Testimony against Amazon corporate welfare

Here are the remarks I made in testimony before the Council on Development Finance in an unsuccessful attempt to have them deny the latest corporate welfare giveaway of taxpayer money to the obscenely wealthy Amazon corp.

Please feel free to post or share as you wish. Please also note that on Friday, Amazon shares traded at $2,095 EACH.

John Kowalko
State Representative
25th District

I am here today at the request of many of my constituents and on behalf of all Delaware taxpayers and their families. Enough is enough. I am asking this group to, once and for all, stop these giveaways of taxpayer money to these obscenely wealthy companies. These gifts to corporations have not generated or created jobs nor prevented layoffs and transfers of existing jobs. Instead this addiction to corporate welfare has drained necessary government resources from working people and the small business community.

Further troubling is the fact that the recommendation to grant this money was made by the Partnership for Prosperity, a legislatively created and taxpayer funded entity that claims exemption from FOIA laws. Their meetings on this particular issue were conducted in secrecy and out of the public view. The fact that this Council on Development Finance is only releasing details of the deal today is an insult to the public’s right to know and flies in the face of good and transparent governance. Doling out money from the Strategic Fund, which is entirely comprised of taxpayer money, to the wealthiest corporations in the world is a practice not in the public’s best interest and displays a certain amount of arrogance and disregard for the electorate when shrouded in secrecy. This application should be rejected out of hand and not revisited unless all negotiations and details are conducted in full public view and under the scrutiny of elected officials such as myself and my colleagues.

As the News Journal reports, we are about to give away $4.5 million to one of the wealthiest companies in the world with no reasons being made public except that the grant was recommended by the unaccountable and nontransparent “Delaware Prosperity Partnership.”

Amazon, one of the wealthiest companies in the world, is asking Delaware for a $4.5 million state taxpayer grant. This request displays the unmitigated gall and greed of Jeff Bezos and his company. Last year, Amazon made a monthly after-tax profit of $1 billion.

Jeff Bezos has personally sold nearly $3.5 billion in Amazon.com Inc. stock in the past week (Feb 6, 2020), according to new financial filings.

Amazon became just the fourth U.S. company to reach $1 trillion in market cap earlier this week. Last Thursday, Amazon blew away fourth-quarter earnings expectations, posting a holiday-season profit of $3.3 billion on record quarterly sales of $87.4 billion.

Bezos is the world’s richest individual, by a comfortable margin. His $126 billion fortune is about $9 billion more than the runner-up.

This is not the only case of corporate extortion that Delaware leadership has acquiesced to in recent years. In a News Journal article dated March 3, 2016, titled Why Delaware plays the corporate welfare game the first paragraph speaks volumes.

“DuPont Co., JPMorgan Chase and Amazon are vastly different companies that share at least two things in common. They are among some of the largest companies in the United States and each has pocketed millions of dollars in Delaware taxpayer grants for promising to stay or expand here.”

“In some cases, the money is less than what these companies earn in a single day,” said former state Finance Secretary David Singleton, who also spent 15 years as JPMorgan’s managing director. “But it’s still a good chunk of money, and it’s coming out of our pockets.”

Economists, retired corporate executives, and former state leaders say those incentives are seldom the deciding factor in where companies choose to put their resources. They also question whether the investments pay dividends in the long run.

One of many examples of the ineffectiveness of these Strategic Fund grants to wealth corporations was the announcement of plans for DuPont to merge with Dow accompanied by the announcement that 1700 Delaware DuPont workers were being let go. Multi-million dollar grants were given to this company but the layoffs were finalized and by Ed Breen’s own admission were not returning to Delaware.

Another example of the business community’s ability to affect policy in Delaware is the passage of the Delaware Competes Act.

The legislation, which reformed the state’s corporate income tax structure, was a highlight of the pitch Markell made directly to DuPont executives.

The bill was introduced Jan. 12, 2016 — the first day of the legislative session. Two weeks later, Markell was able to sign the bill into law.

Previously, the state had calculated a company’s corporate income taxes based on the Delaware share of its employees, property and sales. The new law removed employees and property from the equation, so those taxes could now be calculated based entirely on in-state sales.

The law also effectively gave companies a tax break.

The state is now expected to bring in less money in corporate income taxes every year, to the tune of $8.2 million in the first fiscal year and $48.7 million over the next three years.

You might ask how have these massive giveaways of needed taxpayer dollars personally affects Delaware families and individuals. During the budget year of 2017, a year after tens of millions of dollars in corporate giveaways the Senior Assistance Program was defunded saving the state $1.6 million dollars but with tragic consequences. The announcement by the state was simply — “The State of Delaware has eliminated the Senior Prescription Assistance Program due to cuts in the budget approved this past July. The State sent a letter to each senior who had been receiving assistance through the program, telling them the program was ending.”

In August, 2017, Harold and Helen Masten were interviewed by a News Journal reporter covering the General Assembly’s elimination of the $1.6 million entitlement program that helped cover prescription and over-the-counter drug costs for low-income Delaware seniors.

The couple told the reporter they’d hoped to buy a new heater for their house this year. But with the ending of the Delaware Prescription Assistance Program, the couple was trying to figuring out how to pay for their utilities.

On November 29, 2017, the News Journal reported that an 88-year-old man who expected to face financial hardships after a state entitlement program ended earlier this year is now believed to have fatally shot his wife of 71 years.

After shooting 89-year-old Helen Masten, Harold then killed himself with the gun, state police have confirmed.

Fast forward to today and note that when the news of Amazons surreptitious request for $4.5 million in taxpayer broke in the Philadelphia Inquirer the News Journal headline read — “‘It’s devastating’: 4 found dead in tent at homeless camp in Stanton.” You are all obligated to reflect on the possibilities that instead of giving blank checks to the wealthiest corporations in America how we might direct that money to our own very vulnerable populations of the impoverished, the homeless and struggling seniors and small businesses in Delaware.

Following is a brief summary of some of the economic abuses perpetrated by Amazon.

Later this year, Amazon will begin accepting grocery orders from customers using the Supplemental Nutrition Assistance Program, the federal anti-poverty program formerly known as food stamps. As the nation’s largest e-commerce grocer, Amazon stands to profit more than any other retailer when the $70 billion program goes online after an initial eight-state pilot.
But this new revenue will effectively function as a double subsidy for the company: In Arizona, new data suggests that one in three of the company’s own employees depend on SNAP to put food on the table. In Pennsylvania and Ohio, the figure appears to be around one in 10. Overall, of five states that responded to a public records request for a list of their top employers of SNAP recipients, Amazon cracked the top 20 in four.

The new data showing Amazon employees’ extensive reliance on SNAP demonstrates an additional public cost of the corporation’s rapid expansion. Even as generous subsidies help its warehouses turn a profit, its workers still must turn to the federal safety net to put food on the table. In Pennsylvania, for instance, an estimated $24.8 million in subsidies support 13 warehouses employing around 10,000 workers. At the same time, more than 1,000 of those workers don’t make enough money to buy groceries, according to public data provided by the state.

The American people are financing Amazon’s pursuit of an e-commerce monopoly every step of the way: first, with tax breaks, subsidies, and infrastructure improvements meant to lure fulfillment centers into town, and later with federal transfers to pay for warehouse workers’ food. And soon, when the company begins accepting SNAP dollars to purchase its goods, a third transfer of public wealth to private hands will become a part of the company’s business model.

Amazon told investors it paid a federal income tax rate of 1.2% last year — that’s about 13 percentage points lower than the average American’s tax rate paid in 2019. Even more striking: That was a three-year high for Amazon.

Last year was the first time the e-commerce company reported paying taxes since 2016, according to recent financial statements filed with the Securities and Exchange Commission. Despite making billions in profits, Amazon showed federal tax refunds in 2017 and 2018. All told, the company reported $30.1 billion in profits in the U.S. over the past three years. It also reported paying a negative $104 million to the IRS — translation: Amazon received a nine-figure refund on its sizable earnings.

As I said at the beginning, enough is enough. Do not give this handout to Amazon.

Representative John Kowalko
25th District, Delaware

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