Of Course Amazon Wouldn’t Pay Taxes in Pittsburgh, Nobody Does!
Last year online retail giant Amazon announced plans to build its second headquarters “somewhere in North America” bringing as many as 50,000 jobs and billions in direct investment to whatever community was lucky enough to host the company’s new expansion. The company released a request for proposals laying out the company’s site and building requirements and inviting cities around the continent to submit bids to host the new headquarters building.
In laying out its key preferences and decision drivers, Amazon told cities, “we want to encourage you to think big and be creative as you are collaborating to respond.”
Not surprisingly, the announcement set off a veritable bidding war. In total the company received 238 formal bids from cities, states and regions across North America. Newark, New Jersey offered $7 billion in tax incentives; Montgomery County, Virginia told Amazon that they were ready to write a “blank check” for roads, public transit, and any other infrastructure upgrades the company wants; and Stonecrest, Georgia even offered to create a new town named Amazon, Georgia if it was selected.
And those are only the publicly released offers. The most salacious and consequential offers will likely never be released. Amazon’s request for proposals required that candidate cities agree to a confidentiality and non-disclosure agreement in order to be included in the bidding frenzy.
Not to be passed up for consideration for a major tech expansion (or an opportunity to give away huge tax breaks), Pittsburgh Mayor Bill Peduto jumped to action. On October 19th, Peduto’s administration announced that Pittsburgh had submitted its bid for Amazon’s second headquarters. He later cited the city’s population decline as a reason for courting the tech giant, saying Pittsburgh is “a city that has room to grow. We were a city of over 700,00. Today we’re a city of over 300,000.”
Pittsburghers immediately began to wonder what Peduto had offered Amazon to come to Pittsburgh. Had he offered to replace the city’s bike lanes with Amazon Prime lanes? Would Lawerenceville be renamed Bezosville? Exactly how huge were the tax incentives? In total, the city and county received 17 open records requests for Amazon-related information in the months after Amazon opened the competition. The only request to be granted was a targeted request for a copy of the proposal’s cover page coming from Darwin Leuba, an 18-year-old from O’Hara township.
By January, when Pittsburgh had been included in the list of 20 finalist locations for the headquarters, the Peduto administration’s secrecy faced official challenges. Many news organizations filed challenges with Pennsylvania’s Office of Open Records and on January 24th the office issued a ruling directing the city to release its bid. The city has 30 days to turn release the bid or appeal to Commonwealth Court.
Peduto’s administration probably will not release the bid. Pittsburgh will also almost certainly not be picked as the site for Amazon’s new headquarters. We have lead in our drinking water and we haven’t even figured out how to keep sewage from spilling into the rivers when it rains; our infant mortality rates are on par with infant mortality rates in impoverished developing countries; and LGBTQ advocates No Gay No Way have publicly called on Amazon to pass on possible sites in Pennsylvania because of our discriminatory public policy.
But even if Peduto doesn’t release his administration’s proposal, we should all be able to guess what’s in it. Our region’s largest public sector employer, UPMC brought in $14 billion in revenue last year generating $991 million in profit. UPMC paid nothing in taxes. They didn’t pay real-estate taxes, they didn’t pay property taxes, and they paid nothing to compensate the Commonwealth for the millions tax payers paid out in public assistance to support UPMC employees who are earning poverty wages.
UPMC is not alone. The University of Pittsburgh doesn’t pay taxes. Carnegie Mellon doesn’t pay taxes. The Commonwealth even agreed to give Shell Oil $1.65 billion in tax incentives for its new cracker plant just 20 miles north of the city. If UPMC, Pitt, CMU and Shell don’t pay taxes, why would anybody expect Amazon to pay taxes.
Of course Peduto, Fitzgerald and Wolf would waive Amazon’s taxes if they moved to Pittsburgh!
The Peduto administration has also almost certainly secured some free or inexpensive property for Amazon to build its new headquarters. We have seen massive land grabs in East Liberty, Lawerenceville, the Lower Hill and other neighborhoods around the city. Maybe they’ve offered the old Century III Mall, or some property on the Allegheny River near Monongahela, or the site of SCI Pittsburgh along the Ohio River. The Peduto administration will probably never disclose what property they offered Amazon but it’s almost certain that their plan would involve displacing long-time residents from their homes.
The proposal probably also includes offers for strategic partnerships with Pittsburgh-based private sector organizations. As Amazonlooks to operationalize its drone delivery service a partnership with Carnegie Mellon or Uber could prove strategic. Amazon has recently announced plans to join Berkshire Hathaway and JP Morgan Chase in starting their own healthcare operation. UPMC CEO Jeffrey Romoff recently announced the health care giant’s “desire to become the Amazon of health care.” What better way to do that than partnering with the Amazon of everything else?
This entire bidding process is disgusting. But it’s not the most objectionable aspect of Amazon’s HQ2 planning process. Not by a long shot. If an employer were planning to bring 50,000 stable, family sustaining jobs to a community, offering incentives to make it happen probably wouldn’t be a bad public policy move. But Amazon isn’t bringing 50,000 family sustaining jobs anywhere.
A recent study showed that as many as 1 in 10 Amazon employees in Ohio earn wages low enough that they are eligible for food stamps. And in communities that are struggling, Amazon’s presence has made things worse for workers. The Economist reports that communities where Amazon has opened warehouses have seen precipitous drops in wages for warehouse and logistics workers.
The most alarming aspect of Amazon’s HQ2 bidding process is that there isn’t any discussion about the quality of the 50,000 jobs the company is promising to create. Will these be good, family sustaining jobs or will workers need to rely on food stamps and other subsidies to survive? Will these be jobs for unemployed and underemployed Pittsburghers with real career development pathways or is Amazon planning to recruit workers with master’s degrees from San Francisco and Seattle?
Pittsburgh’s biggest challenge isn’t that big corporations like UPMC, Pitt and CMU aren’t paying their fair share of taxes. To be sure, that is a serious challenge, but Pittsburgh’s biggest challenge is that big corporations like UPMC, Pitt and CMU aren’t paying their fair share of wages to workers.
Pittsburgh is facing a crisis in affordable housing and low income, predominantly Black families are being pushed out of our city at an alarming rate. One obvious driver of that is the rapid elimination of affordable housing in many neighborhoods in our city. But why can’t working class families in Pittsburgh earned enough to pay market rate rents? Pittsburgh’s largest employers can certainly afford to pay living wages to their workers but right now UPMC and Pitt are being allowed to operate with impunity, paying nothing in taxes and keeping thousands of workers in poverty.
So the part of Pittsburgh’s Amazon HQ2 proposal that I’m most interested in isn’t what Pittsburgh is offering Amazon, it’s what Pittsburgh is demanding of Amazon. Of course Amazon won’t pay taxes, they’ll get free land and a whole menu of partnership opportunities. But what is our vision for these 50,000 jobs? Has the city set a minimum wage? A minority hiring requirement? A workforce training program?
Probably not. But Amazon’s new headquarters probably isn’t coming to Pittsburgh either.
That doesn’t mean that we shouldn’t be having a discussion about what our community is offering employers and what we’re demanding from those employers. UPMC and Pitt are already enjoying all of the benefits that Amazon would if they decided to move to Pittsburgh, so the question we should be asking is what are we demanding from these mega employers. The future we should be imagining isn’t a future with Amazon’s new headquarters somewhere along the Ohio river, the future we should be imagining is a future where the tens of thousands of Pittsburghers working at UPMC and Pitt have a voice at work, earn a living wage, and can afford to live in our city.
But if that future is going to become a reality we all need to demand more from our city’s biggest employers.
