“Amazon is not stupid. But perhaps the winning cities were,” says Amihai Glazer, economics professor and director of the program on corporate welfare at the University of California, Irvine.
Cities have been offering huge swaths of land, tax breaks and other financial benefits to lure Amazon. But after all the hoopla, northern Virginia and New York City, which offered relatively small packages, were selected.
Why did incentives ultimately matter so little?
Perhaps it’s because with an annual revenue of about $170 billion, even an $8 billion incentive at, say, 5% annual interest generates $400 million, or about two-tenths of 1% of Amazon’s sales. So the company cares more about finding a location that adds to its revenue rather than incentives, which means the winning cities might not have needed to even give away as much as they did.
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