Tax breaks

Giving tax abatements to corporations eventually shortchanges the community.

In late June, Harris County officials achieved another “victory” for economic development: a $7 million property tax abatement for a giant Amazon distribution center at the intersection of Interstate 45 and Beltway 8.

The pact barely will make a difference in the company’s bottom line, as it posted an all-time profit of $857 million last quarter and the company is valued at around $365 billion. What will the citizens of Harris County receive in exchange in lieu of an investment in say, public safety? Not enough.

Some contractors will undoubtedly benefit from the construction of Amazon’s 855,000-square foot-facility that will cost $136 million and the new warehouse will create 1,000 jobs, according to a prospectus provided to the county as reported by Chronicle reporter Lydia DePillis (“Area should drive better bargain on tax incentives” Page B1, Aug. 7).

But while more jobs are always a good thing, the county did not set any standard as to the quality of the jobs to be created. Amazon says its low-level workers will make between $23,000 and $30,000 a year. That’s not enough to support a family in Houston, where costs are escalating.

The other return that Harris County got on its investment: The new warehouse may also allow residents of Harris County who shop on Amazon to receive their packages a little bit faster, according to DePillis. Our question: How will that affect the vast number of local retailers and their employees who do not receive tax breaks in connection with their stores?

Businesses often ask for lower taxes. In certain limited circumstances tax abatements can be good public policy. But tax break requests should receive rigorous, deliberate review. Although Amazon claimed that it would not have located the warehouse here without the tax breaks, it’s hard to believe that the online retailing giant would have given up easy access to the Houston market in exchange for a mere $7 million.

Some critics have pressed the county to drive a better bargain for employees when giving out abatements. “Whenever local government is going to spend our money to create jobs, it should be creating good, safe jobs,” Jose Garza, director of the Austin-based Workers Defense Project told DePillis.

But there’s really only one way to ensure that Houstonians benefit from tax breaks designed to boost economic development: Government officials should say no to the tax breaks and use the money saved for broad-based public investments.

Amazon needs the same things as do other area employers: Good roads and streets are indispensable to delivery trucks as well as for employees driving to and from work. Property taxes support all city, county and school bond issues for enduring capital improvements and much of the operating budgets for schools and public safety.

Amazon and other firms seeking tax breaks will presumably need skilled employees. If Harris County has tax dollars to earmark for economic development, more partnerships with an area community college system to help high school students obtain the skills that they need to succeed in a development job market would have been a better way to invest our precious tax dollars.

With tax rebates, it’s always the same old story — a promise of new jobs if a firms pays less taxes per dollar of appraised value than homeowners or the vast majority of businesses, and politicians claim that they have “created jobs.” But make no mistake that this scheme does come at a widespread cost to the community: The less in tax revenue that one favored real estate owner pays, the fewer resources the county will have to invest in basic services, unless it raises taxes on others.

This hardly seems a best-government practice, nor should it be a standard one.