Amazon:Deal or debacle?

“Project ASAP”

• Free land (worth $1m)• Employee income tax credit ($3,250/yr)• Free worker training (worth $3.7m)• Fee in lieu of property taxes• Low wages• Non-union workforce• Lower cost of living/business• Lexington county “blue laws” repealed

“Project ASAP”

• 5-year sales taxes exemption

• H3488 roll call vote: 71-47– NAY: Bowen, Thayer, White, Agnew– AYE: Cooper, Gambrell

What the Agreement Said

“...Subject to available resources and to the extent permitted by law, [Department of Commerce] agrees to use its good faith, best efforts to obtain legislation to renew and extend [the sales tax exemption].”Incentive and Inducement Agreement, §3.1.3 (http://www.scsbc.org/UserFiles/scsbc/Documents/Amazon%20Agreement.pdf)

“They did and reasonable people didn’t buy it.”

Rep. Bill Taylor, R-Aiken

Amazon vs. Texas

• 5 year tax break expired• Texas billed Amazon for $269 million• Amazon refused to pay and threatened to

close shop

Amazon vs Colorado

“Amazon reacted with punitive petulance, sending a deliberate message to lawmakers in every other state: Make us play by the same tax rules as other businesses and your state will be punished, too.”

Seattle Times, 5/12/2010

Does “Economic Development” Pay?

“Companies are more interested in the state fighting union 'bullying' and remaining a right-to-work state.”

The State, 5/2/2011

Then and Now…

‘80s and ‘90s• 15th fastest growing

economy• 5.2% unemployment

Today• $2.5b in incentives over

more than 20 years• Recruited 60k jobs

Now…

• Lost 120k jobs• 9.4% unemployment• 12 slowest growing economy• 44th lowest per capita income

“Cutting secret deals for well-connected companies doesn’t foster economic growth. If it did, we’d be one of the most economically vibrant states in the nation rather than one of the poorest.”Ashley Landess, President, SCPC (4/20/2011)

SC Investment Track Record

$17m incentives to Air South

Recruited in 1994Bankrupt in 1997

700 jobs lost

Marine Energy Systems

Recruited in 1997Bankrupt in 2000

700 jobs lost

$25m+ to Western Star Trucks

Recruited in 1998Closed down in 2000

$26m to Inspiration Network

Recruited in 2009Layoffs, wage freeze, ceases 401k

contributions after less than 2 years

Innovista research park$100m facility, unfinished and mostly empty

$40m in hydrogen researchTwo fuel stations, two cars in the entire state

Freedom vs Socialism

“The highest level of prosperity occurs when there is a free market economy and a minimum of government regulations.”

Dr. Cleon Skousen,The 5000 Year Leap

Natural Law applied to business = free market

Ruler's Law applied to business = corporate incentives

“I want to take the calculated riskto dream and build,

to fail and to succeed.I refuse to barter incentive for dole.”

The Republican Creed

“I thought economic development was a core function.”

Rep. Tracy Edge (R-Horry) to The Nerve on 3/28/2011

An Alternative

• Repeal ALL sales tax exemptions(we exempt more than we collect)

• Lower the sales tax rate to around 3%• Lower the corporate income tax

• Lower rate, broader base = more stability• More business-friendly environment