The Journal Gazette
 
 
Sunday, July 25, 2021 1:00 am

Editorial

Tax break for Amazon a wrong use of incentive

EDITORIAL BOARD | The Journal Gazette

Fort Wayne City Council did a thorough overhaul of its tax abatement guidelines in 2013, clarifying the circumstances under which businesses should qualify for tax phase-ins.

“The reason,” Council member John Crawford, R-at large, said at the time, “is to get a business to come to Fort Wayne, to expand in Fort Wayne or to not leave Fort Wayne. The abatement should serve some purpose, rather than being like a welcome wagon.”

By that measure, Amazon's request for $7.3 million in personal property tax abatement looks like a welcome wagon. When asked to grant final approval Tuesday, the council should reject the request. The mega-retailer, with a 630,000-square-foot distribution center under construction in northwest Fort Wayne, is set to receive abatement on its real estate investment. That tax break is worth $16 million over 10 years.

We questioned the initial abatement request because it was not transparent. The deal was approved under the name of “Project Mastodon,” with council members and other government officials constrained by a nondisclosure agreement. While the size of the contract pointed to Amazon, the company's identity wasn't revealed to the public until three weeks later.

The request to phase in taxes on personal property investments over 10 years comes with Amazon's arrival already set. The distribution center is expected to employ about 1,000 workers earning an average annual salary of $30,000. A recent investigation by the New York Times found Amazon's model is to avoid an entrenched workforce. Opportunity for upward mobility is low and turnover is high.

“I voted against the Amazon request because we provided them a fairly large, sizable abatement for the building, and at that time, they said, 'If we don't have it, we won't come,' ” Council member Sharon Tucker, D-6th, said in voting against introduction of the current request. “They've already started building the building, and now they're using that exact same threat.”

Councilman Russ Jehl, R-2nd, said he won't support the measure because it amounts to a retroactive request.

“A retroactive abatement is not in the interest of the public,” he said. “The interest of the public is served when an abatement spurs economic development that otherwise would not occur, not to give a handout after it is already committed to. In this case, I'm skeptical of the merit of Amazon's abatement because it appears that a lease has been signed.”

This is not an indictment of all tax abatements. Tax phase-ins are necessary economic tools, but they don't serve the community well if they are awarded needlessly. In this case, they are simply a welcome wagon for a company already packed and on its way here.

Public hearing

Fort Wayne City Council will have a public hearing on the Amazon tax phase-in at 5:30 p.m. Tuesday at Citizens Square. 

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