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Amazon Scores Big Tax Breaks as It Expands Delivery Network

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Amazon is famously great at delivering — but, it turns out, the e-tail giant is pretty good at receiving, too.

With three months left in 2021, new data out Wednesday shows Amazon has already won a record amount in US tax breaks this year. States and municipalities have bent over backwards to entice the incredibly profitable firm to open up warehouses in their backyards. But it remains unclear how much good that will do for anyone but Amazon.

Mi Casa, Su Warehouse

Amazon is rapidly amassing warehouses and processing facilities across the country in order to turbocharge its delivery speeds, which it sees as the key to asserting its dominance in the e-commerce sector. In its quest to own more land than a Roman emperor, the retail giant more than doubled its capital expenditures in 2020 to $40.1 billion as it opened 100 new facilities across 40 states.

Halfway through 2021, Amazon had already spent $26.4 billion on capex and, with all this cash being thrown around, local politicians were lining up to offer sweetheart deals in exchange for jobs they can brag to their constituents about:

  • Amazon has netted $650 million in grants, tax exemptions, and other incentives from states and municipalities in 2021 — its most lucrative year of perks yet, according to new data from economic development watchdog Good Jobs First.
  • Since 2000, the online retailer has scored $4.1 billion in incentives from local and state governments. It's not like it needs help — the company made a $21.3 billion profit last year, an 84% year-over-year increase.

Amazon's Side: Amazon says it's worthy of subsidies because it created more than 400,000 jobs last year alone. But a 2018 study by the Economic Policy Institute found that, while new Amazon fulfilment centres increased warehouse jobs by 30% in an area, they attracted staff from other employers and thus led to no net job gains.

Ask a Worker: There's also the matter of pay. Take New Jersey: a UPS driver there makes an average of $38.35 an hour, according to recent congressional testimony. An Amazon driver? Just $19.25, the Financial Times notes. The company recently raised its average starting wage from $17 to $18 — and is increasingly touting perks like signing bonuses and college tuition help — as it aims to fill 125,000 warehouse and delivery jobs.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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