxes go, such as, into the subway systems of the city the company is located in, you can see how this wind up being a win for the city of New York on the reverse side. Then, you have the investment that a company would make in the city. Many corporations donate to local charities, they sponsor local schools and colleges and on and on the list would go. There would be a lot of externalities that a corporation would bring to the local community in which it is based. However, these benefits are not there if the company is in a rival city, as what ultimately wound up happening with Amazon. Now, there are some drawbacks to offering a company like Amazon tax incentives to move in the area. One of the things that should never happen is taking the property rights away from individuals or other organizations without fair and proper compensation. Too many cities are too eager to strip private individuals of their rights in order to earn the tax revenue of a major organization, but if the land can be secured, the company should be given some incentive to move into a local community. This benefits all individuals involved, including the local residents and taxpayer funded programs. So, to sum it up, if a company can move into a local municipality, and the municipality can offer a reasonable tax incentive for the company to move in there, the benefits would far outweigh the negatives. Therefore, it would be advantageous for the local community to welcome the company to their region. References Gage, John. Washington Examiner. 16 April 2019. https://www.washingtonexaminer.com/news/aoc-blew-amazon-out-of-new-york-in-2019over-tax-breaks-but-demanded-one-for-herself-in-2012. 8 March 2020. Kevin M. Murphy, Andrei Shleifer and Robert W. Vishny. "Industrialization and the Big Push." Journal of Political Economy, Vol. 97, No. 5 (1989): 1003-1026. Maharjan, Palistha. Businesstopia. 6 January 2018. https://www.businesstopia.net/economics/micro/concept-externalities. 8 March 2020. Moretti, Patrick Kline Enrico. PEOPLE, PLACES AND PUBLIC POLICY: SOME SIMPLE WELFARE ECONOMICS OF LOCAL ECONOMIC DEVELOPMENT PROGRAMS. Working Paper. Cambridge: NATIONAL BUREAU OF ECONOMIC RESEARCH , 2013. http://www.nber.org/papers/w19659.
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Running head: LOCAL GOVERNMENTS AND INCENTIVES

Thought Essay: Local Governments and Incentives
Student’s Name
Institution
Date

1

LOCAL GOVERNMENTS AND INCENTIVES
2
Why Local Governments Should Incentivize Business to Move into Their
Municipality
In 2019, freshman Congresswoman Alexandria Ocasio-Cortez made national
news by leading a revolt against Amazon’s plans of building its headquarters in New
York City (Gage, 2019). She contended that giving tax breaks to Amazon by over a
billion dollars would have meant less money for the crumbling subway system in New
York. However, her criticism was short-sighted as the benefits of having a highly
successful company such as Amazon would have far outweighed the negatives of the tax
break. When you consider the number of employees Amazon would have hired, the taxes
it would have ended up paying in the long term, and the community investment it would
have made, there was a more significant benefit in incentivizing businesses to invest in
the municipality.
First, consider the fact that Amazon would have hired a vast number of
employees, not mentioning that majority of them would have either been local NYC
residents or out of town individuals who would have moved to New York, bought homes,
paid taxes, and invested in the New York Community. For every person that would have
been a low wage, there would have been a lot more who were making a very nice living
for themselves (Maharjan, 2018). But this was an opportunity foregone by foregoing
Amazon in NYC.

LOCAL GOVERNMENTS AND INCENTIVES
3
Second to consider is the amount of taxes Amazon would have ended up paying.
It is important to understand that thirty year...


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