How far away 2018 seems today. That year, the Amazon HQ2 sweepstakes was in full gear as cities and states offered Amazon higher and higher incentives to build their second headquarters. That year, Amazon executives extracted $50 million in subsidies from the state of Alabama and its localities to locate a fulfillment center in Bessemer. At the same time, Seattle was in its initial phase of taxing Amazon to build affordable housing and a fight was brewing in Queens, NY against a $3 billion handout to Amazon in exchange for being selected to house HQ2.
Comparing Alabama and Washington State might seem like apples to oranges, but in fact both have among the most regressive tax structures in the country. Both states give out billions of dollars in corporate subsidies. Both states tax poor people at a higher rate than the top 1% of earners. Regressive taxes plus huge subsidies to corporations means that working people are getting fleeced.
Corporations like Amazon, Toyota, and Honda have been handed millions to set up and operate facilities in Alabama. Meanwhile local politicians claim there’s no money to improve public schools or public housing. While remaining one of the 10 poorest states in the country, Alabama gives the 10th most to corporations out of all states.
Instead of states, counties, and municipalities competing to see who can give the most corporate welfare, working people in AL should take Seattle’s lead and build a struggle to tax big businesses like Amazon and fund critical social services.
When the Bessemer City Council passed its Amazon tax subsidy in exchange for a new fulfillment center, it was met by a standing ovation at the City Council meeting. This deal was sold to working people as a way to bring jobs to an area with an 18% poverty rate, touting the $15 an hour wage jobs that Amazon would bring in a state that has no minimum wage law – sticking Alabamans with the $7.25 federal minimum wage.
Similarly the state of Alabama gave Amazon $50 million in tax breaks and Jefferson County contributed $3.3 million by way of building out the roads Amazon demanded. (Amazon accepted far less to build similar facilities throughout the country.)
Back in Bessemer, Amazon receives quarterly payments from the town for ten years as long as it’s employing people. The money to pay Amazon is drawn from the Bessemer Occupational Tax, which requires all people who work in Bessemer – including those at Amazon warehouse – to pay 1% of their gross income, whether they live in Bessemer or not. So instead of the Occupational Tax going toward crucial improvements to social services in Bessemer itself, it’s being siphoned off, straight back into the pockets of Amazon’s executives. This means that Amazon pays its workers, takes a portion out to give to Bessemer, which is then given back to Amazon. The lowest-paid workers are subsidizing their own employer to stay open.
These taxes are justified by local politicians as “investments.” They point to how much locating Amazon facilities in the community “contributes” to the local economy. Their logic fails, first of all, in that $15 an hour isn’t enough to feed a family on in Greater Birmingham. It also fails to account for the fact that corporations like Amazon increased their minimum wage to $15 an hour only under pressure from workers winning $15 in multiple cities, with Seattle – where Amazon is headquartered – becoming the first major city to win. Most egregiously, that “investment” is taken out of funds raised by taxing working people, and the money Amazon makes from Bessemer is never invested back into the community. Thus the local “investment” paid to Amazon is an investment in the pockets of the world’s second-richest man, Jeff Bezos.
Can Amazon Afford to Pay?
Among the wealthiest corporations in the world, Amazon’s revenue in 2020 was $386 billion, more than the GDP of all but the 30 richest nations in the world. All of Amazon’s profits are generated by the labor of working people: from those who place items in packages, to those who maintain their massive server farms. Without the work of its millions of employees, Amazon’s logistical and internet network would grind to a halt. And yet, Jeff Bezos and top executives make millions per hour while the workforce survives on $15 an hour while being worked to the bone.
How does Amazon get away with demanding that areas like Bessemer, Alabama to pay for the “privilege” of helping the corporation’s millionaires and billionaires make a profit? Because they can dangle the prospects of jobs and economic growth to drive a bidding war between different city governments and get the best deal. According to GoodJobsFirst.org, Amazon has received at least $3.775 billion in subsidies since 2000 using this very strategy. In 2017 and 2018, Amazon not only didn’t pay federal taxes, it received hundreds of millions of dollars in rebates.
Remember that bidding war in 2018 over where their HQ2 would be located? They had NY Governor Cuomo and NYC Mayor De Blasio – both Democrats – ready to shell out $3 billion in exchange for the promise of 25,000 jobs over 10 years. The corporate handout was defeated by a struggle of working people, and Amazon set up shop anyway in order to be close to Wall Street.
Let’s also talk about Seattle, the location of Amazon’s HQ1. Now one of the biggest landowners in the city, Amazon has remade much of the downtown adjacent South Lake Union area.
Seattle has Kshama Sawant. First elected to Seattle City Council in 2013, she successfully led the fight for a $15 an hour minimum wage, which Amazon fought bitterly. Five years later, Kshama and Socialist Alternative helped build the movement that initially won an Amazon tax in 2018 – until the movement was betrayed by the Democratic mayor and city council majority and the tax was repealed three weeks after it was passed. Amazon then dropped $1.5 million in the 2019 city council race to defeat Kshama Sawant (she won reelection anyway). The movement mobilized again in the first half of 2020 and got it passed for a second time last summer, in the midst of, and with strong support from, Black Lives Matter street protests. This will bring in $210-240 million a year, creating tens of thousands of green union jobs by building permanently affordable social housing. Amazon has the resources to pay taxes (and it’s about time they do), but Seattle’s story shows that the company’s executives are determined to fight against it with all their resources.
In Burbank, California, activists and socialists alongside newly-elected Burbank Councilmember Konstantine Anthony, are following Seattle’s lead and organizing a fight to tax Amazon. As their website states: “In order to address Burbank’s housing crisis, unemployment, massive inequality, and the deepening climate crisis, working people and small business owners are organizing to tax Amazon and other big businesses that have accrued billions in wealth under the pandemic.”
Will Amazon Leave if It Is Taxed? Or Unionized?
In the 2018 and 2020 fights to tax Amazon in Seattle, the corporation absurdly claimed that this would be so bad for business they would simply need to leave, pulling out thousands of jobs with them. They have used this threat against Bessemer warehouse workers fighting to unionize as well, instilling genuine fear among workers in an area with twice the poverty rate of the rest of the country. The truth is that Amazon fears the precedent that taxation and unionization would set – these victories are contagious and threaten their obscene profits and power.
Amazon’s online sales are based on its “prime” service, which guarantees two-day delivery and, in some places with some items, same-day delivery. The only way Amazon can make good on their promises to consumers is to have warehouses and delivery infrastructure as widely distributed as possible around the country.
With that imperative, it was inevitable that Amazon would seek to put a facility in the Birmingham area and in this context it would be difficult for them to shut down operations in Bessemer. It was particularly strategic for them: a right to work state, an economically depressed area, with a strong history of corporate tax breaks. But it’s clear that Bessemer and Jefferson County brokered a bad deal: they gave Amazon millions to do what they would’ve done anyway, and are trying to offset the cost on the backs of workers who are now taking the corporation on.
Bessemer, to its credit, is backing Amazon workers now fighting to form a union. Hundreds of Bessemer residents have expressed their support of the union drive and there are yard signs up throughout the city. It’s about time we stop allowing the Amazons and Toyotas of the world to turn our cities into playgrounds for big business; it’s about time they pay their fair share to workers and the residents of the cities they’re in.