Opinion

Editorial: AMAZON - It's 2017 and we need to play to win

Tuesday, Oct. 17, 2017 -- The General Assembly and N.C. Chamber of Commerce say low corporate income taxes, low wages and no unions are all that the state needs to be successful. That may have worked in the 1920s to lure textile mills and other manufacturers, but not a century later. Most important to Amazon, and many new and expanding companies these days, are an available high-quality and diverse workforce, quality of life, educational opportunities and infrastructure investment plans.

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Amazon looks to build $5B HQ; N.C. a contender?
CBC Editorial: Tuesday, Oct. 17, 2017; Editorial # 8224
The following is the opinion of Capitol Broadcasting Company
The Triangle Business Journal recently included a special report on the recruitment of Amazon “HQ2” to North Carolina. When it comes to attracting new businesses or expanding current businesses Art Pope -- the ex-state budget director who is chairman of Variety Wholesalers -- told the TBJ that families and businesses “who have been paying taxes in North Carolina for decades” should not have to subsidize the relocation of a major company – “especially if they’re going to compete with them.”

Meanwhile across the state – the Triangle, Triad and Charlotte – are pondering how best to position themselves to lure “HQ2” – online retail giant Amazon’s proposed 2nd headquarters that boasts a $4 billion investment, 50,000 jobs and 8 million square feet of facility space. The competition is fierce and nationwide.

If you ask the General Assembly and the North Carolina Chamber of Commerce they will say that low corporate income taxes, low wages, and no unions are all that the state needs to be successful. They are betting our future on that notion.

That model may have worked in the 1920s to lure textile mills and other manufacturers, but not a century later. In Amazon’s search criteria, taxes are a low-tier consideration. The word “tax” doesn’t appear until the sixth page of Amazon’s eight-page request for proposals.

Most important to Amazon, and many new and expanding companies these days, are an available high-quality and diverse workforce, quality of life, educational opportunities and infrastructure investment plans. North Carolina enjoys and offers economic prospects these benefits, but it also takes incentives to land companies like Amazon. Not the largest, but a competitive incentives proposal.

Reasonable incentives are not giveaways – they are best viewed as investments that should be measured in terms of the return they’re likely to produce. It’s called ROI. The incentives that North Carolina offers, such as tax credits for jobs created, are only awarded AFTER the company shows the jobs are in place and workers hired.  Further, they aren’t just for companies that want to come into the state, they are also available to companies in North Carolina looking to expand.

Recent history shows when North Carolina doesn’t compete, it does lose. Failure to provide a competitive incentives package resulted in Continental Tire (already committed to coming to the state) taking a 1,400-job expansion to South Carolina instead of southeastern North Carolina four years ago. Two years ago Mercedes-Benz USA picked Atlanta for its corporate headquarters over an RTP location.  Then Gov. Pat McCrory and the legislature could never get together on an incentives package for Mercedes – probably the worst failure in state economic development history.

Overall, says N.C. State economist Mike Walden, the Triangle economy could see a big boost – as much as $52 billion more annually when the Amazon project is fully implemented. “I would expect Amazon’s economic benefits in jobs, incomes and economic growth for the state to exceed the cost of targeted tax reductions and forgiveness,” Walden said.

Art Pope provides a neat ideological package but it completely ignores the real world we live in. The key to a prosperous future is making the right investments to keep the economy growing. You don’t sit around and hope good things will happen.  You evaluate the competition and put together a package that can win.

Reasonable performance based incentives are great investments for North Carolina citizens.

And believe it or not, competition makes us all better.

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