The Truth About Amazon, Food Stamps, and Tax Breaks

Since the early 2000s, Amazon has quietly received more than $1.5 billion in government subsidies, in exchange for bringing new jobs to cities and states across the country. At the same time, low-wage employees at Amazon's grueling warehouses have sometimes had to rely on a different kind of government benefit, like the Supplemental Nutrition Assistance Program, or food stamps, to make ends meet.

Now Senator Bernie Sanders is bringing renewed scrutiny to Amazon's reliance on taxpayer dollars to supplement wages. On Wednesday, the Vermont independent introduced the Stop Bad Employers by Zeroing Out Subsidies Act, which hits companies that have more than 500 employees with a 100 percent tax on some government benefits its workers receive, like public housing, Medicaid, and food stamps. For example: If the Stop BEZOS Act were to pass, McDonald’s would be taxed $100 every time one of its cashiers collected $100 in food stamps. The bill is designed to force large corporations to increase wages, and to raise awareness about how companies benefit from public welfare, even in a healthy economy.

The legislation would likely affect many large low-paying retailers, like Walmart and Home Depot, and also Amazon, which says it employs more than 125,000 full-time workers in its US fulfillment centers. The retail giant, which stayed silent amid President Trump’s repeated criticisms of the company, has mounted a public relations offensive in response to Sanders. Amazon even recently began instructing full-time “ambassadors” to promote positive stories about working in its fulfillment centers via a fleet of nearly identical Twitter accounts.

While Sanders is right to point out that many Amazon employees likely use public assistance to make ends meet, his new legislation doesn’t address the other kind of lucrative government benefits the retail giant often receives. In negotiating to open a new warehouse or other outpost, Amazon often obtains hefty tax breaks and other economic incentives from local politicians, the details of which aren’t always disclosed to taxpayers.

In the lead-up to the introduction of the Bezos bill, Sanders repeatedly singled out Amazon, now valued close to $1 trillion, for paying “employees wages that are so low that they are forced to depend on taxpayer-funded programs such as food stamps, Medicaid, and subsidized housing to survive.” He also invited Amazon warehouse workers to share their experiences with his office, some of which he later made public.

The initiative provoked a rare response from the retail giant, which in a blog post accused the senator of making “inaccurate and misleading accusations against Amazon.” In its response, Amazon took issue with Sanders’ claim that thousands of its workers rely on food stamps, arguing there’s no way to know if they’re employees who deliberately chose to work part-time or were seasonally employed. The company declined further comment on the legislation.

Amazon has a point. It’s impossible to know exactly how many workers at companies like Amazon use public benefits like SNAP, because many states don’t keep track, according to an investigation from news site The New Food Economy conducted by reporter Claire Brown.

She found that in five states, Amazon ranked among the top 20 companies with the most employees living in households that receive food stamps, even in places where it's not a top employer. But she was unable to obtain data from 25 additional states where she sought public records, in part because they don’t exist, at least not in a uniform manner.

There’s also no way to know how much the corporations that Sanders’ legislation targets, like Walmart, benefit from SNAP recipients buying food at their stores. In fact, the US Department of Agriculture and food retailers have specifically fought to conceal data about which companies benefit the most from the estimated $70 billion doled out in SNAP benefits each year. A South Dakota newspaper has been suing the Department of Agriculture to make the information public since 2010, and the case may now go to the Supreme Court.

“Not only can we not prove the first side of the equation, which is how many employees use SNAP, but also how much companies make off of it,” says Brown, the New Food Economy reporter. “We can prove neither side of the coin.”

Sanders’ legislation focuses on public welfare programs, ignoring how and why local governments dole out so much corporate welfare to companies like Amazon, Tesla, Apple, and Foxconn, long before a single employee is hired. Professional sports teams and car makers also have received enormous incentives from local governments, but experts say Amazon is unique in the amount and scope of public assistance it has sought.

"Amazon is particularly adept at receiving incentives, including for their distribution centers,” says Nathan Jensen, a government professor at the University of Texas Austin and coauthor of Incentives to Pander: How Politicians Use Corporate Welfare for Political Gain. He says some states, like Maryland, have allowed Amazon to collect some taxes that workers would otherwise pay to the state.

In a rare move last year, Amazon publicly invited cities to submit proposals to be the site for a second headquarters, noting that “special incentive legislation” may be required.

Meanwhile, taxpayers, and even some local politicians, aren't informed about the details of what companies like Amazon will get in exchange for coming to town. Unlike, say, a proposed tax increase to pay for a new school, few public hearings usually take place over how much a newly arrived employer should be allowed to forgo paying in taxes.

Some municipalities submitted bids for HQ2, as the project is known, through their local chambers of commerce, shielding the proposed incentive packages from open-records laws. The final 20 cities, cut down from over 200, were also reportedly required to sign nondisclosure agreements with Amazon. In some cases, the retail giant has also argued that the discounts it receives on public utilities amount to a trade secret.

Jensen says that economic incentives can come at the expense of public services like schools, and that evidence suggests firms will still bring jobs to new areas without them. "School districts are especially hit by many of the property tax abatements where they often struggle to finance schools or there have to be property tax increases to maintain the same level of services," he explains. "Most of the evidence suggests that incentives are rarely pivotal in attracting investment… Many of the things that really matter to firms, highways and workforce quality, are paid for through taxes."

Despite the potential downsides, Greg LeRoy, the executive director of Good Jobs First, says companies often succeed in securing sweetheart deals because of the intense competition among cities, towns, and states to secure new jobs and foster economic growth. It creates a race to provide the biggest tax breaks for all sorts of companies, beyond Amazon.

In the wake of the 2008 recession, “politicians are desperate to look aggressive on jobs and they have a lot fewer deals to compete for,” says LeRoy, whose group compiled the total of Amazon's subsidies. “Amazon has completely played the system that it inherited like a fiddle.”

In 2006, the Supreme Court had the chance to decide whether such tax incentives are constitutional under the Commerce Clause, but the justices ultimately avoided directly confronting the issue.

Economic incentive deals often last longer than the terms of politicians who broker them. But in the moment, the chance to stand next to a figure like Jeff Bezos at the unveiling of a new warehouse is often too valuable a political moment to pass up.

“What governor doesn’t want to stand next to Tim Cook and announce a new data center, even if it’s only going to employ 50 people?” asks LeRoy. “The political power, the political ‘juice’ of associating yourself with a famous company is enormous.”

President Trump has sought to politically benefit from the same type of incentive package that Amazon has received, when he reportedly personally helped organize the eye-popping $4.8 billion Foxconn deal arranged to lure the iPhone manufacturer to Wisconsin. As a businessman, Trump also secured similar deals for his own properties.

The Stop BEZOS Act ultimately only addresses one kind of public assistance that companies like Amazon stand to benefit from: welfare programs like food stamps. The legislation, were it to pass, would do little to stop local governments from competing in secret to attract companies, and jobs, to their cities. Implementing the legislation would also prove onerous, since information like what companies employ food stamp recipients isn’t readily available.

But Sanders may still succeed in putting pressure on local politicians to examine whether the deals they’ve made with the world’s most wealthy corporations are fair. The stakes are high: Amazon is set to soon announce the final location of its second headquarters, and Apple is currently shopping for the site of another campus as well.

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