Koch group: Big tax breaks to lure Amazon’s second headquarters won't pay off

  • The policy director of a Koch-backed activist group discusses his opposition to local governments giving tax breaks to Amazon.
  • Sports stadiums are a glaring example of how tax breaks can fail to spur economic growth, says David Barnes at Generation Opportunity.

A millennial group backed by the conservative Koch brothers is warning cities that giving Amazon multimillion-dollar tax breaks for its new headquarters might not pay off.

Generation Opportunity, an activist group within the Koch network, has been speaking out against cities offering Amazon tax breaks and other incentives to encourage the e-commerce giant to build its second headquarters in their areas.

The Koch brothers, Charles and David, are billionaire businessmen who are megadonors for the Republican Party and conservative causes.

Their conglomerate, Koch Industries, has received over $430 million in state and federal subsidies since 1990, according to watchdog group Good Jobs First.

David Barnes, policy director at Generation Opportunity, argued on CNBC's "Squawk Alley" on Thursday that history shows massive infrastructure products like these don't always work the way local governments intend.

"When businesses get these breaks and special deals from governments, you see they promise a bunch of jobs that they usually can't deliver; they promise a bunch of economic growth that doesn't happen; and then once their 5-, 10-, 15-year deal has expired, then ... they're looking to either re-up those special agreements or they're going to move somewhere else," Barnes said.

Barnes used sports stadium subsidies as a leading example of these pitfalls. Wealthy teams get cities to build them new stadiums on the cheap, then pick up and move elsewhere for more subsidies, he said.

Generation Opportunity's main goal is to rally citizens around the problem and demand that politicians curb special handouts and bonuses to otherwise rich corporations, Barnes said.

The leader of the group, which consists mainly of 18- to 34-year-olds, even said that he would not shy away from working with Democrats to prevent Amazon from receiving subsidies.

Echoing Democratic sentiments of merit-based, un-incentivized business competition, Barnes said his group would "absolutely" join hands with Democrats to push its policy goals forward.

"Whether it's Amazon or Foxconn or Carrier, any of these different examples where you have governments picking one industry that they want to get in and giving them special deals ... just doesn't make sense. It's not fair," Barnes said.

"As a millennial organization, our generation really opposes these kinds of handouts and special deals," he said.

An Amazon spokesperson emphasized the company's investment in Seattle, where Amazon's main headquarters are located, in an email to CNBC:

"Amazon has invested over $4 billion in its urban campus in Seattle and paid more than $25 billion in compensation to its employees over the last seven years. We estimate these investments resulted in an additional $38 billion to the city's economy from 2010 to 2016 and created more than 50,000 additional jobs on top of our direct hires."

WATCH: Koch-backed group leader bashes Amazon tax breaks

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