Why Amazon Won't Choose New Hampshire

Amazon Headquarters in Seattle - Photo by Adamajreynolds

According to the Concord Monitor, Governor Sununu is “aggressively” pursuing the online retailer Amazon.com, which is looking to open a second global headquarters that could employ as many as 50,000 people.

New Hampshire is a great place for business, with low taxes and regulation, not to mention thousands of productive Free Staters moving in. Business taxes are decreasing, and they can be be offset with the Education Tax Credit. So should New Hampshire pitch to Amazon? Why not! Andrew Cline of the Josiah Bartlett Center for Public Policy writes,

“Reaching out and talking up New Hampshire’s many charms is perfectly fine. But we should never cross the line between marketing the state and giving a big company special treatment that New Hampshire’s mom-and-pop businesses don’t get.”

But states aren’t likely to take Cline’s approach as they bid for Amazon’s business. Many will promise millions in taxpayer-funded subsidies, which Amazon expects. Eli Sanders at The Stranger translates Amazon’s message to interested locales this way,

“If you want to be the new home of Amazon's HQ2, you need to offer Amazon some major, taxpayer-financed subsidies. Those taxpayer-financed subsidies may have to be so big that it'll take an act of your state's publicly elected legislature to make them happen.”

Why is Amazon looking elsewhere? Some see the search as a publicity stunt, but The Seattle Times sees it as a wake-up call, “Seattle’s current political leaders must recognize that poor planning and anti-business posturing come with a heavy price. Their politicking creates uncertainty for job creators and was a factor in Amazon’s decision to look elsewhere to expand.”

If Amazon is looking to grow in a beautiful, pro-business environment, it would be wise to seriously consider New Hampshire. Operating in a state with no personal income tax or general sales tax would be good for its employees and customers too. But Sanders posits that Amazon has used up most of the benefits it can get from Seattle and needs to find another city to take advantage of. He writes:

“…having gotten close to the maximum that it can from this city's existing taxpayer-funded infrastructure, while also aggressively limiting its contributions to the upkeep and improvement of taxpayer-funded infrastructure, Amazon is now seeking to expand to another state in which taxpayers have already paid for a world class education system, mass transit system, and road system that the company can take immediate advantage of—and where political leaders are willing to effectively pay Amazon (in the form of tax breaks) for the privilege of using those taxpayer-funded amenities.”

Amazon won’t choose New Hampshire, because we simply don’t offer the corporate welfare other states do. According to Bureau of Economic Analysis data, New Hampshire offers less than half the subsidies to business that Amazon’s home state Washington does as a percentage of its economy, and the second lowest amount in the country (after West Virginia).

We could do still more to create a better business environment in New Hampshire. Business profits taxes are high by comparison with other states, because New Hampshire doesn’t have a general sales tax or personal income tax. (New Hampshire’s business enterprise tax is effectively a really low wage income tax.) New Hampshire also has three “development districts” authorized to give tax exemptions to new projects, and the state has offered preferential loans to companies like the new Balsams Resort. New Hampshire could cut corporate welfare further to reduce the business profits tax and encourage investment.

Compared to most states, New Hampshire is a great environment for starting and growing a business - precisely because lower corporate welfare allows the overall tax burden to be lower. But that’s not what Amazon is looking for.

  • Sep 22 2017 

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