Yup. "Amazon seeks a city to provide cushy tax credits in exchange for vague, unenforceable promises of job creation" would've been a more accurate headline.
I’m not sure if it was a typo on your part, or you might be misinformed of what the actual deal was that was struck. From TFA;
“Amazon was to build their headquarters with union jobs and pay the city and state $27 billion in revenues. The city, through existing as-of-right tax credits, and the state through Excelsior Tax credits - a program approved by the same legislators railing against it - would provide up to $3 billion in tax relief, IF Amazon created the 25,000-40,000 jobs and thus generated $27 billion in revenue. You don't need to be the State's Budget Director to know that a nine to one return on your investment is a winner.“
The crucial point is that there is no cash to bank! The politicians statements that the “money could have been better spent on xyz” was a lie.
The deal was to reduce taxes on future revenue if and only if Amazon met specific (lofty) investment and job creation requirements.
”Make no mistake, at the end of the day we lost $27 billion, 25,000-40,000 jobs and a blow to our reputation of being 'open for business.'”
And it's not like Amazon has brought nearly as many jobs to NYC as they planned to with HQ2.
This isn't necessarily to say that the calculus was wrong here -- New York is perhaps uniquely a place that doesn't really need a huge influx of Amazon jobs. But I think a lot of people misunderstood the HQ2 process as like "this was a unique and rare situation in which a local government applied tax incentives to get a corporation to open a major facility there." It wasn't. That's very routine. What was unique and rare about the HQ2 process was how public it was.
"Incredibly, I have heard city and state elected officials who were opponents of the project claim that Amazon was getting $3 billion in government subsidies that could have been better spent on housing or transportation. This is either a blatant untruth or fundamental ignorance of basic math by a group of elected officials. The city and state 'gave' Amazon nothing. Amazon was to build their headquarters with union jobs and pay the city and state $27 billion in revenues. The city, through existing as-of-right tax credits, and the state through Excelsior Tax credits - a program approved by the same legislators railing against it - would provide up to $3 billion in tax relief, IF Amazon created the 25,000-40,000 jobs and thus generated $27 billion in revenue. You don't need to be the State's Budget Director to know that a nine to one return on your investment is a winner."
"Incredibly, I have heard city and state elected officials who were opponents of the project claim that Amazon was getting $3 billion in government subsidies that could have been better spent on housing or transportation. This is either a blatant untruth or fundamental ignorance of basic math by a group of elected officials. The city and state 'gave' Amazon nothing. Amazon was to build their headquarters with union jobs and pay the city and state $27 billion in revenues. The city, through existing as-of-right tax credits, and the state through Excelsior Tax credits - a program approved by the same legislators railing against it - would provide up to $3 billion in tax relief, IF Amazon created the 25,000-40,000 jobs and thus generated $27 billion in revenue. You don't need to be the State's Budget Director to know that a nine to one return on your investment is a winner."
I suspect I'll never get why the notion of giving a tax handout to a company that's one of the most valuable in the world shouldn't be a non-starter.
> Incredibly, I have heard city and state elected officials who were opponents of the project claim that Amazon was getting $3 billion in government subsidies that could have been better spent on housing or transportation. This is either a blatant untruth or fundamental ignorance of basic math by a group of elected officials. The city and state 'gave' Amazon nothing. Amazon was to build their headquarters with union jobs and pay the city and state $27 billion in revenues. The city, through existing as-of-right tax credits, and the state through Excelsior Tax credits - a program approved by the same legislators railing against it - would provide up to $3 billion in tax relief, IF Amazon created the 25,000-40,000 jobs and thus generated $27 billion in revenue. You don't need to be the State's Budget Director to know that a nine to one return on your investment is a winner.
Actually, you do. Amazon already created jobs in NYC, without any handouts needed. Google recently announced they'd create more jobs, and they didn't expect a handout to do so. By the above logic, a 9:1 return for Amazon jobs is a good deal. What about the Google jobs? Do those count as infinite return?
If so, more infinite returns, and less 9:1 returns, please.
> Of course Amazon should be asking tough questions of cities akin to “and what are you going to do to support me” before spending $5 billion building a new campus.
Nothing. We exist to support our tax-paying residents and local businesses, and so you will have to work with everyone that's already here if you want something in particular. You can probably expect a new bus line, an extension of the road, sewer, and water system, one new police station, one new firehouse, two new elementary schools, half a middle school, and a new wing of classrooms at the nearest high school. The quality of all that will depend on how much your company improves the local tax base, so don't get too stingy, or the local news will have no problem airing all the dirty laundry for Amazontown a couple years down the road. The zoning board will be busy changing colors on their map so that your people can eventually spend money on drive-through coffee and dog-walkers without having to go all the way downtown.
Amazon needs to come to the table with the attitude "We're going to increase your tax base by $X. What's your plan for spending it?" The ideal city just has to blow the dust off the growth plan they already have and write new names and dates in all the blanks.
Any city that says, "we're going to give you a tax discount" is basically saying "we would rather you send your money off to Wall Street than actually spend it to improve the community that you intend to join here."
I suppose a city could also offer a bureaucrat dedicated to expediting issues related to the new HQ, like building permits and inspections and NIMBY lawsuits, if they wanted to pay the cost of that person's salary as a donation to the city. I just never quite understood the concept of offering discounts to rich people.
> The city is complaining that Amazon is making some of their citizens too rich.
The city would prefer that Amazon's presence has benefits for citizens as a whole - or at least didn't make their live worse - rather than enriching a few. Seems reasonable to me.
We decided it was ridiculous to offer $1.5 billion in incentives when we would never recoup that, so we protested.
Amazon paid no federal taxes last year (https://www.washingtonpost.com/us-policy/2019/02/16/amazon-p...), and probably would have figured out how to pay little corporate state tax. At the promised level of 25,000 jobs with an average $150,000 salary, the city (but not the state) would have only seen an extra ~$150mil in income taxes.
There's lots of ways to run the projections and factor various costs/benefits, but few of them would have resulted in a 10x improvement in the offhand estimates.
It was a bad investment for the city the same way most sports stadiums are.
Too many debates I read online today assume that the city was going to hand Amazon a $3b check. Some sort of misunderstanding of how taxes/tax subsidies work.
I'm going to go against the consensus here and agree with you. Sure it would be great if Amazon moved to your city and added jobs, but that's not what they are doing. They are trying to start a bidding war between cities so that in the end the city gets as little value as possible and Amazon gets the most. This is especially true if you end up in a situation where Amazon gets some tax break for X years and the city expects a return in X+5 years, but Amazon just moved again after the tax break is gone.
Cities do better when they set themselves up to be attractive to companies naturally, not when they try to bribe an company to come to them
No. Not "new business". "A" new business. It's a sweetheart deal for one company in particular subsidized by the taxpayers. They're not reducing their citywide tax rate to attract Amazon, they're just giving a handout directly to Amazon.
What you're describing is nothing close to the reality. It's the prisoner's dilemma. Cities that participate in this scheme take turns screwing each other over in an attempt to get a minor benefit themselves, but compared to the scenario where nobody played the game to begin with, they all lose.
> Incentives from Texas include as much as $25 million in taxpayer-funded grants, and a 15-year property tax abatement possibly worth tens of millions of dollars
That's literally what Amazon was forcing cities to do to each-other.
Turn it around: these cities had absolutely nothing to do with Amazon’s success. Now they want a cut of the revenues (taxes) simply because they want to hire in a location? If Amazon doesn’t consent to that and no deal is reached: how on earth is that a benefit?
If you stop seeing the tax payments as entitlements, it begins to be a lot easier to reason about.
> The company has asked for very specific information on all the state, regional and local incentives communities are willing to offer, and the timelines for how long it would take to approve them. Amazon concludes its proposal by stressing that this a “competitive project.” So let the competition among cities begin!
Sigh. I know these could be good in some situations, but sometimes I wish cities had a most favored company law: every business that employs people gets the same tax benefits as the company that got the best deal. Cities could only agree to things that were good for businesses generally, rather than letting one or two ignore the rules for five years before they suddenly relocate to shop for a better deal.
I can't even try and take an article like this seriously. I understand it says in the article that Jeff Bezos owns the WaPo, but the way it's written sounds like Amazon trying to make a threat. Just look at the way the article starts off.
> Amazon.com is reconsidering its plan to bring 25,000 jobs to a new campus in New York City following a wave of opposition from local politicians, according to two people familiar with the company's thinking.
Amazon isn't considering bringing 25,000 jobs to NYC out of the goodness in their heart. It's a business play where they are doing what they think is most profitable for them. They want to be in NYC because it's the largest market in the US. I think their plan all along was to come to NYC. They just thought they could stage this elaborate "pick my city" nonsense and get a bunch of tax breaks. This article just sounds like them whining that people caught on.
>"Ugh... any company moving into NY can get these same large tax concessions."
Really? Let look at what was offered:
1 $897 million from the city’s Relocation and Employment Assistance Program (REAP) and
2 $386 million from the Industrial & Commercial Abatement Program (ICAP)
3 $1.2 billion in “Excelsior” credits
4 $505 million in a capital grant
Yes the first 3 are existing programs. But the idea that those sums or anything remotely close to them would simply be made available to any company moving to NY is comical at best. Now lets look at number 4, a 505 million dollar capital grant. That's a pure giveaway compliment of the tax payer. And let's remember that both the city and state governments put together dedicated teams to find this money for Amazon. This was in addition to the work the city and state did for give Amazon data, such as "detailed information on the availability of machine-learning specialists, user-experience designers and hardware engineers."[1]
There is no way any of this is available to "any company moving to NY."
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