Amazon is bringing another of its distribution hubs, known as fulfillment centers, to north Mississippi and will receive $2 million in infrastructure funding and local tax breaks to do it.
The online retail giant announced this week that’ll bring the fulfillment center to Olive Branch that will eventually employ 500 workers.
According to Mississippi Development Authority spokesperson Melissa Scallan, taxpayers will provide $2 million in road improvements for the facility. Also, Desoto county will negotiate a fee-in-lieu agreement for the project which will likely involve the fulfillment center’s property taxes.
According to the release from the MDA, the million-square-foot warehouse will ship large customer items such as sports equipment, patio furniture, kayaks and bicycles.
“This announcement serves as a shining example to industry leaders around the globe that Mississippi plays to win,” Gov. Phil Bryant said in an MDA news release. “We offer a supportive business climate and integrated transportation network so companies with shipping needs, such as Amazon, can reach their customers in rapid time and remain a step ahead of their competition.”
Some of the other taxpayer-funded economic development projects in Desoto county include:
- Medline Industries will receive $3.8 million from state taxpayers to build a medical supply distribution center Southaven in Desoto county that will employ 450.
- German agricultural equipment company Krone, which moved its headquarters and 45 jobs across the state line from Memphis to Olive Branch, will receive $7.3 million in property and inventory tax breaks in addition to a $250,000 equipment relocation grant. The company could also receive some income tax rebates that could add up to $675,000 annually over the next decade.
- O’Reilly’s Auto Parts will receive $300,000 to transform a 580,000-square foot warehouse into a new distribution center that will employ 380.
From 2012 to 2017, taxpayers have spent $678 million in just MDA grants alone from 2012 to 2017.
Select incentives for a few may generate headlines or photo-ops, but it does not generate sustained economic growth.
Economic development policy really means the state picking the winners and losers by employing direct subsidies and tax breaks to attract or promote specific businesses or industries. An authentic effort to grow our economy would not focus on giving targeted companies the assistance and resources without providing those to all companies and industries.
It is not fair to the current companies in Mississippi, who built their businesses without government help, to find themselves competing with companies subsidized by taxpayers. For too long, Mississippi has followed a policy that supposes “economic development” can be a meaningful driver of economic well-being in the state. It cannot. That policy is a losing one.
The evidence produced from analysis points convincingly to the conclusion that these targeted incentives do not produce long-term benefits in excess of their costs. In many cases, the cost-per-job is extraordinarily high. While some high-profile companies and their political allies may be better off, non-beneficiary companies may lose workers or experience wage increases, or both, and the state’s economic activity as a whole slows.
When political favor seeking is emphasized like this, it thwarts the private sector and tips the scales in favor of those companies and individuals with access to political relationships. It sends a message to the private sector that it should not focus on consumer-oriented actions, like product/service innovation or marketing, and focus resources instead on lobbying, legal representation, and elections. That’s not a recipe for sustained economic growth.
And we should also acknowledge the opportunity costs of corporate welfare. By eliminating corporate welfare, Mississippi, and every state in the nation with income taxes, could reduce their personal and corporate income taxes for everyone. Or, the money that is sent to select industries could instead be used for infrastructure, healthcare, education, law enforcement, or other basic functions of government.
Rather than increase the hand of government in our economy, we should trust the “invisible hand” of the marketplace and the proven incentive of profit and loss for the allocation of resources.