Apple, Amazon, Facebook, Google and Foxconn among companies taking increasingly large tax breaks in return for the promise of jobs

Giant technology companies in the US, which include some of the world’s most profitable firms, have been pledged at least $9.3bn in state and local subsidies over the last five years – much of it coming from the coffers of cities and states with failing infrastructure, struggling schools and broken budgets.

The analysis by watchdog group Good Jobs First shows that the size of individual handouts appears to be growing. The latest – and largest – award of $4.8bn went to Foxconn, the Taiwanese manufacturer of the iPhone, PlayStation and other electronic goods, for its enormous new plant in Wisconsin.

The overall figure is also likely to increase. It does not include any breaks Amazon can expect for securing its second headquarters, known as HQ2: in the first round of bidding, many of the tax and subsidy packages on offer topped the Foxconn subsidy. One region alone – Montgomery County, Maryland – offered tax breaks and infrastructure improvements worth more than $8.5bn.

Good Jobs First calculates that the average price of a job created by a “megadeal” – one costing $50m and above – is now $658,000. “At that price taxpayers never break even,” said Greg LeRoy, executive director of Goods Jobs First.



States and cities argue the tax breaks are necessary to attract the high-paying jobs that technology companies provide. But the list of the biggest giveaways so far shows that the handouts rarely result in significant job creation – and the jobs that are created come with a high price tag.



Tech is not the only industry to secure megabucks, but it is among the worst offenders, LeRoy said. Data centers for Apple, Amazon, Facebook, Google and others have secured huge tax breaks but created few jobs. Amazon warehouses and assembly plants like Foxconn’s may create large numbers of jobs, but few six-figure salaries.

Wisconsin governor Scott Walker, for example, has said that Foxconn’s new plant will create 13,000 new jobs in the state. More conservatively the company has predicted it will “create 3,000 jobs with the potential to grow to 13,000 new jobs. ” If 13,000 new jobs are created, Wisconsin would be paying $346,153 per job at a subsidy of $4.5bn. The subsidy would be worth $1.5m per job cost if the deal ends up creating just 3,000 new positions.

Facebook Twitter Pinterest The Tesla Gigafactory during construction. Nevada gave the company $1.3bn in tax benefits. Photograph: James Glover/Reuters

The true cost of tech’s tax breaks is slowly becoming clear, thanks to changes in US accountancy rules that require states and localities to release more information about the cost of their tax abatement agreements.

In the last tax year local governments in Nevada lost more than $105m as a result of state abatement programs. Nevada is home to Tesla’s “Gigafactory” - which received $1.3bn in tax benefits, the largest such subsidy the state has ever awarded.

The new rule – Governmental Accounting Standards Board Statement 77 (GASB 77) – led to Nevada giving one of the most detailed breakdowns so far of the cost of the cost of these corporate handouts.

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Tesla accounted for $68.7m of last year’s loss. Good Jobs First calculates that Tesla’s tax breaks resulted in one school district, Storey County Schools near Reno, losing $36.7m of revenue.

LeRoy of Good Jobs First said on current trends the handouts were only likely to increase. “The big dirty secret in economic development in America is that the number of job creation programmes is falling,” he said.

Fewer smaller, fast growing companies are being created in the US; as a result “anxious mayors and governors are chasing these big deals” and driving prices up. “The big loser is the taxpayer,” he said.