Note that Amazon already has about 5,000 employees in NYC, and presumably without getting massive tax breaks. I would not be surprised to see the NYC numbers increase, even without HQ2.
No. Because (as far as we know, we hope so) nobody is getting a cut of the money, Bezos is not friends with NYC or NY State bigwigs. It’s a misguided attempt - “Let’s attract a large business here - what will it take?” Now, that may be a valid strategy if it’s backwater with no other redeeming qualities, but most of the USA’s bigger cities (Except Detroit?) should already be chosen on the merits, not with corporate welfare. If New York is a good choice, Amazon would already pick it.
(There’s always the possibility that the higher-ups would use insider knowledge to profit from, for example, real estate. I would hope the FBI would enjoy looking into that)
There are only so many airline “hub” cities with direct flights to almost anywhere - NYC, Chicago, LA, SF, Seattle, Denver, Atlanta, Washington DC, (Toronto!), Minneapolis, Dallas/Ft. Worth or Houston. If I were Bezos, the questions are simple- real estate costs, taxes, communications, desirability for the IT/MBA types, etc. Anyone else was never in the running.
The other problem with corporate welfare is, as we see with GM - you spend billions of taxpayer money to help them out, maybe even stave off bankruptcy, and how do they repay you? By pulling out as soon as there’s a few bucks more to make by moving south of the border.
There are definitely issues with state/local concessions to draw employers. You can definitely pay too much. But it really depends what you pay. Which also fits with your point of what do you have to pay. If a company starting/enlarging an operation in your locality is an economic plus, why in principle would you expect to get it for free? Although you might. It depends on the market.
In this particular case it’s manifest Amazon would not have chosen NY otherwise, so I’m puzzled by using this as an example showing you don’t have to give any concessions. For this particular type of project, that’s pretty obviously not the market.
You can decide the market price doesn’t offer value of course, but then you have to speak in terms of particular number not an abstract principle that localities, even NY, with always come out ahead giving no such concessions.
Again a lot of my disgust with this turn of events is the lack of much argument by the opposition that the City was paying too much. The headline figures are something like $3bil in concessions v $20-something bil in tax revenue over a comparable period. That’s $3bil worse than $0 concessions for the same tax bump obviously, but also not obviously a bad deal. And again the opposition IMO seemed to harp on far left ideological bullshit, not challenging those numbers. The Foxconn deal was attacked more rationally IMO on the basis of the numbers not working. The GM bailout was socio-politically driven and arguments that it made economic sense were a fig leaf IMO, that wasn’t truly seriously analyzed, the political fallout of letting it collapse was too great.
Also NY (again my original and still loved hometown) is no ‘backwater’ by any stretch. But it’s also a high tax city in a high tax state with loads of non-business friendly state and local bureaucracy. That doesn’t prevent it being the national financial capital and one of a few world ones, but it’s non-obvious that that doesn’t hurt attempts to build up other businesses.
Any town, state, county providing tax breaks or other incentives needs to put together a business case and prove there is a return on investment (ROI).
Let’s say they provide a million in incentives and they can prove to recoup the million in the 18th month and 2 million every year after, etc. Something like that. Would be a very intense and comprehensive report (and the source data needs to be good). LMAO… we’re talking about politicians.
It is simply the politicians’ responsibility to do the proper math and build the proper business case. The problem is that it’s all ‘soft’ math, or high-level breakdowns and not a real ROI analysis. Sometimes, the ROI is legit, but too often, eroded trust in politicians becomes the problem.
Hate on a business? Sure, for specifics. But the theme here is that politicians don’t exactly build trustworthy business cases. And the same goes for those who refuse and push back against the incentives/breaks. Those politicians better have facts and data on their side. They are likely just playing to uneducated constituents.
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It’s unequal application of the law. It’s a straight up breakdown of the rule of law to give large, well connected, famous companies special deals while not giving them to others.
Again, it would be like you’re at the DMV. “I’m a famous actor, give me a vanity plate for free. Also don’t charge me a registration fee”.
“well if we keep this actor happy maybe he’ll keep living here in a mansion and paying taxes…give it to him”
Straight up kleptocratic graft.
So the question I have with this–$20 billion as opposed to what? It’s NYC, so I assume projected revenue for the area even without Amazon is non-zero, particularly since others in this thread have stated the area was gentrifying on its own anyway.
So if the expected revenue for the area over the same timeframe without Amazon was, say, $10 billion, then you’re really paying $3 to get $10. If it’s expected was $15 billion, then you’re paying $3 to get $5, which is still a positive, but still gets into the question of if you want a single company to have that much leverage for future negotiations.
Or Amazon in particular moving in that big a way might end up attracting other companies which would not otherwise and no won’t be as likely to come. There is definitely an effect of ‘clustering’ in such industries and jobs.
That’s hard to say. But, the basic numbers seemed pretty favorable, and again it doesn’t seem the opposition was really based on contesting them. But rather on various (highly dubious IMO, but in any case vague) ‘principles’ about ‘greed’, ‘Bezos is the richest man in the world’, (arguably a little more substantively) Amazon’s approach to labor unions, and so forth.
Seems to me the not as extremely left politicians in NY who supported the deal, as well as perhaps some posts here, are now recasting the opposition in various ways that makes it look more well thought out than it actually was. IOW there’s a hypothetical case of carefully analyzing the numbers and deciding it doesn’t make sense, but I really don’t think that’s what happened in this particular case.
I was reading about a city providing $2 million to bring in a Kohl’s Department store. Four years later Target closed in that city, probably the market (35,000 or so population) not big enough to support both stores. So you can’t look at just the business in isolation with respect to these incentives–the decision may result in other businesses closing/leaving.
And in a burgeoning city, you can get the opposite concern: If you pay for a business to come to your city, will their presence just crowd out someone who was going to start/move a business that wouldn’t have needed handouts?
I live in said county, and there has been ZERO economic boom. However, traffic has gotten worse, and housing prices are through the roof.
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De Blasio strongly supported the deal. While Gov. Cuomo blames the state Senate, De Blasio is now pissed at Amazon for giving up as soon as they got some pushback.
Powers &8^]
I think this was the overriding issue - some people looked at it and said “why them and not anyone else?” The corner store has been employing clerks and paying taxes for decades and never got any such breaks. If the going tax rates etc. aren’t good enough, then yes, the company will go elsewhere. And, that $20B in alleged benefits is just that - alleged. No guarantee it will stay that way. Considering the company di not exist what, 30 years ago, what guarantee it will be as big and lucrative in the next 20 year? Ali Baba could knock them off their perch in 5 years. Where’s Lotus 123, Blackberry, DEC, MySpace, Gateway, Commodore, or any other hi-tech firm from 20 years ago that is now history?
The trouble with bidding wars paid for with concessions is it’s a zero-sum game. (Or more accurately, “The Red Queen’s Race”. We’re running as fast as we can just to stay in the same spot.) the airlines have found this out the hard way, when one offers a discount, they all do and all they’ve done is lower the net revenue for everyone and hope someone else gives up first. Plus, the low number has set expectations for the next one to come along.
This is not necessarily the case. Shopping malls charge less per square foot for the anchor stores than the other stores because they think that the other stores will benefit from the customer traffic that the anchor store brings. Some large businesses may attract enough employees to a location that the foregone tax revenue can be made up by the other businesses attracted to the new employees.
NYC is large enough and wealthy enough that this probably does not apply but it could elsewhere.
My personal opinion is that Bezos strategically picked NYC because it is the center of media power and DC because it is the center of government power. If the process of moving there generates lots of negative publicity instead of the good publicity sought, then the proximity to media becomes a liability instead of a plus.
The 5,000 employees Amazon has now are mostly minimum-wage warehouse workers. The employees of Amazon’s HQ2 won’t be (though obviously they won’t all be moneyed executives either).
Seem to be, perhaps, but aren’t. Studies of the economic effects of targeted tax breaks invariably make underlying assumptions that do not reflect real-world impacts. In this case, there was no “study.” The $27 billion figure was an “estimate” from Cuomo’s office with no underlying methodology published.
Generally speaking, targeted subsidies to attract business bring in far less than the cost of the underlying subsidy. At best, they provide a short-term boost to employment figures. And that’s when the business being lured in keeps its promises. When they don’t, there may not even be a short-term boost.
In the specific case of NYC and Queens, the economic impact of AHQ2 would have been marginal at best. New York City is already the biggest in the US, from an economic perspective. Unemployment in Queens is already at a record low. All this project would have done is attract more people to NYC over time - hardly something a city already groaning under the weight of its population density needs.
That article was interesting. Its conclusion was that Amazon assumed it would get the final approval, but it knew every decision and every element of its long stay there would be analyzed, criticized, and objected to by a significant portion of the population and politicians.
Looking at it from Amazon’s perspective, I would want to go where I am wanted, not where I have to fight to be. It sounds like they made the right choice.
New York is not some uniquely self-aware place. Plenty of government money was wasted on the Barclays Center, and the hockey team that was supposed to play in it isn’t even there anymore (the Nets still are of course).
:smack:Of course you’re correct. I wonder what I was thinking when I posted that?
Thanks for the correction.
Because he specifically mentioned “their competitors” instead of the much larger group of “other companies” that could have made use of the space and/or deal.
It implies that Amazon will be hurt by this decision because their competitors will take advantage of the situation, as opposed to some random company in some other market niche taking advantage of the situation.
Reviving this thread. I guess Amazon didn’t need those tax breaks afterall, huh?
Quelle surprise.