Give $4B to these people, not Amazon | Opinion

Nancy Kaffer | Detroit Free Press

Show Caption Hide Caption Amazon HQ2 cities could see Seattle's growing pains Amazon HQ2 cities on the East Coast could see strains on housing, transit and even more jobs beyond Amazon's hiring spree - at least that has been the experience Seattle had (Nov. 13)

OK, maybe not $4 billion.

But what if, what if, instead of offering over-the-top tax credits to lure a mega-corporation, we gave that kind of good-faith tax credit to regular folks?

Foregoing $4 billion in future tax revenue in order to nab a second Amazon HQ was always a stretch for Michigan, a state with a $56 billion budget, and Detroit, a city with a $2 billion budget, and it is a blessing that Amazon took a pass.

It's pretty clear now that the competition Amazon peddled to cities last fall — that they'd accept pitches for a second headquarters, bestowing 100,000 high-tech jobs on the city most willing to give away the tax-incentive farm — was a business-attraction farce, not a sincere effort to spread the economic development wealth. Amazon officially announced this week that its HQ2 will be split between Arlington County, Va., and Long Island City, New York.

More: Do tax incentives for billionaires really work for Detroit?

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And, basically, for pennies compared to what Michigan and Detroit were prepared to offer. New York, city and state, has agreed to pony up as much as $2.8 billion in tax incentives, tied to specific job creation targets. That's in a state with a roughly $1.5 trillion gross domestic product, and where the jobs Amazon has promised to create are a small percentage of the state's annual total. Virginia, with a gross domestic product of about $508 billion, offered just $813 million in tax incentives.

Michigan's annual gross domestic product, by contrasts, is about $504 billion; the $4 billion it offered Amazon is a proportionally larger slice of that $504-billion apple. The argument that justified Detroit's Amazon HQ2 bid is the argument that is always advanced to justify tax incentives: The tax revenues the city and state agree to forego wouldn't exist without the new development, so waiving them is a net neutral.

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But here's the thing: it was never about tax incentives. Companies want to open shop in communities that have invested in roads and schools, infrastructure and higher education, the arts and transit and all the other thousand things that add up to vibrant, successful, quality of life.

So ... let's work on that.

Detroit is a vibrant, rich city, but services, amenities and infrastructure still lag. Our schools are still struggling. We continue to not make meaningful progress toward functional regional transit. Those are big-picture projects, and there are big-picture efforts to move those needles.

The prevailing wisdom on tax incentives is that return on investment is what matters. Give a public subsidy to a would-be Amazon HQ2, or a Ford Motor Co., redeveloping the long-derelict Michigan Central Depot, or the Ilitch family's Little Caesars Arena, whose promised residual developments have failed to materialize, and you'll reap the rewards of job creation, redevelopment and density: visible, tangible improvements.

So why not apply the same standard to Detroit's residents and small business owners?

Detroit has some of the highest residential and commercial millage rates in the state. The highest income tax. And while the city desperately needs those revenues to provide services, it's return on investment that matters, right? Despite growth in Midtown and downtown, Detroit's neighborhoods are still struggling.

What kind of tangible, visible improvements could business owners make with, say, a 25% tax break this year? With a break on property taxes, what home maintenance or upgrades could Detroiters fund? What kind of material, meaningful differences would we see in our city if we valued the contributions of our long-time business owners and residents as much as a hypothetical Amazon?

Nancy Kaffer is a Free Press columnist. Contact: nkaffer@freepress.com.