Maryland Gov. Larry Hogan Takes Cronyism to the Next Level With $5 Billion Bid for Amazon Headquarters

The PRIME Act would fork over millions to one of the world's wealthiest corporations.


Gov. Hogan
Congressional Quarterly/CQ-Roll Call, Inc./Newscom

Amazon has narrowed the list of places where it might put its second headquarters down to 20. Maryland's Republican governor, Larry Hogan, is so excited that Montgomery County made the shortlist that he's offering Amazon a new $5 billion package of incentives.

"Amazon sent a clear signal that Maryland truly is open for business by selecting Montgomery County as one of an elite group of contenders for this transformative project," Hogan said today as he unveiled the sycophantically named Promoting ext-Raordinary Innovation in Maryland's Economy (PRIME) Act.

The PRIME Act offers a lot of sweeteners. It includes 10 years of tax credits against any state and local property taxes, plus a 10-year exemption on any sales taxes owed by Amazon on purchases of construction equipment and warehouse equipment. Maryland would also give Amazon a 10-year tax credit to cover state income taxes paid by any employee Amazon hires within 17 years of setting up shop in the state, as long as that employee earns between $60,000 and $500,000.

And it's not just tax abatements. The proposal offers the online retailer $150 million in direct grants. Add the legislation's road, transit, and infrastructure upgrades, and the whole package comes to $5 billion—the same amount Amazon plans to spend on the new headquarters.

Luring businesses with corporate handouts is a long-lived American tradition. For instance, Washington state—home of Amazon's current headquarters—has given the aviation giant Boeing $11.9 billion to stay in town. Likewise, Amazon's competitor in the retail market, Walmart, is notorious for scooping up development grants, tax abatements, and any other form of pork it can from the jurisdictions where it sets up shop. The group Good Jobs First calculated in 2011 that Walmart was pulling down $70 million of these incentives annually.

The inevitable justification for these giveaways is that they will more than make up for the costs by bringing new jobs, new spending, and new investment to an area. Hogan, for example, says Amazon is offering "the single greatest economic development opportunity in a generation, and we're committing all of the resources we have to bring it home to Maryland."

Hogan is indeed bringing all the resources he can to bear with the PRIME Act, which at this point is the second most generous incentive package to be offered in the Amazon bidding war. (New Jersey had offered the company $7 billion.*) Yet every dollar the governor is offering will have to be paid by someone. If the PRIME Act passes and Amazon comes to Maryland, residents and businesses without the political clout of a multi-billion-dollar multinational will suffer a higher tax burden.

Maryland Senate President Mike Miller (D-Calvert) has already criticized Hogan along those lines, telling the Washington Post that he'd like to see the state give more aid to Baltimore and higher hospital funding in Prince George County before it offers billions to one of the world's wealthiest corporations.

Hogan won the governorship in deep-blue Maryland in part on his promise of creating a more business-friendly, fiscally responsible state government. His PRIME Act betrays those promises. And it encourages the other places on Amazon's shortlist to stoop even lower to cinch the deal. Reason TV highlighted highlighted the dangers of that in a recent, all too realistic, video:

CORRECTION: The original version of this article stated that no New Jersey cities made the final list of prospective Amazon HQ2 sites. Newark, New Jersey is still in the running.