SATURDAY, DECEMBER 25 , 2021. THE WASHINGTON POST EZ RE A
Economy & Business
BY CAT ZAKRZEWSKI
Amazon has been heavily ex-
panding into areas that the gov-
ernment designates for special tax
incentives, according to a new
analysis that comes amid growing
regulatory scrutiny of the e-com-
merce giant.
The company has located deliv-
ery stations, fulfillment centers
and even an air hub in “opportu-
nity zones,” regions across the
country where investors can qual-
ify for capital gains tax breaks
under a 2017 law.
The initiative had bipartisan
backing and was intended to in-
centivize investment in some of
the most economically distressed
regions of the country. But critics
of the program have raised con-
cerns that such programs further
enrich wealthy investors and cor-
porations for projects that would
have happened without govern-
ment assistance. And because
there aren’t requirements that in-
vestors and corporations publicly
report how they are using the tax
breaks, it’s difficult to measure
impact. Experts say it’s impossible
to know if the program is having
the intended effect of creating
jobs and affordable housing — or
simply exacerbating economic di-
vides.
Amazon has opened 153 facili-
ties in these zones since 2018,
accounting for more than 15 per-
cent of the warehouses that it has
opened in that time period, ac-
cording to the analysis from Good
Jobs First, a policy resource center
working with subsidy data, shared
exclusively with The Washington
Post. And 18 more facilities are
scheduled to open in these areas
in 2022 and 2023.
The findings underscore one of
the potential ways that Amazon
could take advantage of federal
tax subsidies as it rapidly expands
its delivery network. The compa-
ny’s relatively low tax bills have
been at the center of a political
firestorm. The Good Jobs First
researchers say the company has
received at least $650 million in
government subsidies this year,
but that the expansion into oppor-
tunity zones highlights how the
company could be receiving other
tax breaks that are opaque to the
public and difficult to track.
“More sunshine” is needed to
better track the opportunity zone
program, said Greg LeRoy, execu-
tive director of Good Jobs First.
Amazon spokeswoman Julia
Lawless said the company hasn’t
used the benefit in any of the 171
sites identified in the Good Jobs
First analysis. (Amazon founder
Jeff Bezos owns The Washington
Post.)
“We may use the [opportunity
zone] benefit on future acquired
sites as Congress intended it to
help jump-start local economies
in the types of areas we are invest-
ing in and creating jobs,” she said.
She added that the company
“does not actively seek out” loca-
tions in the zones.
“If we locate in one of these
areas, it’s because of our site selec-
tion criteria — from available land
to access to talent — aligns with
tracts that governments, across all
levels, have previously identified
for economic development; not
because we utilized the [opportu-
nity zone] benefit,” she said.
Opportunity zones could be a
boon to big companies like Ama-
zon, that buy and sell many assets,
leading to capital gains. Compa-
nies can invest those gains into
projects in opportunity zones, al-
lowing them to defer tax pay-
ments.
LeRoy says Amazon has been
particularly aggressive in “garner-
ing available tax breaks.” The
Good Jobs First report argues the
expansion into opportunity zones
is part of a much broader pattern,
where Amazon’s rapid growth has
been bolstered through govern-
ment subsidies. This push into
potentially advantageous markets
comes as federal policymakers are
applying increasing scrutiny to
the company. Lawmakers have in-troduced legislation that takes
aim at Amazon’s alleged anticom-
petitive behavior, and President
Biden has elevated some of the
company’s most prominent crit-
ics, including Federal Trade Com-
mission Chair Lina Khan, to key
regulatory roles.
Amazon has rapidly expanded
amid an e-commerce boom, in
part accelerated by the coronavi-
rus pandemic. Good Jobs First
estimates that Amazon has re-
ceived $4.2 billion in U.S. subsi-
dies, through property tax abate-
ments, corporate income tax cred-
its and even sales tax exemptions
on building materials.
“You’ve got two functions of
government fighting each other
right now,” LeRoy said. “You’ve got
state and local governments fuel-
ing this monopolistic grab in the
retail space, accelerating the de-
cline of brick-and-mortar retail.
And you’ve got Uncle Sam finally
smelling the coffee and realizing
that maybe they have to look at the
company through that lens.”
Amazon has a high-profile andcontroversial history of seeking
government subsidies to expand its
corporate footprint. In 2017, the
company launched a nationwide
search for its second headquarters.
Faced with the promise of 50,
high-paying jobs, cities aggressive-
ly competed to offer the company
tax breaks and other incentives to
attract the office. But after the com-
pany in 2018 announced it would
split the new headquarters be-
tween Virginia and New York City,
it faced broad blowback from liber-
al politicians, unions and commu-
nity activists, who argued taxpayer
dollars should not be used to fur-
ther enrich a tech giant, and that
the project would exacerbate in-
come inequality in the city. The
company ultimately dropped its
plans to open the New York cam-
pus, amid the criticism that the tax
incentives would take government
resources away from other key pro-
grams, but pushed forward in Vir-
ginia.
However, unlike the high-pro-
file headquarters search, the sub-
sidies and incentives that Amazonreceives for smaller local projects,
like warehouses, data centers and
offices, often fly under the radar.
The role of opportunity zones in
fueling corporate growth is espe-
cially opaque, said David Wessel, a
senior fellow in economic studies
at the Brookings Institution. The
tax law does not mandate public
disclosure of who is using the
opportunity zone program, and
whether their projects are result-
ing in jobs or affordable housing.
There have been some media re-
ports about how individual inves-
tors have benefited from them,
but less attention on how large
corporations have used them.
That could be problematic if
companies are using them to fund
projects that do little to benefit or
encourage job growth in the com-
munity, but garner them large tax
breaks.
“It’s an unanswered question
just how aggressive corporations
are in the opportunity zone space,”
he said.
Lawmakers, including Rep. Bill
Pascrell Jr. (D-N.J.) have been call-Amazon is building in ‘opportunity zones’
Company has located delivery stations, fulfillment centers in regions that qualify for capital gains tax breaks under a 2017 law
ing for more robust reporting re-
quirements around opportunity
zones, especially in the wake of a
Government Accountability Of-
fice report that found the IRS does
not have the necessary data to
evaluate the efficacy of the pro-
gram. Pascrell also criticized the
fact that there is no cap on the
amount that investors can receive
through the program.
“Nationwide, there is concern
that the benefits are mostly flow-
ing to those zones that were al-
ready ripe for development and
could provide certain returns on
investments,” Pascrell said at a
recent hearing.
Political scrutiny of Amazon’s
tax payments has escalated in re-
cent years, especially after the
company paid no federal taxes on
profit of $11.2 billion in 2018.
Democrats, including Sen. Cory
Booker (D-N.J.) and Biden, repeat-
edly attacked the company for not
paying its fair share of taxes dur-
ing the presidential primary race.
The company responded with an
aggressive social media strategy,
frequently tweeting at individual
politicians.
“We pay every penny we owe,”
the company said, saying the poli-
ticians’ complaints were about the
U.S. tax code, not Amazon itself.
[email protected]ELIJAH NOUVELAGE/GETTY IMAGES
Amazon has opened 153 facilities in “opportunity zones” since 2018, more than 15 percent of the warehouses it has opened in that time period, according to a new analysis.3-D file, says Itemfarm CEO Alder
Riley.
For people who buy and sell
NFTs, it’s usually not a casual in-
terest. It’s the kind of hobby that
inspires passion and, in some cas-
es, talking about it to obliging
loved ones. Perhaps it’s because
NFTs are only increasing in value
as long as more people buy into
the idea. It has been compared to a
pyramid scheme, but defenders
say it’s no more or less an asset
than sneakers, paper money or
stocks. For some families, it’s more
about being involved in some-
thing together than hitting it big.
Mariana Benton has a holiday
list of her dream NFTs and at the
top is a Cool Cat, one of a line of
drawings of cats (she’s not expect-
ing anything from the list, but just
in case). Benton wasn’t into NFTs
at first, but her husband Alex
eventually won her over by show-
ing her the NBA Top Shots NFTs,
the league’s digital collectibles.can simply put it in the recipient’s
virtual wallet, but then you miss
out on the drama. Usually people
give a virtual representation when
they can’t get the physical gift on
time, like a picture of a back-or-
dered gadget. Making a real-world
representation of an NFT is the
reverse — a physical gift that’s a
placeholder for the virtual.
You can print out a version to
wrap or pop in a nice envelope,
like Caton. Kristen Langer is an art
teacher and calligrapher who is
planning to set up virtual wallets
for her niece and nephew as a
present. When you set up the new
wallet you get a list of random
words to access it as a recovery
phrase, so Langer is going to write
the words out in calligraphic style.
3-D printing company Itemfarm
has seen an increase in requests to
make physical versions of the im-
ages on NFTs. It involves confirm-
ing the person owns the NFT, then
often wrestling a 2-D image into aand got into NFTs full time, she
wasn’t entirely on board.
But he had struggled with anxi-
ety, depression and addiction is-
sues in the past, and she saw how
his new interest was pulling him
out of it. Eventually she started to
participate with some caveats:
Kristen Langer has final say over
most financial decisions around
NFTs, and while they’ve invested
some of their savings, it’s not so
much that they couldn’t recover
from it.
“He has a pattern where he gets
just stupid excited about some-
thing,” said Kristen Langer, 36.
“But I really feel like it’s made us
grow closer because it’s something
he can teach me about instead of
us coming home and complaining
about our days.”
For her birthday, Josh Langer
got his wife an NFT of the Scissor
Sisters song “I Don’t Feel Like
Dancin’.”
“It was my anthem in college,”
Kristen Langer said. “I don’t know
about resell value but this song is
about me.”
Emily Cornelius does not want
an NFT for Christmas. Her boy-
friend, Ian Schenholm, is an avid
gamer studying for the bar exam
who spends hours researching
crypto and NFTs online. He enjoys
telling Cornelius about it all, but
she’s made it clear that just be-
cause they can talk about it, that
doesn’t mean she wants to be as
involved.
“I don’t even want to know how
to do it. I don’t ask him to get into
astrology, I don’t ask him to get
into color correction and how that
could really enhance photos of
himself,” said Cornelius, a comedi-
an in Denver. “I would rather have
something that is meaningful to
me. I think that’s true of any gift.”
[email protected]The couple exchanged NFTs for
Hanukkah.
“At first I didn’t understand
why Alex was spending so much
time in this thing,” Mariana Ben-
ton said. “Now it’s a whole cool
new thing we can talk about.”
For the couple, who live in Los
Angeles with their two kids, col-
lecting things was already a family
affair. Everyone in the house is
into Pokémon cards, and Mariana
and Alex collect baseball cards.
Now the kids have their own cryp-
to wallets and their 10-year-old
daughter is writing about NFTs for
a school paper.
“My daughter and I minted our
first NFT together. We sat holding
hands and clicked the button,”
Mariana Benton said proudly.
Getting involved in NFTs from
scratch isn’t exactly easy, and nei-
ther is giving one as a gift. First
there are the technical issues —
the recipient needs a wallet to
“hold” the NFT, and the giver
needs the right cryptocurrency to
purchase it. The cost of entry is
high, at least a couple hundred
dollars, for the NFTs that have the
potential to appreciate. There is
also special lingo, different sub-
cultures, Twitter accounts to fol-
low and Discord rooms to join.
Alex Benton is also buying his
mom an NFT for Christmas, at her
request. She follows him on Twit-
ter and wants to be more involved
with what he loves, so he’s going to
set up a wallet and buy her an NFT.
Unlike a nice scarf, a pair of
earrings or a Swedish ax, getting
an NFT is either accepting an en-
tire world that you need to learn
about, or forgetting about it like a
bond your grandparents gave you
and not knowing if you’ll ever
benefit financially.
When Langer’s husband Josh
lost his job earlier in the pandemicis stored on the blockchain — a
kind of public ledger — and they
can double as an investment and a
kind of art, albeit one that you
admire on a screen. They’ve taken
off in the past year, with an NFT
created by an artist named Beeple
selling for $69 million at auction.
More recently, Melania Trump
was pushing an NFT painting of
her eyes, and Tom Brady offered
NFTs of his college resume and old
cleats.
They combine an age-old enjoy-
ment in collectibles like baseball
cards with the rush of gambling.
For people who may have stayed
away from the more purely mon-
etary world of bitcoin, NFTs can be
a more accessible entry point. Yes,
you might be buying a unique
digital token stored on the block-
chain, but you’re also getting a
cartoon of a depressed primate in
a cute sailor hat. And once the
recipient has one, they might hold
onto it indefinitely for the senti-
mental value, or trade it away (the
rare gift where immediately sell-
ing it off isn’t always considered
rude).
As with any present, your mile-
age may vary. NFT values can fluc-
tuate and they could end up worth
less than you paid. But unlike
cryptocurrency, they might al-
ways be worth a little something
sentimentally. Many families are
already all in, and know a virtual
gift will be appreciated and even
reciprocated. Others hope gifting
an NFT will hook their loved ones
so it can become a shared passion
instead of something one person
won’t stop talking about. But
there’s no guarantee the person
getting it will appreciate the gift
and it could backfire, or at least be
met with confusion.
There’s the question of how to
actually package a gifted NFT. YouBY HEATHER KELLY
Alex Caton put a lot of thought
into his girlfriend’s Christmas pre-
sent this year.
The 24-year-old found a stun-
ning picture taken by a local pho-
tographer of her hometown of
Mississauga, 17 miles south of To-
ronto. In the foreground is her city
and in the distance the glittering
skyline of Toronto, where the cou-
ple lives together. He thinks of it
like her old life looking toward the
future, to their new life together.
There is one small catch. The
image he bought for around $
is in the form of an NFT, a one-of-a-
kind asset that exists digitally. Ca-
ton, a computer engineer, is the
one in the relationship who’s most
interested in NFTs. He’s aware
that even though they talk about
NFTs together and took in a real-
world NFT gallery show recently,
his girlfriend would probably en-
joy something more tangible, too.
So he’s trying to get an official
print of the photo to wrap up,
along with a fitness tracker.
“It’s not something I’d want to
push onto somebody,” Caton said
of the NFT. “I thought it would be a
meaningful gift.”
It’s too late to order or find some
of this year’s hottest Christmas
presents, but there is one buzzy
gift that’s still doable (if risky): An
NFT. A virtual gift is often a fall-
back for last-minute shoppers, but
it’s also appealing for anyone wor-
ried about supply chain issues, the
rising prices for physical goods
and a rapidly spreading coronavi-
rus variant that makes shopping
in person less attractive.
The term NFT stands for non-
fungible token, which rarely clears
anything up, but they are unique
digital assets, like an image or
audio recording. Their ownership
Reactions may vary to this year’s hottest present: NFTs
MARK ABRAMSON FOR THE WASHINGTON POST
Mariana Benton and her daughter Julia look at NFT art on a phone
screen in their Los Angeles home on Dec. 16. For the Bentons,
NFTS are a family affair, and a perfect Christmas gift.