There's another problem here that isn't addressed by whether its a net plus revenue to the city. The tax break isn't applied across the board to all companies which means that Amazon is getting an unfair competitive advantage.
I don't really think of a company like Amazon needing a competitive advantage.
More than just office space, it is about the tax kick-backs that Amazon (and presumably their peers) have extracted from cities where their major offices are built. The cities offered the tax cuts or rebates to the company on the expectation that wealthy tech commuters would be forthcoming. Much like how Amazon has its cake and eats it via advertising revenue from its marketplace sellers, these companies have found a secondary revenue stream from their employees.
The cities give huge tax breaks to companies based on how many employees they have there. The tax incentives are why Amazon is moving workers from Seattle to Bellevue. Also, Amazon doesn't own most of its offices so the companies they rent from are pushing for it. It's a convoluted mess but there is money to be made from rto.
Of course the argument is also the employees are paying taxes. Besides, Amazon is notorious for pouring money back into the business and growing instead of reaping profits, so good luck taxing that. By any account that's exactly what a city should want.
Over some years, Amazon was to pay some $X in taxes. But they were given a break to pay $3b less assuming some goals are met. The city receives $X - $3b.
Echo your question. I would note that it seems that the tax breaks weren't negotiated as some special package for Amazon specifically -- actually, most of the incentives (or about $1.5B) are coming from existing programs run by NY state and NYC that reward companies based on square footage of office space created and number of jobs created. So, arguably, Amazon would have gotten those incentives anyway even if they had moved to NYC without all the fanfare of the HQ2 process.
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.
Agree completely. To some people, the tradeoffs between having Amazon come with a couple tax breaks and not having Amazon come at all is worth it. Nobody put a gun to the heads of these city officials - everyone knew what was going on and city officials went along willingly.
If Amazon had chosen Detroit or some city in America's heartland, the national press would have been praising Amazon for "spreading the wealth". Instead of getting mad at Amazon, policy makers should look at why Amazon chose these locations and seek to replicate these conditions elsewhere.
Amazon would not pay less NYC tax than other businesses. The NYC tax breaks that Amazon was planning to take advantage of are open to every company that qualifies:
These programs are designed to encourage specific behavior, like companies moving to and making capital investments in particular areas of the city. Any company that does so qualified for a formulaic tax break. NYC did not offer any tax breaks to Amazon beyond its existing incentive programs.
They did game the system though. Feels like they negotiated tax benefits with 50k employees in mind, and kept the same benefits while only giving locations 25k each.
If that's what happened, that's poor negotiation by the cities. If they made an offer based on employee counts, they could have required employee targets in return for the benefits being offered.
And if Amazon refuses to make firm employee count guarantees in return for the benefits being offered, then that's a pretty strong signal that you shouldn't rely on their promises.
These were thousands of SWE jobs. Amazon would have paid significant payroll taxes (which are federal but that doesn't fit the narrative so people ignore it) and their employees would have paid millions a year in city and state income taxes, property taxes, etc. Getting a high-paying company like Amazon in your city is a huge economic boon and is totally worth up front tax breaks. Remember, it's a tax break, you're just agreeing not to take money you already don't have.
>It is crazy to allow tax breaks for company's that largely don't pay taxes to start with, especially extremely profitable companies.
Again, Amazon pays tens (maybe hundreds) of millions in taxes every year. You're just repeating a political talking point based solely on what they pay at federal income taxes (due to loss carry-overs).
I'm extremely curious what the cities who were working closely with Amazon think of this development, as now it seems that they'll be getting half the jobs for their concessions. Additionally, the reason cited for splitting their new HQ is the lack of enough tech talent, which means that their concessions may have been for naught if they didn't have enough talent for Amazon in the first place.
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