Amazon, the worlds largest online retailer, decided to pull out of its deal to set up a second headquarters (HQ2) in Long Island, Queens New York due to rising protests and negative media attention. On February 14, 2019, Amazon announced after much thought and deliberation, weve decided not to move forward with our plans to build a headquarters for Amazon in Long Island CityFor Amazon, the commitment to build a new headquarters requires positive, collaborative relationships with state and local elected officials who will be supportive over the long-term.[1] Amazon said it has no plans to re-open another headquarters elsewhere at this time, but would continue its plans in Virginia.

Various U.S. States had put in bids with tax incentives to attract Amazon to set up a new corporate Head Office. The deal was expected to provide $30 billion in tax revenue over the long term by creating 25,000 new jobs paying an average of $150,000 per person while the state and city governments provided tax incentives of $3 billion to Amazon to help subsidize the cost of its building, salaries, a helipad and other expenses.[2]

New York Governor Andrew Cuomo, a supporter of the deal, was deeply disappointed that Amazon threw away an opportunity and wasnt tough enough after receiving extensive criticism. Cuomo said, we competed in and won the most hotly contested national economic development competition in the United States. However, a small group (of) politicians put their own narrow political interests above their community which poll after poll showed overwhelmingly supported bringing Amazon to Long Island City.[3] Cuomo argued that the long-term economic development for Long Island City outweighed any initial government investment. It costs us nothing, he said since, he contends, we are only forgoing taxes we wouldnt get at all if Amazon didnt come here in the first place. He says we will make back $9 for every $1 in tax forgone, give or take.[4]Opponents said it was a zero sum game, that jobs are just getting moved from state to state and that there are no real winners or losers.

Protestors to the deal were glad that Amazon backed out and now the $3 billion in taxpayer dollars promised to Amazon can now go to schools, roads, firefighters and other community needs. Since Amazon is valued at over $700 billion dollars, many people argued the company doesnt require help from taxpayers.[5] For example, in 2017, Amazon earned over $178 billion in revenues, earning founder and CEO Jeff Bezos the status of the wealthiest man in the world.[6]

Many opponents were against the deal for other reasons. There was some concern that the influx of 25,000 people to Long Island City was going to cause a rise in rents, housing costs and put extra demands on the transit system. Supporters argued that the $30 billion in additional revenue could have helped fix the ailing transit system, repair roads and other infrastructure needs. After all, the 25,000 employees would be paying income tax, spending money and assisting the local economy. Coffee shops, restaurants, gasoline stations, and other local businesses could benefit from potential improved sales from the increased consumer traffic, demand, and economic development in the area. There was also hope that this economic influx could increase further jobs (outside of Amazon) and reduce the poverty level in the area. Amazon would have been moving near Queensbridge Housing, the countrys largest public housing project, where the median annual household income is $15,843 and nearly 60 percent of its households rely on food stamps.[7]

Everyone in New York City is a loser now, because we lost these good-paying jobs and unfortunately our reputation as someone who is welcoming of business as well, Republican Assemblywoman Nicole Malliotakis said.

Regardless of the potential economic benefits, many opponents argue that some corporations are getting too powerful and should not have governments competing in bidding wars for jobs. Clearly, small businesses and start-up companies do not receive these kinds of benefits. Other critics argue it is also a question of how special deals may undermine the political process. For example, the negotiations between Amazon and New York State were kept secret and not open to the public until finalized. There was no stakeholder engagement, community involvement or transparency during the proceedings.

Most analysts agree Amazon already has significant market dominance. Amazon is a global online retailer, a content producer, book supplier and cloud computing service. Amazon has also become an essential channel for millions of companies to reach their sellers. This gives Amazon a great deal of power. For example, Amazon competes on a cloud-basis with Microsoft, Google and IBM, and on a retail basis with Walmart and everyone else.

Amazon is the largest Internet company by revenue in the world and the second largest employer in the United States. In 2015, Amazon surpassed Walmart as the most valuable retailer in the United States by market capitalization. When there is a concentration of economic power, this translates into political power which poses a threat to the democratic process and the free market system. In 2018, for example, Amazon paid zero $0 in federal corporate income taxes due to some effective tax planning strategies and tax loopholes that the government has failed to change, including some unspecified tax credits and a tax break for executive stock options.[9] It was however legally done within the existing tax laws.

Government tax revenue impacts the amount of funding for schools, libraries, road repairs, police officers, firefighters and other community services. And with New York States debt of $64 billion, the 2^nd highest level in the country, the State continues to be scrutinized for how it spends its tax dollars.[10] For now, Amazon has ended the public scrutiny over its Long Island HQ2 deal, but may look for more tax subsidies in the future. Amazon has become an expert at negotiating tax incentives with state and local governments. From 2005 to 2014, its gotten over $600 million in tax breaks to build warehouses in certain states. It got another $147 million in tax breaks from building data centres around the country.[11] Tax incentives are nothing new.

1. What are the ethical issues in this case?

2. According to utilitarian ethics, is it ethical for Amazon to accept $3 billion dollars of free taxpayer money? Apply the theory with case examples to support your analysis.

3. Considering the Christian perspective, is the State of New Yorks action to offer Amazon $3 billion dollars of free taxpayer money: holy, just and loving? Apply the theory with case examples to support your analysis.

4. According to Carolls 4 levels of social responsibility, was it socially responsible for the government to be offering Amazon $3 billion dollars of free taxpayer money? Why or why not? Apply the theory with case examples to support your analysis.

1. What are the ethical issues in this case?

2. According to utilitarian ethics, is it ethical for Amazon to accept $3 billion dollars of free taxpayer money? Apply the theory with case examples to support your analysis.

3. Considering the Christian perspective, is the State of New Yorks action to offer Amazon $3 billion dollars of free taxpayer money: holy, just and loving? Apply the theory with case examples to support your analysis.

4. According to Carolls 4 levels of social responsibility, was it socially responsible for the government to be offering Amazon $3 billion dollars of free taxpayer money? Why or why not? Apply the theory with case examples to support your analysis.