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Maryland will offer Amazon a package of $5 billion in tax incentives and transportation upgrades in its bid to land the company’s second headquarters, Gov. Larry Hogan (R) said Jan. 22.
The proposal follows Amazon.com Inc.'s announcement Jan. 18 that it has narrowed down its search to 20 locations, with Montgomery County, Md., making the cut. Amazon estimates it will invest $5 billion and employ as many as 50,000 in the new site.
“The Hogan administration has put forth an incentive package that makes Maryland competitive with any state or city in the country,” Maryland Commerce Secretary Mike Gill said in a statement Jan. 22. “We’re playing to win.”
The proposed Maryland legislation, which Hogan called the “Promoting ext-Raordinary Innovation in Maryland’s Economy (PRIME) Act of 2018,” would offer 10 years of tax incentives worth $3 billion and billions more in road, transit, and infrastructure upgrades, bringing the total value of the package to $5 billion. The proposal will require legislative approval.
Nearby finalist Newark, N.J. has offered as much as $7 billion in tax credits to persuade the online retail giant to move there. However, most tax proposals among the HQ2 finalists remain a secret.
Among the tax credits that Maryland would offer: a 10-year credit against the state income tax for each new full-time job, a credit against the state and local property tax, and an exemption from sales and use tax for construction materials and warehouse equipment. To qualify for the income tax credit, equivalent to 5.75 percent of wages, the position must be full-time, hired during the first 17 years, and pay between $60,000 and $500,000 per year, according to a fact sheet the governor’s office released Jan. 22.
The company would need to spend a minimum of $5 billion in capital expenditures and employ at least 40,000 people over a 17-year period to qualify for the credits, the governor’s office said. The bill would include clawback provisions to recoup the credits if the company doesn’t spend enough or create enough jobs.
Some Maryland Democrats in the past have expressed reservations about large tax incentive programs. Maryland’s House and Senate leadership didn’t immediately return requests for comment.
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