Maryland approves billions in Amazon incentives
President Trump may not be a fan of Amazon and its CEO, Jeff Bezos, but Maryland Gov. Larry Hogan (R) is.
Hogan is likely to sign a massive new incentive package passed by legislators Wednesday morning aimed at enticing the online retail giant to locate its second headquarters in the Washington suburbs. The measure includes nearly $8.5 billion in incentives, making it one of the largest incentive packages ever offered to a corporation.
The bill — the Promoting Extraordinary Innovation in Maryland’s Economy Act, or the PRIME Act — passed Wednesday includes billions in property, sales and income tax credits, both from the state and from Montgomery County, a finalist to host Amazon’s HQ2 project. It also includes about $2 billion in transportation improvements around the proposed site Montgomery County wants Amazon to use.
The Maryland General Assembly’s budget analysts estimated it would cost the state almost $5.5 billion over the next 35 years; it would also cost local governments another $924 million in property taxes.
Including the money for transportation improvements, Maryland’s incentive package appears larger than any other publicly known offer made by the other 19 finalists named by Amazon last year.
Hogan, who is seeking reelection this year, is likely to sign the measure, which he initially proposed. His office did not immediately respond to a request for comment. {mosads}
To qualify for the tax credits, a company would have to hire at least 40,000 new workers making annual salaries of at least $60,000 and spend $4.5 billion on its new headquarters.
That language is tailor-made for Amazon, the Seattle-based retailer that has said its new corporate headquarters would employ up to 50,000 people at salaries averaging $100,000 a year. Amazon has said it plans to spend at least $5 billion on the project.
The General Assembly’s budget analysts said they could not estimate how much revenue Amazon would bring to the state, because other details of the state’s bid are proprietary. That worries some opponents of the subsidies, who say the state is giving away far too much to lure the company.
“We just had a corporate tax cut nationally from 35 percent to 21 percent. Amazon’s a business that made $2 billion in the last quarter, and we’re proposing to give them $6.5 billion in corporate welfare,” said Herb McMillan, a Republican assemblyman from Anne Arundel County. “Obviously someone’s going to have to pay for it, and it’s going to be Maryland’s small businesses and middle class families.”
McMillan said that for the same amount of money, Maryland could cut its corporate tax rate — one of the highest in the nation — in half for a decade.
Montgomery County, one of 20 finalists Amazon named in the bidding process, has offered the company the old White Flint Mall, which closed in 2015. The site is owned by Lerner Enterprises, the company run by Washington Nationals majority owner Ted Lerner.
The HQ2 project has the potential to dramatically reshape any city or region, leading some jurisdictions to propose huge incentive packages in hopes of landing the deal. Newark and New Jersey have offered an incentive package worth about $7 billion, and while details of most other finalists’ proposals are secret, they are almost certain to offer their own tax breaks and spending promises.
Two of the other finalists are also in the Washington region: The District of Columbia and Northern Virginia remain in the running. Bezos, who also owns The Washington Post, owns a home in Washington.
Richard Florida, an urban economics expert who runs the Martin Prosperity Institute at the University of Toronto, said he believes the greater Washington area is the front-runner to land the project. The executive running Amazon’s search for a new HQ2 location, Holly Sullivan, ran Montgomery County’s economic development wing before decamping to Seattle.
Florida said cities that offer too much to Amazon could be left holding the bag, through increased transit, school and public services costs.
“This level of incentives is ludicrous and will likely turn a potentially good thing into a bad thing for Maryland,” Florida said Wednesday. “Instead of handing over public taxpayer dollars to one of the world’s most valuable and profitable companies and the world’s richest man, Maryland and local communities should ask Amazon to be a good partner in economic and community development, eschew incentives and actually contribute to local development.”
Amazon’s site selection team visited the Washington area last month as they evaluate the finalist candidates. Hogan and Montgomery County Executive Ike Leggett (D) have not said whether they met with company officials, though Hogan later toured an Amazon fulfillment center in northeast Maryland.
Virginia Gov. Ralph Northam (D) and Washington Mayor Muriel Bowser both met with Amazon officials during the tour.
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