Whatever happened to the UNITED States? All politicians, media, Facebook, big corporations want to do is play states against each other for personal gain. I would think the job of the President would be to prevent this kind of thing, but maybe the next gen will. Clearly Trump, Obama, Bush, etc didn’t
3
I am not so sure. I wish there was a way to keep companies, particularly sports teams hitting up the citizens. This one seems to not stink so much. Virginia did not give Amazon nearly as much. The NY pols could have just said no. They did not. The protesters went after the wrong people, Amazon was not the problem, the government was. The economics certainly indicate that it would have been a good deal for N.Y. Amazon was getting maybe a 10% reduction in taxes. I think it is particularly notable that the black and Latino residents near where Amazon was going were very in favor of this. They knew it would help them. It was largely the wealthier, white Manhattanites that killed the thing. AOC appears to have gone into hiding because the people of her district are likely very unhappy.
18
Real Estate interests along with the help of the politicians control the city.
They wanted to make a killing in Long Island City by inviting Amazon in and then gut the area of its remaining small factories, modest homes and warehouses in order to build housing for the highly paid tech workers who would be working at Amazon.
Unfortunately there is never any consideration for the folks who are already living in the neighborhood who will be priced and crowded out of the homes they have been living in for many years.
I've seen it happen all over Manhattan and Brooklyn.
Maybe next time they come up with a scheme like this they will roll it out in such a way that will benefit all pf those who's lives will be affected and not just the few.
34
"Tragedy of the commons" or protection racket. What's the difference? Federal legislation to tax these shakedowns at 100% would quickly put the Don Corleones posing as corporate benefactors back under their rocks.
15
sometimes journalists print what they would like us to believe
13
Cupcake Logic! Amazon is bigger than the Big Apple and the Empire State. Combined! Amazon is bullying those poor itty bitty Lilliputians. For shame, Amazon.
Well, bully for the Lilliputes. They showed that bully a thing or two, huh?
Putting a snowflake twist on cupcake logic, they showed everybody that they need a lesson or two in simple arithmetic. 90% of a whole lot is a whole lot more than 10% of nothing.
They also showed everybody that they desperately need a course in simple economics. But, what good would it do to teach multiplier effects to a class that failed simple arithmetic?
Oh well, let them eat cupcakes while their class thralls on marx.
16
New York lost 27 billion in tax money when Amazon left New York. New York lost 25,000 jobs. New York lost high paying jobs that averaged $150,000 per year. Lots of poor people lost jobs that would have made their lives better. Progressive politicians won praise from liberal press like the New York Times. Yes, everyone can now see how socialism helps the common work, right?
29
Yea, Jeff Bezos. I don't care about your private pics. I want you to become a responsible citizen of your country. Make your company something that young people can admire. As of now, you are the opposite.
12
Now that Amazon was stopped, can our local politicians stop the seemingly unstoppable giveaway of public property via up zoning, (air rights and density are valuable public property) and massive tax abatements?
I don't have much hope. Every upzoning proposal that has gone through ULURP, the sham community engagement process for New York City, has passed the City Council by wide margins.
And please don't tell me that these mega-developments are justified by the public benefits they produce be it jobs, affordable housing etc.. The benefits are meager when compared to the real cost.
Can we please get away from this barter system of public benefit for private incentives. Collect the taxes and sell the zoning rights and let the City provide the public benefits.
14
The problem with this article is that Leonhardt doesn't develop a coherent economic argument. I know, this is corporate welfare, handing out cupcakes to the masses...sorry that is not a serious economic argument.
What does one call the de-industrialization process that affected New York City in the 60s, 70s and 80s? It was called losing jobs to more attractive manufacturing locations in the South and overseas. New York almost went bankrupt, turned into a larger version of contemporary Detroit. What turned the situation around? Proactive policies to give tax incentives to keep businesses in New York despite all the reasons corporate employers, such as the Securities industry to leave.
New York is in competition for jobs with every metro area in the country and around the world. Saying no to Amazon isn't good policy. In fact, it wasn't New York's policy at all. Community activists and leftists of a certain stripe attacked the company and the corporate board, wise to all the existing challenges of setting up a massive new headquarters in New York City, pulled the plug. Why enter combat with hostile residents when there are so many nicer places to do business and live? Don't flatter yourself.
14
I find it simply amazing that not one post of mine has ever been approved.
Do I not shout Love the New York Times loud enough? Is my vocabulary, analysis, clarity not sufficient to your standards?
I'll guess I'll just stay withe the WSJ. I disagree often enough, but all comments are printed.
You are eager to have more women to post. Well, here I am, Graduate level education,involved and pretty passionate about some key issues. And not one post.
Hail and farewell. I am, as the kids say, 'outta' here.
4
Regarding the "End Corporate Welfare Act" -- Bravo! Has no one read King Lear?
New York's deal with Amazon was a bad one. But the worst ones involve sports teams which not only get huge tax breaks but charge its fans exorbitant amounts for tickets, not to mention food and beverages.
Yankees (I'm a fan) got $1.7 billion, according to The Week (https://theweek.com/articles/803881), but what did the taxpayers get? Not even a domed stadium which could have been used for conventions and such.
14
@RK Also, a retractable roof would have provided the ability for fans to sit in comfort during the chilly nights of April and October as well as virtually eliminate any cancellations due to bad weather.
4
True, but tell it to Chicago.
You'd think New Yorkers would have learned from Trump's making of so many enemies that you shouldn't insult someone you want to move in with you.
Hey, when you dilute free-markets with so-called "progressive" social-welfare programs you're bound to end up with crony capitalism/statism 'cause corporations are taxpayers too. They're bound to feel entitled to a share of the freebies.
As for those who had hoped to go to work for Amazon, tel your politicians to raise the minimum wage to $25 an hour and you won't even feel cheated by Amazon's departure--until all of the other businesses in Queens are gone. But then the pols can solve that problem by raising your unemployment compensation to a thousand-a-week minimum, and stick the remaining taxpayers with the cost--if there are any remaining.
If things get really bad, vote for AO-C. She will help you in your distress.
12
Your example is, well, juvenile! :) (perhaps intentionally?) Rather, the analysis should be, NYC and governments in general, give tax breaks, create loopholes (buried in obscure code provisions at the Federal and SALT level), as a consequence of lobbying and other unseemly activities. Further, NYC and its great institutions are "in bed" economically with (from a progressive's standpoint), a host of characters far more odious than Amazon -- Sackler, Koch, Trump, WR Grace to name a few. And its silly to assert that any of this is remotely equitable, fair or matches any articulate political or social agenda -- its a free for all and that's the way it is and probably always will be.
Which is not to say that we shouldn't continue to try to move toward equity. But to "get religion" on this one is self-indulgent, purely symbolic, bad political gamesmanship and will punish NYC severely financially and reputationally for a generation or more. Tell me, should we stop going to the Guggenheim and the Met because their donor list includes people we don't like? Is this a new "me too" moment? Should we avoid the Frick and the Morgan Library because they were robber barons? AOC and others should have thought this through and used NYC's greatness to first take the jobs; and second, influence Amazon to be a better company. This wasn't hard to see and on top of it all, will drive sensible liberals away from the Democratic party (myself included).
7
Amazon didn't impose NIMBY restrictions on housing supply that have created shortages and priced out the poor. Amazon didn't create sprawling and inept bureaucracies to oversee the city's infrastructure, public transport, and schools.
Amazon was never the problem, but Amazon could have been part of the solution. Kicking them out is a distraction, not a fix.
12
New York City just dumped an extremely beneficial deal with Amazon -- which its citizens favored by twenty percentage points -- because its opponents apparently just don't like Amazon's brand of capitalism. That's very rich for a metropolis that is filled with cut-throat capitalistic firms who actually pay its taxes. So, instead of a long-term stream fat taxes that will fund its subway and schools, it will get.... what? The pride of making a statement against corporate welfare that the rest of America will ignore? Left wing symbolism won't pay the bills, folks.
18
Key fact overlooked in Mr Leonhart's depictions of what happened: Amazon's anti-union stance. Unions call most of the shots in NYC and when it became apparent that the company would not change its policy, things went south fast.
Max Zahn writing in Yahoo Finance:
"The company’s unwillingness to promise neutrality toward a union drive at its Staten Island warehouse became a lightning rod for critics, with talks between the company and labor leaders on the issue reportedly continuing on Wednesday morning, a day before Amazon’s decision to pull out of New York.
“Clearly, it was decisive,” said Shaun Richman, program director of the Harry Van Arsdale Jr. Center for Labor Studies at SUNY Empire State College and a former organizing director with the American Federation of Teachers, of the role of organized labor.
“There was the idea that it would be unacceptable to the labor movement—and to politicians loyal to the labor movement—for Amazon to come into New York City and operate on a completely non-union basis.”
4
I can't speak for NY or its deal but I have watched a small bedroom community destroy its tax base with these bad deals. Port St. Lucie, Florida is a nice little town that has wasted millions of dollars on boondoggle investments attempting to garner business to the community. The huge Civic Center sits mainly empty. Digital Domain which was given millions of dollars to attempt to create an animation studio lasted one year. Bought by the city for 40 million sold to a church for 13 million which will pay no taxes. There are about 3 more such egregious examples. The school system, however, is starving for funds. Who is going to pay for all this? The taxpayers.
10
David, I'm totally lost by your argument. So glad that NYC will not be encumbered by jobs. Stand firm and stand impoverished.
9
Why that awful bully, baking those cupcakes and offering them to children. The analogy doesn't really work. First of all, most cities, states and municipalities are already in the cupcake eating business. They all have offices of development and program to woo businesses to their neighborhoods. Most of the incentives NY offered to Amazon were from programs that were designed to bring jobs to NYC. Amazon wasn't conducting a secret auction and no cities were competing in secrecy. I don't see a lot of other cities declaring they don't want those jobs either. Rahm Emmanual made a public plea to gladly take them.
6
the funny thing about all these comments about all these lost jobs and taxes is that they are written by people that don't live in NYC. Since I moved to New York in 1982, nothing has gotten better, nothing. Housing is uglier and more expensive, the streets are filled with thousands and the stores are right out of a suburban mall. NYC has become a shopping mall with real estate for the rich and every neighborhood downtown has been destroyed - since Bloomberg. Every grocery store, stationery store, laundromat, shoe repair store - every place that a community needs to live is gone - it's Chase, Duane Reade, Citibank, Duane Reade, high-end boutiques. etc. etc. It's not the place I came to filled with interesting people and places, affordable housing, and NO TOURISTS. The thing is NYC doesn't want to be a tech hub - especially not Queens, it's the last affordable place to live. The people protesting Amazon are NYers, they're not Texans or Arizonians. This is their neighborhood that Amazon was coming into - a bunch of strangers with no regard for Queens. Bloomberg destroyed downtown NY. We don't need to be a tech hub, go to California and Seattle and leave us alone. Yeah, the subways are crazy AND expensive, BUT if you don't live in NY you don't know what people who live here, full-time want. Why don't we move Amazon into a quaint New England or Connecticut suburban town, a behemoth on your street? NYC is a town of neighborhoods - not a piece of land.
20
While I fully agree with your point, I have another theory about what happened with Amazon/LIC. Politicians have an "inventory" of properties that can be leveraged for economic developed, they want to work for the public good, to do things and get re-elected. One such area that has lagged development is LIC, which is historically an ethnic low to mid density residential area, housing projects, and defunct factories and warehouses. In the last 10y it has been slowly gentrifying. It is right across the river from Manhattan, but, there are no roads, there is an electric generating facility, one or two mid-rise office building, and a handful of newer residential developments. There's an elevated subway line or two. In and out of LIC is a nightmare: 59th St Bridge and LIE to the south. Politicians tried to sell the site, they had to go deep to even have a chance, they gave it a shot. Needless to say if they put the 3B into local infrastructure they'd probably have a worthwhile site for mixed office/residential. Amazon probably never wanted it but 3B is a lot to say no to. IMO surely a sign of
2
It is fair to criticize the amount of payments to corporations. It is also just as fair - but much less common in these discussions - to criticize excessive taxation as part of the problem. NYC is unfortunately a leader in that category when you factor in the various state and local taxes. That and the changes in the SALT deduction is hurting NYC residents more than any Amazon deal. Sure, unions can be helpful, but shouldn't the added cost of union provided goods and services also be considered? e.g. the WSJ article on the exorbitant cost of installing LED bulbs using union mandated labor. If the Amazon deal is to be criticized, at least be honest and look at both sides.
9
@Dr. Strangelove This problem has been exacerbated by the changes to the tax code that take limit the amount you can deduct for state income and property tax. This particularly hits those people who make over $100K per year and bump up against the maximum deduction. Amazon wants to be able to attract and reward people in that income range. Looks to me like a win-win that NY just lost-lost.
1
It’s amazing to see folks claiming to be capitalist - with a straight face - argue that the common man should subsidize highly profitable multi-billion dollar companies with tax breaks unavailable to smaller companies.
Corporate welfare is welfare ...
33
New York dodged a bullet. The jobs are not all high paying and in fact, most are not paid living wages, meaning they are minimum wage or only marginally more. You can't live on that when your housing costs soar. Those making the high pay snatch up the real estate creating a demand that landlords are only all to happy to profit from, which then creates a market unsustainable for the very people it was supposedly meant to support. I have watched San Francisco go from expensive to impossible, a primary care doctor would be hard pressed to buy a home here, and renting is draining what would be retirement savings from those that do stay and pay well over half of what should be a very comfortable income. Used to be $100k salary would suffice here, now it is closer to $300k. Those that don't make a wage to even pay rent are forced to commute long, long distances as even now affordable hamlets adjacent to the city have also seen the increase to almost San Francisco levels. Politicians and city leaders have done nothing to force these companies into responsibility for the mess they create, such as building housing when the business permits are granted. Yet, we see no improvement with the additional revenue and in fact the opposite: homeless like never before, drug abuse is rampant, hope is fading. I don't know but it seems the only solution would be term limits so that politicians could focus more on people rather than reelections to keep their seats.
15
How did Amazon fail to anticipate the issues that derailed the plan, when these issues have been discussed in NYC for years, indeed decades?
I'm not from NYC, but visit frequently, and talk to the natives. It's not been difficult for me--and I'm not a genius, like Bezos--to learn the following:
New Yorkers have many complaints about their transportation infrastructure, which is old and crumbling. It seems there is no money to fix it.
New York has been having a housing shortage for decades. Not just for poor people, but for people who have jobs and still can't find/afford an apartment. It seems there is no money to fix it.
There are plenty other problems, and there is never enough money to fix them.
But suddenly political leaders can find $3 billion in give-aways to Amazon!
How did Amazon think this was going to fly? Can they not hire an intern or 2 to read local media or watch NY1 and find out what locals are concerned about?
I hope we are entering an era when NO CITY in America throws billions of dollars at corporations that are insanely wealthy, for any reason.
20
I live in Manhattan. Three of the people I know who own nice property here made their money investing in Amazon. I don't think they were rich before, but AMZN made them well off. These people didn't work for amazon (AMZN worked for them). My family trusts include AMZN. My affluent Manhattan neighborhood/community was made by stocks like AMZN. Most people I know with money made it in stocks.
The world is not divided between the rich and the poor. The world is divided between people who own stocks and people who do not.
10
@Anti-Marx
You have to have the extra cash lying around to become an investor. Your family and friends who became even richer by choosing to invest in Amazon when it was a fledgling company with promise but no guarantees before they became super rich.
Kind of like how Trump was given "a small amount" of money to start his investments.
19
@Anti-Marx: Karl Marx wrote it first: ownership of means of production is wealth in industrialized nations.
7
@Peregrine
Um, yes. That's how investing works. I love kids. I want two. I won't have them until my income crests 250k/yr. People who wait to have children usually have more cash lying around. People on the NYT say that capitalism makes people poor. Perhaps, but I think having too many kids perpetuates poverty a whole lot more than any inequity in the the tax structure. The people I know who made money on AMZN also, as far I know, waited until after age 35 to have kids. Did they succeed financially because of good stock picks or because of later in life parenthood?
Glad, NYC as always, is a trend setter. Anytime you start off a relationship that is not in balance, you're asking for trouble. Then you're always at their mercy when they threaten to take their cupcakes elsewhere whenever the corporation faces a problem. This corporate strong-arming has gone on far too long. It use to be that corporations wanted to be part of a community. Now they only want to come if there's $$ in it for them. Loved the cupcake analogy. Spot on!
16
@Terry- NY voters need to change the laws currently in place that allowed Cuomo and the mayor to do this deal in secret and avoiding City council, State legislature's approval or disapproval. I suspect the current law was drafted and crafted by corporate lobbyists for their own advantage
12
Amazon claims 25,000 jobs will be created. Most of these will be high paying skilled jobs in the six figure range which is good.
However, how are the people living in public housing near the proposed site supposed to fill these positions? If they had the skills for high paying tech jobs they would not be living in public housing in what used to be an industrial part of NY.
I seriously doubt if there were ever as many as 25,000 to be had. Businesses always exaggerate and over sell. This happens all the time. Then there comes the time when it it becomes more feasible to move elsewhere, tempted by another offer by another ambitious politician (Rick Perry was such a man when he was governor of Texas) . What happens to the community being left behind, the one that invested so much time, money and emotion to court them in the first place?
At least NYC is not worse off than it was before this circus.
8
@cl- notice the word "Claims". I doubt it very much if even half were created and most were being paid less than $20 per hour. they showed no proof that number was feasible.
8
The article and especially the comments are drastic oversimplifications – lurching back and forth ideologically. The deal should have been dispassionately analyzed and the answers to big questions presented publicly. For example: how come Va. got a much better deal? ; are the estimates for potential taxes paid on solid ground ? what are the costs for additional pressure on NYC infrastructure? Is there solid evidence for the Amazon facility enhancing NYC development as a tech. hub? I personally sense that Amazon leaving was a mistake but portraying this as some ideological conflagration is foolish. Remember both the Mayor and Governor remained strong supporters. In addition, Amazon made little effort to engage with the local community – having not a single high-level planner assigned and then vaporizing at the slightest hint of public concern. Our world is on a path of exponentiating complexity and we can’t deal with this by throwing out simplistic ideological missiles.
8
@Allan AH
Maybe Jeff Bezos was distracted by his other issues.
3
Well said, Mr. Leonhardt, though I wish you had called out the professional athletic teams for which we taxpayers build costly facilities... or risk losing the franchise. They too are not poor folks.
13
New York City currently is down to less than 4% unemployment. It's almost certain that almost all of the people Amazon would've employed already have jobs.
10
@Will, most likely, those jobs would have gone to tech workers from outside NYC.....from other tech hubs. NYC isn't as big of a tech hub. Some would have gone to people from Silicon Valley, San Francisco, etc., aand others to H1b Visa holders.
How convenient that the supporters of Amazon, including those "centrist" Democrats a.k.a. Moderate Republicans, don't or can't address Amazon not paying any tax on their $11.2 billion in profits this past year. i would call them tax cheats except that they and other corporate lobbyists help rewrite the current tax law, with the Republicans in Congress just there as entertainment. Regarding the $3 billion in tax cuts, if Amazon ever achieved that $27billion, 25,000 employee number, that $3 billion would have been in the treasuries of NYC and State under normal circumsatnces, so $3 billion is gone, resulting in governmental services cuts, not forgetting the middle class residents of that area being forced to move due to sky high rents and other costs, and many other negatives due to Aamzon's presence. Not worth those few jobs, 25,000 was a number pulled out of Amazon's hat, no proof they would have materialized.
12
@lou andrews Agreed. And let's be honest: Amazon and other corporations contributed heavily to the GOP war chests with the explicit purpose of that tax windfall, which is benefiting exactly no one but people like Jeff Bezos, while his employees are paying more in federal income tax than him or Amazon combined - which is exactly $0 for 2018.
12
@BothSides Hello? Bezos is one of the highest profile Liberals in the country. He owns the Washington Post for heavens sake. Don’t let the facts get in the way of your story.
3
If NY was not interested in playing Amazon's game, it should not have wasted taxpayer money chasing them only to turn on them when they accepted the offer.
What no one mentions is that in the fast changing employment market, how long are those 25,000 jobs going to exist? Amazon and its even more upstart colleagues pride themselves in being disrupters. That means that the job you have today may not exist in 2 or 3 years. If you accept the ever changing nature of work then you don't invest in jobs from a company but instead invest in the requisite infrastructure (e.g fix the subways!).
6
@CDN- they also destroy small busineess, the crux of our economy. how many thousands of jobs and businesses owners are that?
3
Years ago, I watched Phil Donahue debate Bill O'Reilly regarding the foolhardy actions of the Bush administration in invading Iraq.
O'Reilly, predictably, started screaming. Donahue shut him down, stating "Loud does not mean right".
In this case, a minority of New York residents, a loud group at that, shouted Amazon out of town.
70% of New York favored Amazon, according to recent polls. The minority simply did not care. They wanted their way and well, they screamed until they got their way.
I would say it is incumbent upon that very loud group to propose, specifically, how they intend to replace those potential tens of thousand of jobs.
12
@Texas Duck- those polls, probably inaccurate , did you forget about our recent elections where most polls were way off base? I would have liked to see who was polled, their income level, a business owner or worker, home owner or renter, and political party affliation. Without that, those "Polls" can take a hike.
7
Was the Amazon deal a form of “corporate welfare?” Absolutely. However this corporate welfare was actually an investment that would have yielded far more revenue than it cost on the long run unlike NYCHA and DeBlasios free healthcare for all (including illegal immigrants who by and large don’t even pay income taxes).
If we want to end welfare, that’s another discussion but in the meantime let’s honestly compare costs and benefits. Without companies like Amazon and their wealthy employees, NYC won’t be able to fund their welfare programs for the many residents in this city who will never be anything other than a financial drain.
11
@JP not welfare a small tax break in a high tax state. A tax break off of future nearly $30 Billion in tax revenue for the city and state. Perhaps zero is better? Apparently some think so.
7
@JP- Amazon did pay a dime on it's income these last 2 years, with this years profit amounting to $11.2 billion. Now what do have to say? Stop criticizing the poor and immigrants, next thing you'll say is that the middle class should move if they can't afford the sky high rents due to Amazon's moving there.
8
@JP funny you should mention welfare. In Seattle where I live and where Amazon employs thousands of people I have watched my city become filled with homeless people unable to afford the skyrocketing rents in Seattle because of the Amazon effect. Now the city spends millions on trying to mitigate the problem. Why should a company worth billions of dollars be given tax payer money to move to another city when they fight against any corporate tax that might help alleviate the social problems they helped cause in Seattle. People complain about welfare to poor people when (this might be a story for the NYT) I would imagine that American corporation of all types receive far more welfare (tax payer dollars) in the form of tax breaks, free public land, our public air waves, permission to pollute the air and water (ie. an externality), no restrictions (ie the hated regulations) on how much they can extort from sick people via the cost of healthcare and in particular drug prices. It's actually sickening how little these giant corporations care about their fellow Americans.
18
Saying that NYC's rejection of Amazon will change the policy of tax abatements countrywide ignores the fact that $1.87B of the tax credits Amazon was going to use over 10 years were already approved by Albany long before Amazon started their search. If you want to point fingers at who's giving away taxpayer money, look at the politicians who authored that program. What NYKers fail to fully consider is that NYC's economy is tied to NY State's. NY state is $2B in the hole during an expanding economy. The economy upstate has been in a free fall for decades. Those tax credits were designed primarily for upstate. The politicians should have limited their geographic application. It was incumbent upon local politicians, like DiBlasio, to make the deal work. He punted. Amazon too is not without many faults, some despicable, like paying no corporate tax, but again this is only possible because of the politicians allow themselves to be bought and sold. Turning away 25K jobs at 6 figures is not something to brag about. Most don't recall the virtually bankrupt NYC of the 70s, but there's no reason it can't happen again if the 'Unwelcome' sign is big enough, the costs high, and the squabbling self loathing/defeating.
10
I gainsay what the author suggests as remaining short term interests and sacrificing long term benefits; the fact is, it is the reverse. NY presaged the adversities from the Amazon deal in long run. The people can embrace the long term stability, liberty and development. If amazon deal did get through, it would plausibly dishevel the economy by its lever and by all means. The impartial experts and politicians were not aiming at making their momentous career obtrusive. It is veracious that Amazon does not and will not circumnavigate lucrative business or employment boosters in NY. One obvious example; abundant globally influential and affluent companies and retails with catholicity in NYC. Amazon might be aiming at undulating them by offering lower price levels of identical products (it can obtain the inventory through the distributors as it is legal) and snatching their business quotas. The retailers, customers and labours would be enthralled much easily afterwards. Do you think Amazon would not resurge the price? In addition, it would demand more aggressively and diversely. It’s quintessential in amazon’s rapacious manners. Domineering the globe and the universe (in reverie) is perceived by how Amazon aligns its aggregate business models. If the author would like to use metaphor, then he should assimilate Amazon to drug dealers. As a postscript, its terse statement of cancellation is brusque to NY. NY is gumption. Excavate the inherent advantages and utilize them w/o regrets
1
Cities have been luring business by any means possible since the creation of cities! NY liberals didn't stop anything. It will never stop. You just get no cupcake.
9
These tax incentives are as much a part of corporations doing business much like moving factories and shell offices out of the country. It’s part and parcel of corporate America. Follow the trail backwards and you will find the 1980,s when pensions became poison and 401k,s the new kid on the block. Reaganomics. Today its all about shareholders and profits. I applaud New York in this case for realizing that the ten thousand pound gorilla in the backyard was not your friend or anyone else’s. This will not stop these corporate pythons from strangling the bright feathered bird of the American dream. We are retrograding back to the gilded age. Amazon is a frenemy.
17
Finally someone seeing the bigger picture!
7
@Cornelia Kueffner
Cornelia, I'm not so sure. I live in Dallas, and cities in the metroplex have been offering incentives for some time.
As a result, major corporations have moved to Dallas, most recently Toyota, along with a major State Farm presence.
The result-an improving housing market and jobs.
I, by the way, believe I am very liberal. I don't think that necessarily means throw out common sense.
If Dallas does not attract those jobs, someone else will.
3
@Texas Duck Do more houses, more stores, more crowded highways, more sprawl make Dallas a better place and its residents happier people? Endless corporate growth within finite resources of air, water, space gets ugly fast.
3
I couldn't disagree more. The city has done enormous damage to its economy and reputation.
The opportunity to become a world class tech city to balance the rollercoaster that is Wall Street has been immeasurably damaged.
We have also likely scared other companies, whether seeking incentives or not, for fear of being welcomed like the Nazis in Paris.
Our subways are broken, our schools stink, homelessness is rampant and yet my city and property taxes are enormous. This was a total disaster for NYC.
16
@Sparky- NYC isn't Nashville, or Toledo. NYC was, is and will do fine. It's very diverse and has flourished in tough times before.
3
@Sparky I still don't understand why one of the richest Corporations that paid no Federal taxes and balks at helping the thousands of homeless people in Seattle they helped force onto the streets should get any kind of tax gift from the State or city of NY. This ridiculous use of taxpayer dollars to incentive disgustingly rich corporations to relocate has to stop.
3
The usual, one-sided Progressive drivel...Oh, and you left out the Embarrassment Factor....As a former New Yorker who left as the City was self-destructing in the 1970's, I can only say this is just another example of the complete and profound stupidity of local politicians. Were it not for what remains of of the financial industry in New York, the City would just be another Cleveland. Cringe-worthy, anyone?
14
@Kingston Cole
And California is better? It is a very expensive state to live in and has instituted so of the silliest laws ever. It must be the most regulated state in the US.
You've got great weather. I'll give you that. But then NY does not have drought, fire and mudslides.
1
@Kingston Cole
I would not trade one hour in New York City all that is the life of this marvelous city - warts and all for an incentive based, tax free throw in a new car bonus to live in .....what is this place? San Rafael, CA.
'Wanna move. Be my guest. New York "just another Cleveland." Put your money on the table, brother. I'll take bet anytime.
San Raphael? There nearly 50 years. May you vegetate in peace in contentment. I wish you well. A relatively recent move to San Diego from you guessed it. Fantastic, amazing, ever alive New York City.
2
So silly for a corporation to play a reality TV game on real life.
4
You kids can be even more courageous.
There's a huge cupcake factory down on wall street. Kick them out. Grab your easy bake oven and go it alone. To each kid according to their needs from each according to their abilities. It's simple.
2
@Brian It’s clear that the politicians in NY have neither cupcakes or ability.
1
The free ride for Amazon and others like Amazon.....should
be discussed on PBS....so that the general public will understand fully the argument which Leonhardt presents and
which commenters here have aptly reviewed.
The ploy of Amazon to amass more income for their corporate
benefits whilst crushing others should be fully argued prior
to the 2020 election...
PBS or a Q&A...(such as the DOHA Oxford Forum debate template is the best way to inform the general public)
6
@Carol B. Russell
Unfortunately, PBS seems to have been captured by corporate America. I would be surprised to see such a "touchy" subject be covered there - might upset those large coporations that donate to keep its doors open.
3
@Carol B. Russell...I should truly hope that the scorching expose on Amazon, et al would include all of the lurid details of how Amazon, et al would be able to amass $30 Bi$$ion in just 10 YEARS to pay for the free ride in NYC. Are they laundering drug money by paying all of those taxes? Is Albany in on the take? The General Public would like to know a lot more about all of this so-called "tax money".
1
How great is it to live in NYC? They kiss off 25,000 jobs as if it were nothing. Meanwhile, they ban “hairstyle discrimination”! Way to keep your eyes on the prize.
13
NY progressives storm into the room, throw all the cupcakes on the floor and stomp on them. They then turn and smile for the cameras and state now there is equality in cupcake ownership. No one has any.
12
@Daphne I think they took the Ariana route and licked all the cupcakes then complained about obesity in America.
New York leadership both state and city showed sheer incompetence. Competence is conducting the economic analysis before you compete. If the benefit is less that the cost, then you don't enter the contest. If it was bad policy before the competition, then why was it noticed only after the award. Any idiot can identify a problem after it happens but we pay leaders to find issues before they become a problem. Mr. Leonhardt article is just a whitewash of either weak leadership or ideological incompetence.
8
Does no one consider that Amazon is behaving like a spoiled brat? Was there a decision made to take back the bribe that had been arranged? No, I think Amazon just decided that New York didn’t love it enough. Sickening.
8
@Carol Wheeler...I would suspect that spoiled brats would see spoiled brat behavior, but adults, not so much. It's the old "being is seeing" thing.
Principled Stand by local politicians? Where do you get that? Amazon pulled out, NYC NYS had no input. I agree with your premise economic subsidies are stupid policy, but not sure where you are seeing " principled politicians" in this mess.
4
All the NYT (and the other leftist) have done is drive 50K high paying jobs away from the city. In return for $3B in tax incentives ( that the city never had, to spend elsewhere) NYC would have received up to $17 BILLION in new tax income. Now no big job magnet company will want to come to NYC; many of those here are reconsidering if they should stay. This is beyond cutting your nose off to spite your face, it is more akin to cutting your legs off to spite the remainder of your body.
Enjoy your socialist utopia NYC, those who can are fleeing. Those that can’t are making plans to do so.
10
@Dave
If they wanted to come here, why should we give them incentives?
They should just come here.
Walmart had been courting NY year for years but no success. a Few years ago they were still hoping.
6
The cupcake analogy is infantile. To say corporations "do nothing to lift the country's economic growth" is delusional, regardless if they search for local tax advantages. Who does Leonhardt think pays all the corporate and income taxes that fund government across the fruited plain? It's not even a case of "if you scratch my back, I'll scratch yours." It's more like, "If you scratch my back, I'll marry you."
New York City has become Bedlam.
8
@Dougal E - Are you kidding me? "Who does Leonhardt think pays all the corporate and income taxes that fund government"? Not Amazon. They paid zero dollars in federal corporate tax this year. They had profits of 11 billions dollars.
2
Who among you is hiring? I know a few thousand people that would love a good job --- that would love to buy lunch locally --- perhaps hire a plumber --- etc etc
4
@tobin
These are they very people who will be losing their jobs, the small business. Their rents will skyrocket
Just look at what happened in San Francicso: Big tech moves in. Residential and commercials rents soar.
Tech companies set up all encompassing facilities inside the workplace (food, exercise, meditation, pets, you name it. They even provide a company bus to bring in workers from the suburbs, so they are not even contributing to public transportation but do so for carbon emissions.)
These tech workers work long and hard and never come up for air. They have no economic or social presence on the local streets. The shopkeepers have complained that although their rents have gone up, their street traffic has gone down. This is what happened in San Francisco. Want more?
9
We are to assume that if David Leonhardt had formed from the ground up a company like Amazon he would have instead given NYC 3 billion for locating there. Please get real this country has benefited very handsomely from capitalism!!
7
I've never been so proud of all my New York people...
...hey Amazon, don't even think about backtracking to Detroit. We'll figure out our own way...
6
@SD...Detroit's success speaks for itself. So, don't worry. UPS is as close as Amazon is going to get to Detroit.
New York City didn't damage any interest, short term or otherwise. Recall that the touted benefits, the billions of dollars, would come over twenty years. It is not sour grapes to call it what it was from the beginning: a big swindle. HQ2 came about because HQ1 was starting to feel this same disobedience from its home population in Seattle. The 50,000 job HQ2 then got cut in half, which did not dissuade our rather pathetic Governor and Mayor in their eagerness to please Amazon. For good measure this pie (whose parts seemed increasingly exceed the whole) was further divided to accommodate a location in...Nashville. Then the patronizing nonsense, this Mayor's forte, about NYCHA residents getting jobs there. Like there is this huge talent pool among NYCHA residents waiting to be tapped (the one chapter in this tale where one can see clear to extend some sympathy to Amazon.) And just what was going to go on at this HQ2.5? Who knows. Something involving a lot of $150,000/year "Amazombies" easily transferable amongst the other HQs should efforts to quell any future political disobedience (taxes) fail.
8
Mr. Leonhardt you need to check your college degree and see if you got your money's worth. You assert "Yes, Amazon’s departure will modestly hurt the city’s economy. But it’s also a victory against bad economic policy."
Sir, the annual budget of New York City is $87 billion. Amazon would have brought $27 billion in revenues including payroll taxes and other benefits to New York. $27 BILLION sir is about 31.0344 % of that budget. Hardly a trifling to be thrown away.
You claim that New Yorkers did not act in their own interest by accepting Amazon. By what measure? How about what percent is $3.5 billion of $87 billion? The answer is 0.000000003448%. In other words not much. Especially if the $3.5 billion is comprised mostly of tax abatements not cash.
The fantasy economic policies of New York are ruinous. Another example is the banning of drilling in Marcellus Shale for natural gas. How many jobs and what price is paid by New Yorkers for that odious banning policy? Did that too do much to "lift the economic growth" of New York or the country? What reform in economic growth and achievement was made by trashing Amazon and banning drilling of the great abundance of natural gas in lower New York?
Here are some real numbers Mr. Leonhardt; Lost jobs 25,000. Lost revenue $27 billion.
"New York's economy will be slightly worse off because of Amazon's departure." Really Mr. Leonhardt?
This isn't Reagan's Voodoo economics. This is radical leftwing fantasy economics.
8
Even the socialist mayor of NYC, Mr. de Blasio, could do that math on this one, Mr. Leonhardt. The tax revenue to the City, as compared to the incentives provided, paid off at a rate of 9-1. This is money the city sorely needed to shore up its crumbling infrastructure, including its moribund subway system--and perhaps remove the boot heel from throats of other taxpayers who struggle with some of the highest taxes in the world.
To all of you coastal "elite" NYC geniuses, you blew this. You let your hatred of capitalism get in the way of landing a good corporate citizen (just ask Seattle) and 25,000 jobs whose average salary was $150,000. Nice going.
Will the last person to leave NYC, please turn out the lights?
8
Nice try David, but you’re wrong. The twenty five thousand jobs (and their secondary jobs) are gone, and all the Left wing spin in the world isn’t going to create a single paycheck.
The irrefutable fact that the Liberal messiah AOC actually thought that there was cash involved in this fiasco is just the frosting on the cake.
If you really don’t think that jobs are important, I suggest that you pack up and move to Venezuela. Be sure and take AOC with you, and walk the whole way so as not to cause greenhouse gases.
10
And why was it that Northern Virginia got a better deal than NYC?
Perhaps the Virginia location was near the Pentagon?
Just sayin'.....
1
@bdk6973 Try to keep up. Virginia gave fewer incentives and is certainly a nicer place than Queens.
1
Misguided Fools! What a colossal failure by local NY politicians. We are not talking about 25,000 jobs but hundreds of thousands of jobs lost. These include consultants like me, vendors, suppliers, and an entire network of partners in the region that would get newly created good jobs, and hence, well paid taxpayers. Amazon would have been a regional “tech anchor tenant“ that would have attracted many other tech companies to the New York City region, who would also need consultants, vendors and partners. Thus benefiting schools, infrastructure, etc. This was a much bigger loss than one company. This is a loss of hundreds of billions in the region. So short sighted.
11
Amazon would never do a deal where they didn't come out ahead of the other party. Good riddance!
4
Wow! The Times used to cheer the creation of private commercial facilities with public money, via the process of redevelopment, using eminent domain that took land from private owners who were undercompensated in the process, and conveyed it for a pittance to favored [re]developers.
An example: the 1905 notorious, widely despised Kelo v. New London case in which an entire unblighted 90-acre lower middle class neighborhood in New London, Connecticut was razed in order to be leased to a [re]developer for $1 per year. All this for the benefit of planned upscale shops, condos and a marina serving the highly paid employees of the nearby Pfizer pharmaceuticals research facility. Higher tax revenues and employment were supposed to follow. But it was for nothing.
The city and the State blew over $100 million, but nothing was built. To add insult to injury, Pfizer waited until its tax goodies ran out and then moved out of town, taking 1400 jobs with it. That taken land is sitting vacant until this day -- a trash-strewn eyesore.
But unlike the vast majority of the press, The NY Times supported that outrage editorially.
And the Times itself was the beneficiary of a similar redevelopment caper when it obtained the land on which the Times building now sits, in a financial sweetheart deal with the city.
So on balance it was a good thing when the city-Amazon deal came a cropper. Let Amazon and the likes buy their own land and risk their own money on land they want. Not yours.
3
"did us all a favor"?
how about those 25,000 jobs, and the families of those breadwinners?
How about the now gaping hole in our state and city budget deficits?
Smiling utopian dreamers don't understand economics nor face reality
5
@Joe Yoh- how about all of those thousands displaced due to high rents which they can no longer afford? Way more than 25,000. the 25,000 jobs is a number pulled out of Amazon's PR department's hat.
4
Bezos is a bully boy and he two-timed seattle immediately after the city asked him to pay a tiny tax to offset his impacts. He doesnt leave anything better than he found it and he doesnt have to because he’s going home to mars — and for that privilege, he will pay billions.
7
I'm a Trump supporter, so bash away and of course I think AOC is a nut job. BUT I actually think she got this one right. Giving her credit. Amazon has killed the small business trying to make it, especially the small mom and pop brick and mortar stores.
This behemoth of a company needs anything but a taxpayer handout.
9
NYC should not have given Amazon 3 billion in tax breaks
and Amazon should never have considered NYC for a 2nd
headquarters.
The "community" is the loser. The neighborhoods that would have had the injections of higher paying jobs and
educated employees.
1
@horace Greeley- yeah, they would have lost solid middle class families forced to move due to sky high rents. because Amazon moved there.
2
I totally disagree with your article . Another New Yorker, Martin Brooks, recently wrote in your paper the following excellent comment which makes a lot more sense to me:
"While I understand the feelings of those who don't think a rich company should get $3B in taxpayer subsidies, walking away from these jobs is ridiculous. I could understand it if these were low paying warehouse jobs (although they'd have to pay the new NYC minimum of $15 per hour), but they weren't: we were promised 25,000 $100,000+ jobs. That's $2.5 billion in salaries PER YEAR that we just walked away from. That's about $17 billion in total economic activity annually.
Large parts of LIC are already gentrified. People are assuming that the jobs would be filled by non-New Yorkers or by people who would move to LIC. There's no reason to believe that the jobs wouldn't have been filled mostly by New Yorkers who would keep living exactly where they already are. Would the subways have been more crowded? Maybe. But a lot of those people would be people from Queens or Long Island who currently work in Manhattan and would have just gotten off the train earlier and others would have been coming from Manhattan into Queens, opposite the crowds.
I consider myself a leftist, but sometimes we act like fools (like voting 3rd party in 2016, costing Hillary the White House). One has to look at the NET benefits. This was a stupid populist move by the Left that's just as inane as stupid populist moves by the Right."
4
If you want to have monopolys in everything keep giving huge corporate subsidies.
5
Seriously? What an utterly bizarre analogy (i.e., the cupcake and roomful of kids). This result is clearly due to De Blasio's and Cuomo's mishandling of this relationship and their inability to communicate with their own party's (also my) dissenters. The mayor and the governor put out without reserve and then were surprised when the Lothario didn't choose to sleep over.
Let me see....NYC pays out $3 billion only after the city gets the 25,000 jobs...and... in return it gets $27 billion in increased tax revenues. Additionally...the jobs are high paying jobs so the citizens of NYC realize a higher standard of living as a result. Further these are jobs not likely to be replaced by artificial intelligence as is the case with the low paying jobs the citizens have now. I agree that cities should not pay large sums for football stadiums etc., BUT NOT TAKING THIS DEAL WAS NUTS! Amazon saw that they were about to get shaken down by the liberal left and rightly bolted. New York just hung a big sign around its neck...CLOSED FOR BUSINESS...Profitable growing businesses need go elsewhere.
3
Amazon showed all businesses that they don’t have to accept the high tax Big Government socialism of NY! We’re proud of you, Amazon!
2
NY NY was not the disobedient child. NY & NY state wanted Amazon in Queens. The disobedient child was a group of local pols and their followers who were not the spokespeople for NY & NY State or even the majority of their citizens. Just saying - get your allegory right.
2
History repeats. New York tried to nationalize Amazon and Amazon voted with its feet.
3
@God paying taxes that any other small business would pay is nationalizing a business? LOL
2
Congratulationd to New York for turning down a bad deal (regardless of what reasons the politicians may have pronounced).
Giving away $3Billion to a corporation so it will employee 25,000 people is a welfare operation, short and simple. And its expensive corporate welfare - $120,000 per employee. Not likely the employees themselves would pocket $120K each.
Anway what is the point of this corporate welfare?
5
The tragedy of the commons arises from users not being charged for the detrimental side-effects of their consumption of a common resource (or being encouraged by subsidies to expand such exploitation of the common weal). There is not necessarily a time-frame difference while this reality sinks in; at times it is obvious from the outset, but political factors enable the disparity (and wealth transfer) to continue. We should bear in mind there is also a potential tragedy of the non-commons, when markets that theoretically reflect costs and enable efficient allocation fail to do so--and government has to step in on behalf of (e.g.) stabilizing financial institutions.
There is no logical or necessary relation between government involvement and the familiar fear-mongering of a communist or socialist state. Circumstances and the economics of particular sectors render them amenable to competition (which requires regulatory oversight) or prone to monopoly. The federal government rescued the airline industry after world war two, and more recently the domestic auto industry. To say nothing of fossil fuel sector. The advent of socialism has not arrived, unless you consider the highly skewed form of socialism that supports tax avoidance by Amazon while ensuring that working citizens pay 'their share.'
2
Hear, hear. Paying the richest man in the world what amounts to bribes is crazy. America coddles the rich in hope they'll garner crumbs from their plate, while the poor are blamed for being poor.
4
I'd like to know how high the "high paying jobs" were going to pay. Currently Amazon pay averages from $10.54 per hour to $17.50 per hour in NYC. That's not high paying - that's poverty level.
https://www.indeed.com/cmp/Amazon.com/salaries?location=US%2FNY%2FNew+York
These were not warehouse jobs — the avg salary was anticipated to be $150,000 a year and up.
This rate is spot on in NYC for skilled tech workers.
2
@Greg- what proof or guarantee did they give for those number of jobs and at that pay scale... none.
1
I have no love for either side, the Leftist Democratic politicians who did everything in their power to squash the deal and Amazon for giving in to them and quitting.
1
It’s amazing how dumb New Yorkers are. Can’t understand how Virginia offered less tax breaks than New York and still got the deal? If NY takes $40 out every $100 dollars that Amazon makes and then gives Amazon a $20 tax rebate the net for Amazon is $80. If Virginia only takes $25 and gives Amazon a $10 rebate then Amazon nets $85. If New York was less taxing to begin with then they wouldn’t have to make such large concessions to be competitive.
2
Shopping at Amazon is an amazing sea change for the United States. I just bought some Manuka Honey for half the price at a local retailer. But when Amazon holds a bidding war to see who will provide the most in incentives, it is similar to the guy from the Mafia who strolls into your shop and says - 'I'll trade you: give me a cut of the profit and you won't go out of business.' This ain't capitalism, folks. $3B comes from somewhere, yes - the taxpayer. That's extortion.
5
"The subsidies mostly redistribute income upward, from taxpayers to corporate shareholders. "
Hmm. How Krugmanesque. A forceful and confident statement that is wrong, entirely.
You can't redistribute what you dont have.
Before Amazon there was no tax income from Amazon to New York City, and no costs to New York City.
With Amazon, there may have been real cash costs to the city brought about by Amazon operations: load on buses, wear and tear on streets, etc.
Those, would be the only cash costs to New York City, and would certainly not exceed Amazon;s tax burden.
By giving Amazon a tax break - not 100% mind you, but a big one, the City forgoes some tax income, but that's all.
By missing out on the Amazon HQ, the city loses ALL the tax income from Amazon.
The "wealth redistribution" claaim is false for that reason.
Amazon just keeps more of its income than it would have, and that's not wealth redistribution. That's a tax break, just like any other tax break.
Do Amazon shareholders benefit ? Yes.
Is someone trying to argue that no one in New York City owns Amazon stock ?
That would be another false narrative.
As an addendum, Ocasio-Cortez and her lemmings have failed to add to the loss to New York City, the income tax that would have been paid by the 25,000 new job holders.
If there is any redistribution going on here, it is the continued tax burden to city taxpayers, which - now - will not be reduced by the amount Amazon could have provided.
2
Nice. As Muddy Waters would say:
You can’t lose what you ain’t got and
You can’t miss what you ain’t never had
Good point! I can't wait to see states do this with respect to sports franchises, too.
3
When the down and out in Queens are down and out and hungry during the next downturn if not already, they can live off their pride knowing that their far left politicians gave them this pride, and stuck it to a big bad corporation.
Meanwhile the elitist liberals on this board will be still going to the theatre and will have intellectual conversations about poverty.
And you wonder why the rust belt deserted Hillary.
3
There is something odd about granting $3Billion in taxpayer money to Amazon to obtain 25,000 jobs. This works out to roughly $120,000 per employee. Why would transferring wealth from working taxpayers to other taxpayers make any sense here?
2
@Ellen: I used to sell empty factories in the rust belt whose owners had moved the shop south for lower taxes.
@Ellen
The "down and out" were not going to get those jobs anyway, if the jobs were high-tech and paid $150,000 each.
How many jobs in the rust belt did Trump create?
1
This arm twisting of NYC, my home town, may be the straw that breaks the camel's back of my relationship with Amazon. I deleted my Facebook account several years ago; Amazon Prime is next in line.
1
So was Virginia a fool?
"Northern Virginia gave Amazon much less money than New York but still won tens of thousands of new jobs." - makes no mention of the tax & cost differences between the 2 cities.
"If you don't let me use you, I'll just go use someone else!", spoken like a Valentine. As if that supposed to be enticing.
Or, as they'd say in England, "Come on! Sing for your supper!"
1
What Leonhardt wants is for someone who shares his values to play the role of kindly kindergarten teacher. There is no such institution. As long as states and cities (or foreign countries) have the autonomy to set their own tax and regulatory policies, and as long as capital is mobile, competition to attract substantial capital investment, a/k/a the race to the bottom, will ensue. If New York City (or rather a vocal minority) thinks itself too good to compete, someone else will benefit.
1
Good article with sound economic reasoning.
'Incentives' are bribes. And they are never paid back.
Mr. Leonhardt has every right to challenge the practice of awarding tax breaks to attract corporate headquarters, but his transformation of that line of argument into some clarion call of higher moral practice is infantile.
$2.5 billion out of the $3 billion in tax breaks that Amazon was to receive came from existing tax incentive programs available to any company, not fashioned exclusively for Amazon. For some reason Mr. Leonhardt neglects to mention this. What's more, New York officials (led by Cuomo) estimated that New York would come out with a net gain of over $20 billion in tax revenues, taking into account the income taxes and sales taxes that would be generated by the 25,000 new jobs (and the likely 15,000 - 20,000 additional new jobs in service industries that would support the new arrivals). This is hardly a modest gain for a state that only last week was bemoaning the $2+ billion shortfall in its current tax revenues. Yet Mr. Leonhardt omits this awkward little factoid. Doesn't he know?
3
In Israel where I live we had quite a similar case years ago. Intel was considering building a large factory and asked for large tax consents and other benefits. Israel was competing directly with other countries and Intel made it clear that if its demands are not met they will build it in some other place.
After lots of heated arguments the government accepted Intel demands. The result is that the factory was built in one of the poorest towns In Israel, is employing thousands of people at all skill levels, supporting, directly and indirectly the economy of the entire area. The plant has already doubled in size and a large R&D center was built in Haifa in which some of Intel's most advanced CPUs are designed.
I understand most of the pros and cons of " not yielding" to Amazon but as far as I see it NY comes out as the poor, proud luser. Amazon will shrug off this unpleasant incident and move to another place. No big deal for them.
5
Hard to see how the bully in this story is Amazon. Also, the kids in the story had NO CUPCAKES before. Really bad analogy.
Starting with the cupcake scenario analogy and all the way through to some kind of Pyrrhic victory, Leonhardt is really off base here. There is no message or action against bad economic policy here, and nothing has changed in that regard. All that has happened is that NY lost potentially 25,000 jobs and massive ongoing investment via an Amazon presence. It was a total loss for workers and for economic growth in the city. There is no other kind of economic growth out there, that is a fairy unicorn. If you want to change the rules of economic policy that is one thing, but Amazon is just playing by the rules as they are now.
2
Was it principle, as Mr. Leonhardt would have us believe? Or is it the reaction of the city of status-quo's response to an interloper that has already upended many of the businesses (starting with former retail megaliths such as Macy's) that are part and parcel of the city's elites?
How NYC loves that old, Sinatra-era trope: If you can make it here, you can make it anywhere.
How nerve-wracking: the top tier of the nation's (thus the planet's) most highly-valued companies were started and grew out of garages that weren't in Manhattan; companies that, in fact, seem to have little interest in locating anything beyond retail-outlets and "subsidiary" offices on the little island.
Tell me, Mr. Leonhardt: what really major life-changing innovations have come out of Manhattan recently--beyond the shenanigans of "too big to fail" and the rent-seeking of Wall St?
1
The problem with the Amazon fiasco was the path deBlasio and Cuomo took, doing the deal secretly then springing it on us as a Fait Accompli.
You want this kind of thing? Do it right:
1) Hold open meetings as demanded by the New York State Open Meetings Law administered by The NY State Committee on Open Government (https://www.dos.ny.gov/coog)
2) Go through the Uniform Land Use Review Process (ULURP) which guarantees public input via OPEN HEARINGS at every stage from Community Board input to the Borough President and City Council. The public gets to comment on the deal as it shapes up. We thus have a role in forming the deal.
3) Where was the environmental impact statement for this project? Where was the economic assessment? The lack of due diligence on the part of two overly enthusiastic politicians – to the point of gullibility – was a total breakdown of the system in place; a system that protects the interests of local residents and the City as a whole.
4) Present the public with an actual signed, enforceable contract, not some flimsy, warm & fuzzy "deal memorandum" or letter of intent that is unenforceable.
Both Gov. Cuomo and Mayor deBlasio know full well what the process entails.
They skirted the process & evaded the laws that have been in place for decades and did this on their own.
If everyone involved wants to start over, they can all do it properly and with full transparency. Not a secret, backroom deal. Play by the existing rules.
https://emcphd.wordpress.com
5
@Rev. E. M. Camarena, PhD
We're living in an era of unprecedented changes driven by technology and everything is changing faster than before. While it's nostalgic to yearn for the existing rules, maybe those rules no longer apply to maintain competitiveness.
@Rev. E. M. Camarena, PhD- it was done within the law unfortunately and that law was written with the help of corporate lobbyists. That has to be outlawed completely. Then if possible, recall Cuomo and the mayor.
@Indy970 these rules apply to the rest of us.
1
It is interesting that so-called free market theorists call what Amazon was doing a market driven act. In fact, it is a kind of extortion more common to a banana republic or the mafia than a democracy. Companies should move where it make sense, but allowing one state to destroy its future for the present only serves to destroy the market and give these "citizens" (and I use the term advisedly) much more power than they should have. We also see, as with professional sports teams, that once their benefits are used up, they extort the municipality again or leave to another sucker.
The best way to combat this is to call it an illegal act, legislate against it, and hold those that continue to do it culpable with jail time. The solution is really not that difficult if our politicians were not such cowards (or perhaps sullied as accomplices).
2
I hope US citizens will come to realize that “Hey-let’s-have-a-contest” Amazon engaged in a rather sly form of promoting corporate socialism for their own multi-billion dollar benefit. Amazon hob-lobbied across the USA dangling shiny jobby-jobs for its expansion plans in exchange for many pricey goodies that would, in effect, force the people of NY or other cities to help defray expenses that the company should pay for as the cost of doing business. Job creators need to be job creators, not bloodsuckers of our social compact. This is another form of corporate socialism, people, and thank you David Leonhardt for articulating this so clearly. It’s all well and good that Amazon wants to expand and spread jobs around. However, I’m sure the company received invitations of interest from communities that they rejected offhand because it has no use for poor communities that can’t pony up the money to pay Amazon for their jobs. Good for New Yorkers for saying no. The people of NY contribute more than their share to the rest of the country. It’s time for corporate America to do the same.
2
Thanks for writing this! Well done.
1
Bravo New York! Amazon needs New York more than New York needs Amazon.
New York is already a magnet for the talented and ambitious. It already has a vibrant tech sector employing tens of thousands, if not more, people. New York did not and does not need Amazon to make itself attractive to the skilled and talented.
New York is a wonderful place to live – with problems, of course, like any other major urban center. And I say this as a long-time Seattle resident, beneficiary of the many benefits and problems that Amazon's extraordinary growth and extraordinary success have meant for Seattle.
Again, Bravo New York for having the courage and character to resist short-term bribery.
2
Many smaller regions would be delighted to get even a fraction of the 25000 jobs that aren't going to Queens. Most of them are more rural, but often close to major cities or recreational areas that would draw employees who didn't already live there.
I can support giving modest advantages to lure a company to an area that needs jobs, but it shouldn't be billions of dollars when a company is already earning billions more.
New York did the right thing.
@Barbara NY isn't a small region - we don't need Amazon.
Many great comments on the current economic reality of attracting business. I am not an American, but anyone else wonder if Amazon’s mistake here was making this a marketing campaign of epic proportions? Even Canadian cities played the “please come here” game. As far as I can see, some Amazon VPs decided to drag a very common business process into the public eye. The author mentions many other companies that take advantage of Ec Dev incentives, they just do it behind closed doors. To me, Amazons growth strategy morphed into a marketing campaign, who decided that was necessary? it is also a good case study for MBA and project management students on what happens when you don’t engage project stakeholders properly. IMO, Amazon’s mistake was dragging millions of stakeholders into a process that likely required a few thousand at most.
Amazon didn’t foresee the target they were painting on their strategy, and they lost control of their end game by making it a public spectacle. The world is too polarized to be showing your growth cards, and those opposed to change hold strong and obfuscated convictions. Objectors don’t understand, or refuse to care about economic realities. Coupled with what seems to be a decreasing amount of common sense in the world, this should be a lesson to all businesses. Develop strategy, deploy, and keep it to yourself. Stop looking for a hero cookie every time you create a job.
@Tom Mcc: Amazon will add more workers in New York if it the right thing to do on its own merits.
@Tom Mcc what they didn't do - because the mayor and the governor didn't make them do - is engage the people of Queens and the other boroughs of NY. Where were these people going to live? the realtors were chomping at the bit to get them into high priced apartments - all the vultures were ready for this new prey - but what about the people already living here - they didn't and wouldn't make any agreements with the communities and that's why they left, they didn't want to engage. They wanted it on their terms and when the people found out, they said you must consider us and not just the mayor and governor. It's our city. Amazon said we have nothing to say to you but bye, bye. and we say good riddance.
The collapse of the Amazon has benefits. "Progressive" New Yorkers can bask in their moral superiority, Amazon will probably find acceptable perhaps more profitable locations in cities that want it, and the economies of those cities will prosper. Almost everyone wins! -- Except that majority of New Yorkers who wanted Amazon in Long Island-- grubby, materialistic folk, lacking in moral principles. Serves 'em right!
1
Relevant to Mr. Leonhardt's thesis is something Margaret Thatcher once said while criticizing socialist methodology: Better the poor be poorer, so long as the rich are a little less rich.
1
Many of the same people who are all for this deal are strongly opposed to the government picking winners and losers.
As to the big benefits, maybe a review of the Foxconn deal would be instructive. Good for NY on canceling the deal. I’m hoping Chicago also loses out.
It sounds a bit "fishy" to me that a huge corporation like Amazon, that pays no federal income tax needs to be subsidized to expand its business. As the old saying goes, "no one can take advantage of you without your permission". Businesses have managed to make extortion into a phony win win situation. I say, "Here, here" to Queens protestors and taxpayers. Somebody had to speak up.
1
Hmm, lets review the facts. Amazon knew it needed a new facility and to hire more employees as it continues to grow. So it was going to create jobs in any event. That is good and I don't think anyone objects to that.
Where it went wrong was the farcical search for a HQ2 which was at this point an elaborate bate and switch to get cities to provide valuable data to Amazon and fall all over themselves to offer taxpayer funded "subsidies" to entice them to come and...wait for it...create the jobs Amazon knew it needed to create all along! And let there be no mistake about the bate-and-switch aspect - Amazon turned down far bigger subsidies elsewhere for NYC and Virginia, which were, of course, the most obvious candidates all along. They knew where they wanted to go all along and the search for HQ2 was just an old fashioned shake down.
Why do people keep forgetting that those jobs will be created anyway? What people objected most to (myself included) was the use of massive amounts of corporate welfare to get Amazon to do something they were going to do anyway.
The amusing part will be how many of those jobs will end up being created in NYC anyway. Amazon already has offices in NYC, and clearly wants to be here anyway. Time will tell on that front, but the verdict is already in on corporate subsidies- they are a race to the bottom for the cities that engage in them, and the only winners are the owners of the business that get them
2
This is not complicated. NYC either pays the next company thinking of relocating here, or it sits on the sideline.
There is no straight line from 'holier than thou' crowd that killed the deal to a solution for 'Pay To Play'. A few 'holier than thou' players got their way, but the end result was pragmaticism lost and feel good ideology won.
It's a great way to bankrupt.
You might want to do a follow-up with the mayor of San Jose, CA. I believe they are just welcoming a large tech firm with no subsidies! Good place for democrates to start discussions on corporate welfare.
1
America's most iconic city says NO to America's most toxic corporation.
I LOVE NY
To follow this logic to the end, let's drive every major industry out of the city except finance by establishing a hostile business climate. Oh wait, we already did that.
2
The other dirty secret about these deals...often the company has already selected their location based on the usual factors: existing infrastructure, quality of workforce; unions (or lack thereof). Years ago I worked on a project that nominally pitted two sites (one in OH & one in IL) against each other for incentives. All the time that the locals were bidding, we made detailed plans to install the project in OH. Illinois never had a chance.
1
"Cupcakes, after all, are pretty tasty."
Not all cupcakes are good for your health and not all jobs are good for our society.
7
Don’t know about the cupcakes but these were good paying office jobs with a killer view of Manhattan. If you need a multiplier effect think of all the parents working these jobs who will spend a ridiculous amount of their salaries on college education for their kids. The extreme cost of college is certainly a topic all its own but it’s jobs like these that give the parents the ability to afford the cost.
1
Think back to 2009 and all the jobless. How soon you forget and how easily you dismiss the hard work of job creation. You cannot legislate job creation unless you advocate a centralized economy and a communist state. Simply demanding new and better jobs is humorous. If it were so easy, some of those demonstrating against Amazon would be business tycoons with tens of thousands of employees. As employers continued to be punished for success, more will leave the hostile confines of New York and similarly "entitled" locales and good jobs will become ever more difficult to find. Good luck paying for your guaranteed income, free college, Medicare for all and subsidized housing.
3
@Toni, NYC continued to do perfectly well in 2009, despite what was going on in the economy overall.
Good luck paying for your own state. Oh, don't worry - we'll continue to subsidize it via our Federal tax contributions, which are more than we get back.
2
It was just reported that Amazon paid no corporate income tax in 2018, on earnings of over 11 billion dollars. New York City should pay it 3 billion dollars for the privilege of having soaring rent, more damaged infrastructure and gentrification for an increase of slightly more than .5% of existing jobs?
5
@PeterLaw New York wasn’t paying any money. And now that Amazon is no longer building HQ2 in NYC, there will be no additional tax revenue either.
The issue was not progressives vs. non-progressives. NYC's rich fabric is built on its thriving immigrant populations. While Amazon may have indeed created some lower-paying jobs for working people in the city, most new jobs would probably have gone to IT professionals. The result would have been to change the property profile in Queens, Brooklyn, and even Nassau and Westchester counties. Working people in the city would have been pushed out by the rising prices and the city would have lost some of its racial & ethnic diversity and also its socioeconomic diversity. Sorry. No cupcakes for me.
1
@Dye Hard. Im confused so these jobs are too good for immigrants so they should stay in fast food ? Do we want to train our labor force ? Immigrants or more correctly their children are the ones studying to be programmers and coders. Plus there would obviously be thousands of different jobs (from staff kitchen, to computer, to marketing, to writing , to management, etc). Working people would not be pushed out - enough with that untrue diatribe. New York is diverse, our factories are closed, without Wall Street we would be Detroit. We need to diversify. I am amazed how shortsighted and myopic folks can be.
Thank NY? It’s only cities and states like NY that overly subsidize corporations and tax their people instead. There is a reason you won the ‘competition’ to begin with - you rely almost exclusively on taxing people instead of companies. Other cities and states couldn’t fall back on their resident revenue stream like you could. Thus your deal was sweeter. Nice to see NY slowly starting to wake up to what the rest of the country already knows. Taxing people to subsidize corporations is wrong.
8
New York is home to some of the greatest economic minds in the world. David, how about tapping into a brilliant economist at, hmmm, Columbia, and ask them to explain the economics of the Amazon deal and what it would have done for New York City and beyond? Let’s hear from an expert.
5
@Born In The Bronx: The notion that corporations are people is abject hogwash. Corporations are shields to protect their managements from laws applicable to individuals.
Capitalism is supposed to like competition but what it really like is monopoly and subsidy. There is no reason why the average tax payer should subsidize a profit making corporation
9
@LES
Or a losing one for that matter.
1
A 1994 article in this paper highlights how things have changed in terms of how companies get cities to accommodate them. In the 1980s Citibank PAID and invested in the community to get permission to build the Citi Bank Building in LIC:
"To gain city permission to build, Citicorp renovated and connected the E/F subway stop at Ely Avenue and the G line's Court Square stop, opened a public library branch in the tower, paid to renovate a playground and park and doled out $350,000 to organizations for young people, the elderly and others. Its tower houses a gallery that displays works by local artists. Last year, Citicorp sponsored the first March of Dimes walk in Queens, raising more than $100,000. Free meeting space is available on the top floor, which offers a sweeping vista of Manhattan."
5
@LaBean
And guess who was going to take over all that space?
Starts with an A.
It started in the 80s as a subset of the Reanomics craze, and was call 'the race to the bottom' by skeptics.
The skeptics were right.
Why should a trillion dollar corporation that already pays too few taxes be handed billions more in tax breaks?
America, find a new paradigm.
3
Many years ago I met with the Director of Economic Development of an unnamed state, about relocating a part of the company that I worked for into the state. I was prepared to negotiate terms, but was shocked when the Director figuratively threw the States wallet on the table indicating that we would get pretty much what we wanted.
I was pleased as a business man, but appalled as a tax payer. Not much has changed.
P.S. We did not move.
6
"Refusing to play an unfair game is sometimes better than winning it." Thanks you. New York does't need 25,000 jobs paying $100,000 plus jobs created by the Amazon headquarters. We can use them in Virginia and don't have a anti-capitalistic congressperson here. Any subsidies or breaks are easily paid for by the revenue generated by Amazon. But it is better that the New York workers make the $15 per hour minimum and embrace Democratic Socialism espoused by their elected officials. Fight the power!
5
Sure, that really happened.
Nice story, bro.
Meanwhile in the real world, it's not that odd that NY agreed to abate $3 billion in immediate taxes in order to secure nearly nine times that amount over the course of the agreement.
Amazon did not create the infrastructure, budget and political nightmares that exist in NYC. Those were already there before the deal was struck.
After the deal was done, the leftist crazies came out of the woodwork demanding that somehow Amazon needed to "solve" issues that predate the deal, so they said no and exited.
Money and people go to where they are treated well. NY still has the same infrastructure, budget and political nightmares...but does not have the tens of billions of future tax revenue the Amazon deal would have brought.
Nice work...now those 25,000 jobs paying an average of $150k a year (and the taxes they would have brought to NY) will go to a less hostile, less fraught city and bring immense prosperity to that other city.
Somehow this absolute catastrophe for NY is being hailed as a "victory" by AOC and her angry crowd of economically illiterate supporters.
1
It is worth mentioning that sports team owners have been blackmailing cities to build new stadiums for them for many decades. The threat of moving a beloved sports franchise to a new city has often been employed to “good” use, resulting in taxpayer-funded wealth generators for the already-wealthy.
At a point in our country’s history when tech robber-barons are driving income and wealth inequalities to the level of the early 20th century, New York’s principled stand is overdue and needs to be duplicated or it is in vain.
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Somehow, this sounds a lot like after the 2016 election. He may be president but she won the popular vote. Yesterday another NYT article compared the deal in NY to the one in Virginia. Virginia gave much less tax breaks than New York would have and now Virginia may get another 25,000 jobs. I was surprised Amazon even thought about going there. The high personal taxes, political drama, unions who are quite willing to bring everything to a screeching halt if their demands aren't met, a crumbling infrastructure and transportation system, all seemed a lot for Amazon to ignore. They may have been relieved for all the adversity to come up. Who needs it? In the meantime, while Mr. Leonhardt is back slapping himself and other New Yorkers, other areas such as Chicago are saying they could be Amazon's kind of town.
1
First if you do not like the deal blame your elected officials who put it forth. I agree it was overly generous but no one forced NY to offer it.
Next I think that not having Amazon is more than moderately impactful. Another 25,000 professionals plus all that would have done for the Long Island City area is quite a loss. Let us check the area is 5 years and see what is there then.
Lastly, think of the moves that will not come to NY. Those companies looking to locate to NY surely are questioning is it worth all these issues. And you will never know that entire loss since no company will publize not coming to NY- who wants the ill will.
Perhaps it was worth the lost opportunity benefit not to have Amazon in NY - but be honest about about the lost opportunity benefit. It is not “moderate”.
11
Lots of critical comments here. I for one appreciate David's argument, although I am not sure it was the bulk of the argument employed by the social activists that made this deal collapse. Nor am I certain that they represent the wider NYC populace, but... I for one am thankful to NYC for dealing a minor blow to the Amazon-Goliath, although I doubt they will feel the sting. I understand the net economic sacrifice that NYC made, but wealth inequality is a serious issue and this sets a precedent in the right direction. Several commenters note that the "cost" of these subsidies would be repaid in as little as two years, leading to a long future of profits for the NYC community. Again, sustained. But Amazon is going to put these jobs somewhere, and they will generate that revenue and contribute to the tax base regardless. Why hand them a few extra billion just because they asked? Doesn't Amazon have enough? I think yes.
7
Bravo. And thanks especially for calling out the anticapitalism of corporate welfare. Regular human beings pay a premium to relocate to a vibrant urban area. There is no reason the richest companies in the world should be getting what are basically government subsidies to do the same.
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@RGT regular people don't bring $28 billion in tax revenue or 25,000 jobs with them when they relocate. So I don't really see a comparison.
3
@Jimbo - Regular human beings also don't have *one trillion dollars* in wealth. That was Amazon's valuation as of last September. Why couldn't they afford to move to New York w/o a $3B subsidy, again? Most regular human beings living in NYC manage to make it work w/o any subsidy at all, with about .0000005% of Amazon's wealth.
PS: If corporations are different than people, then there are whole bunch of laws, which treat them like people, that I'd be happy to see rewritten.
1
About 20 years ago, there was a proposal to build 3 casinos in Detroit. I remember it well. All that was talked about were the jobs it would create and the tax revenue that would benefit the public schools. So, they changed the laws to allow the casinos to be built. And what happened? Detroit filed for bankruptcy in 2013. New York City didn’t lose anything by standing up to Amazon. The citizens took a stand against trickle down economics and they will be better off for it in the long run.
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@Mark
Yes Mark I was there also and what you wrote is pretty accurate. However, a deal between GOP Gov. Engle and Detroit Mayor Archer removed $210 million (old state revenue sharing formula) annually from Detroit’s budget. This exasperated and expedited Detroit’s insolvency. FYI the State also had 10 year business tax abatement programs that municipalities could use to incentivize municipal business startups and reinvestments. As I recall 80% of such businesses failed to meet their obligations (typically # employees hired) under such agreements. The three casinos were excellent and reliable revenue streams but as you pointed out Detroit public schools did not benefit one iota from that.
1
Economic growth for the sake of growth may have been a good thing in years past. With stagnent wages, overpriced healthcare and housing, failing schools and infrastructure and this planet in danger of failing to support life shows us we must find a new definition of economic growth that values people over profit.
I am delighted New York City had the guts to take the first step.
6
This thoughtful column ends with the throwaway that New York City's economy will be worse off now that Amazon left us at the altar. Isn't it true that we'll be the same as before and perhaps even a tad better off for being less inclined in the future to give away so much under extortion? In fact, Amazon arguably shot itself in the foot with this bit of drama because now highly talented people will have to choose between living in a city that's up to their intellectual and cultural standards and being able to add "Amazon" to their resumes.
Meanwhile New Yorkers will keep buying from Amazon and the company will HAVE to continue creating jobs - for people already living here! - in order to provide the fast service it promises. We win (and the government here should be thanking the coalitions of resistance at the same time as it publicly pats itself on the back).
8
@Jonathan
"Isn't it true that we'll be the same as before and perhaps even a tad better off for being less inclined in the future to give away so much under extortion?"
Definitely not the same as before. NY has clearly demonstrated its anti-business bias and if I were thinking of locating my corporate headquarters somewhere, NY has just taken itself off the list of candidates.
"Amazon arguably shot itself in the foot with this bit of drama because now highly talented people will have to choose between living in a city that's up to their intellectual and cultural standards and being able to add "Amazon" to their resumes."
Yeah, because who wants to live in the wasteland of northern VA??
"Meanwhile New Yorkers will keep buying from Amazon and the company will HAVE to continue creating jobs - for people already living here! - in order to provide the fast service it promises."
So you think of hiring another few thousand warehouse workers in the NY area at $15/hr is better than 25,000 white collar professionals making $150k/yr? Got it.
2
U.c. - Thanks for your reply. On the first point, could I validly amend "anti-business" to read "anti-extortionist megacorporation"? And yes, my remark about "intellectual and cultural standards" was very clunky. But the leaders of ANY prized metropolitan area - including NYC, northern VA and many more - should come to the table knowing that THEY, not the company, bring the real jewel. Finally, I admit my comment about the existing rate of job creation here by Amazon wasn't exceptionally well thought through but Amazon's having stomped away doesn't mean the city is impotent to create jobs in other ways. And the company's continued cultivation of its market here means the city will continue to benefit from the company, albeit not in a giant sugar rush.
1
@Jonathan they may need to build a distribution center but not a HQ. Socialists would prefer the lower wage facility because it is easier to their agenda to poor people.
NYC lost but AOC secured her district's demographic of poor ignorant folk and reassured her re-election.
No, NY scored in its own net. The city needed the expected tax revenue from Amazon's highly paid workforce to maintain its aging subway infrastructure, fund the country's largest school system and build affordable housing. Now NY gets to stand on principle and raise subway fares on riders who can least afford the price hikes.
14
@Steve - You're kidding, right? Amazon's existence, and the workers it would import, would've put *further* burdens on the subway system. Meanwhile, a big issue here is that while NYC's infrastructure deteriorates, one imagines due to a lack of funds, the city and state somehow were able to find billions in subsidies for Amazon. If Amazon had come into NYC pledging to spend billions to upgrade the subways and build affordable housing, I guarantee there would have been less of a pushback, if any.
5
@RGT
"a big issue here is that while NYC's infrastructure deteriorates, one imagines due to a lack of funds, the city and state somehow were able to find billions in subsidies for Amazon."
I know I'm repeating myself here, but NY was NOT writing a $3b check to Amazon. They did not have $3B squirreled away and suddenly decided to give it to Amazon instead of paying for needed infrastructure improvements.
RATHER, It was $3B in "tax credits" to offset future taxes that they would have otherwise had to pay on their income. So rather than paying $30B in taxes, they would have paid $27B instead.
Clearer now?
4
@Unapologetic capitalist
Thank you! My point is that long-term forecasted windfall from 25,000 newly relocated highly compensated workers could have been used to address NYC's crumbling infrastructure. It's not Amazon's job to fix the subway. The city could have put that $27 billion of expected tax revenue to work on its infrastructure. Now we'll have to make up that lost revenue from another source.
1
I remember these tax break deals for car manufacturers in the Southeast US. These tax incentives create a real problem. Tennessee lawmakers were the biggest defenders on Volkswagen after the emissions scandal because they stood to lose 100's of millions. This is not the role of politicians, to become lobbyists for corporations. Also imagine owning a company and suddenly finding yourself competing against a corporation with $3B in tax incentives to keep your senior engineers.
People who believe 25,000 new jobs will not cause disruptions and shocks have never been to Seattle. Ask the renters in the city; I believe NYC has a few renters.
Rushing is how you make mistakes, because the truth is, no one knows the full impact of Amazon's presence, you can only mitigate the risks by giving yourself time to adapt to change. Stop trying to drink from the fire hose. Like the story, even children know not to do that.
14
The analogy to the children story is completely false. A more relevant analogy would be: An adult tells a class of children: I will give you cupcakes that you can go and sell at a fixed price. You can then pay me back 1/2 the selling price as my cost and profit.
And - I also want 10% of your profit until I make a thousand dollars. Then you can keep the whole profit for yourself forever. In this analogy - the kids get to make money with no cost/risk upfront. They pay and extra fee ONLY if/when they make profit. And the deal is limited - once the amount is achieved - no more extra cost. This is akin to Amazon taking the risk of the investment, NYC keep it's profit (in the form of boost to economy and taxes), minus an additional fee per year (in reduced taxes) until $3B number is reached. From then on - NYC keeps all it's share of the profit. Any rational person would make this deal. And many other cities are waiting to take it. So throwing a childish hissy fit does not change anything in the country - only a great benefit is forfeited and goes to others.
4
Barry - I'm thinking about what you've written and, if I understand, it seems the issues Amazon didn't want to address included questions akin to these:
- Will local residents be able to eat these cupcakes or will they have to move away to make room for new arrivals who CAN eat them (and then travel great distances each day to wipe the cupcake eaters' mouths)?
- assuming you can't and won't provide all the cupcakes at once, do you get your margin at the same rate that we get ours?
- Are you really giving us the agreed number of cupcakes or does this deal assume that others will start making donuts and candy to satisfy the total promised amount of sugar?
- Instead of shuffling up to you with our tray held out, wouldn't it be more sustainable in the long term if we teach people how to bake and then arrange for low wholesale prices on flour, milk, sugar and the like?
@Barry - You're missing a little detail here. **Amazon is one of the richest companies in the world.** Why does it need to have its "risk of investment" offset by the city it decides to move to? Why do we, the public, have to give giant corporations a break until their "risk" is recouped? Is this capitalism or what? Why should rich private institutions get public subsidy?
2
I'm glad Mr. Leonhardt opposes silly subsidies and tax incentives from New York to private businesses in the name of fairness, equality, and non-crony capitalism.
I am sure if I go through the catalog of his writing on the topic, I will find many complaints about how the city pays studios to film TV and movies in NYC, since, after all, 3 billion dollars of incentives - or what we spent in the last 6 years to make NYC a TV fixture, like it wouldn't be already - is a very significant sum, worth driving away a potential tech epicenter.
And obviously this issue was worth paying attention to before Amazon, if it's worth paying attention to now... Right?
Or is this actually yet another instance of journalists being led around by headlines, which are practically pre-written by PR-savvy politicians and marketing departments?
Fake news isn't the biggest problem in modern journalism. Recentism, the failure to address issues except when they're trending, and the propensity to soon forget them - that is our modern curse.
5
Not all failures to promote long term interests over short term interests count as a tragedy of the commons.
5
Couple of things missing. First, you forgot the multiplier. Restaurants, landlords, lawyers, financial planners, dentists, contractors - you get the picture, all serving new Amazon workers. In this sector, a job has a multiplier of three to five, so that’s at least 75,000 jobs. Second, as a second HQ, the jobs would’ve paid more than your estimate. About triple, in fact. Third, your tax rate is low - you could be missing property, sales and other transaction taxes. Overall, for NYC it’s estimated at 12.7%. There are other factors here but when you add it up, the $3B in breaks would’ve been exceeded significantly by the forecast net gain.
10
@MWR The multiplier effect can go both ways. Stress on infrastructure, yet more sounds of new luxury building construction all around us, rental increases due to gentrification, families having to leave their neighborhoods, children having to start at a new school, the overall city becoming more and more known as a soul-less corporatized city for the rich, etc.
12
@Lisa - Right on. And then there's the larger question no pro-amazon people seem to want to answer, which is: *why did the richest company in the world need the $3B tax break in the first place?* Answer: They don't. Amazon's just playing cities off against each other in order to use public funds to boost their own private bottom line. I don't care how fast the $3B could've been REpaid. *Why should it have been paid at all??*
@Lisa Sure - we can all stay in bed all day and do nothing and none of the sad things you mention will happen. But maybe other things....
Amazon is basically a retailer with computer infrastructure. Even after settling in, the company would not increase its already substantial retail presence in New York City. How would Amazon's promised jobs compare to the thousands of retail jobs already gone from the city?
Take a walk up Madison Avenue past the vacant storefronts and the answer reveals itself. Amazon has killed thousands of retail businesses and thousands more jobs.
New York would be better served by making efforts to support the smaller retailers that gave the city such character ... once upon a time, before Amazon.
10
@steve from virginia
Amazon planned to build a corporate headquarters in LIC, not another fulfillment center warehouse and not a huge retail store.
Comparing lost retail jobs paying minimum wage to gaining 25,000 white collar jobs paying $150k/yr is comparing elephants to kumquats.
5
@Unapologetic capitalist How many of these 25,000 jobs would be given to locals is very debatable. These will be primarily highly educated specialists coming in from the outside.
@steve from virginia Exactly. Instead of tax breaks to the rich, what about tax breaks, rent-control etc., for all those small businesses and owners who give True Character to NYC's various neighborhoods?? It's an absolute disgrace...all the empty storefronts that now litter our neighborhoods streets, with big signs advertising the names and phone numbers of the soul-less realtors and rapacious landlords. I'm stupefied at the levels of heartlessness and greed.
1
I am glad Amazon is not going to New York. I would rather have Amazon move to Chicago.
If Amazon had moved to New York, there would have a lot of jobs. In addition other jobs in the neighborhood and further out would have sprung up.
4
I’m familiar with the South Lake Union neighborhood in Seattle. It is home to Amazon. It has been transformed from a lively neighborhood where families lived to a desert of uniform condo complexes (each with its rooftop garden and indoor workout room) upscale but chain taquerias and expensive coffee shops, and fitness centers. People who used to live there and work in Seattle at mid-paying jobs now have a hellish commute from far-away suburbs. I’m not saying it’s all Amazon’s fault — lots of other cities without an Amazon presence such as my nearby San Francisco, are similarly suffering from what is politely called gentrification. The thing is, it happened so fast in Seattle. I’ve only been traveling there regularly for 5 years and South Lake Union is no longer recognizable. Be thankful, Queens, that you have avoided, or at least put off for a while, this fate. And if it happens anyway, at least you aren’t paying a mega-company to do this to your borough.
13
I live in Seattle. I used to work in South Lake Union. It was a semi industrial and office area, not a residential area.
I've long been appalled at the system of corporations extorting concessions from states and cities and politicians giving sweetheart deals to select corporations - thus committing the sin of "choosing winners and losers" that conservatives often decry.
Perhaps what we need is a constitutional amendment to prevent states and local governments from offering these kinds of deals. It would be in the interest of all citizens and would level the playing field for corporations as well. It would also help curb a clearly corrupting influence on our politics.
4
@voreason: No Constitutional amendment is needed. The "Commerce Clause" in the original Constitution empowers Congress to ban any economic competitions between states.
4
Ireland created a program of inducing corporations to come to the Republic by giving them tax reductions for 10 years. It worked for 10 years, companies came and the Irish prospered. Immigration swelled. All was ok. For 10 years.
At that time the corporations demanded the Irish extend their deals. When it refused, they left. The Irish economy crashed.
Corporations need regulations, else they behave solely in their own monetary interests.
15
The concentration of "economic power — the kind that allows (Amazon or other corporate giants) to dangle 50,000 jobs and billions in revenue over every metropolitan area in the country" & make them beg like puppies for a treat should highlight the need for antitrust & tax enforcement & reform.
10
Amazon has said it will not open a HQ2 "headquarters" in NYC, but by all reports Amazon already has a presence in New York City and seems to have no choice but to keep expanding that presence because it wants to employ more of the skilled people who live and work in NYC. The rational course of action for Amazon is to keep expanding its presence in NYC based on its needs regardless of whether or not Amazon gets a tax break.
6
I agree. A great city should be a magnet for companies who pay to set up the operation, not the other way around. It's in the company interest to have better transportation infrastructure, schools and parks. A great model is how Google is working with San Jose to build a 25,000 employee office, housing, retail complex near a major transportation hub. There's no talk of subsidies, rather both sides are working together to build a great urban location for Google and the community.
8
Was a cost-benefit analysis of the plan, including social costs, presented to the public?
2
You weigh the costs. You weigh the benefits. If the costs outweigh the benefits: Pass.
This removes social "theory" from consideration.
Time will tell if NYC's decision was correct.
4
It was not New York’s decision, it was Amazons.
@Anita Larson Either way it's still COST/BENEFIT.
States & Municipalities may have many other features to attract new business development or business redevelopment. However business tax subsidies and abatements should not be offered period. The problem is not with businesses wanted such largesse but why governments play that game. Business is driven by profit not social goodwill. If granting subsidies were prohibited everywhere then governments and businesses would not discuss that issue. Governments competing against one another on business tax policy is stupid on their behalf as a whole. Would a private business make a deal that cut their profits? Why then should governments make a deal to cut their revenues? The auto industry is a good example. The industry as a whole supports individual auto makers in terms of regulations. Yet makers compete individually. This principle can be applied to governments but only if they ‘agree’ that altering taxation policy for the sake of business investments is forbidden! Then business loans, infrastructure, regulations, workforce, utilities, gov. process speed, etc become the only essential selling points for a business suitors to consider. But again, government must abide by the rule that their individual business tax policies cannot be altered to better accommodate business interests. Businesses work together for their common interest so why can’t governments? That’s the lesson from the NY/Amazon story! Local gov. form compacts of common purpose!
4
From a finance geek perspective: $3 billion tax break too little or too much? too much.
Why? suppose all 25000 new jobs are created at an average of 40,000 per year and they all pay a tax rate of 10% to the city and state. That is .10*25000*40000= 100 million. So it would take 30 years to generate $ 3 billion.
Next add infrastructure costs due to 25,000 people all going to the same location. That is subway, roads etc. Line 14 subway extension is $450 per mile.
Next add congestion costs. 25000 people all going to the same location, at relatively the same time. (Madison Square Garden has a capacity of about 20,000.
Based upon these numbers, especially the infrastructure that NYC would of provided, it seems that Amazon should of paid NYC $3 billion to build there. (not the opposite!)
12
@Peter
This was intended to be a Corporate HQ, the average yearly salary would be in the 6 figures, certainly not $40k. Where did you get the $40k/year from? Because even the NYT in previous articles have mentioned it several times that about the 6 figure income for the 25K jobs that would be created.
3
if you are so worrying of congestion and impact on schools, subways and infrastracure why are you ok with thousands illigals flooding NY?
@Peter Well said!
What makes anyone think that the 25,000 jobs for people won't quickly turn into jobs for robots. AI is the future for companies like Amazon. Even companies that need humans to perform jobs begin layoffs and transfers months after the ink is dry on contracts with the host communities. In what universe does Amazon need financial incentives to do business?
8
@DD, it is common in a business world to offer incentives to get clients and promote more business. If NY wants to milk a cash cow the city needs to five a cow some incentives
2
Because it wasn’t a distribution center, it was Headquarters where 25,000 people making $150,000 would have worked.
Bravo! Thank you for exposing this corporate greed for what it is--blackmail, extortion and all to often either pie-in-the-sky baloney for a delusional "entrepreneur" who flees with the loot just before the shell corporation declares bankruptcy or was an out-and-out fraud from the start. As a 50-year journalist I've covered far too many of both, along with the deals where the government bestowing largess on behalf of its citizens winds up with both holding an empty bag while the business pockets the loot. To quote an old friend who created 50 jobs directly and hundreds through financing other businesses by founding two banks in underserved communities--without a dime's worth of government handouts--"When you have them firmly by the [male organs], their hearts and minds will quickly follow." In economic development terms, he worked closely to finance countless small businesses with fair rates, good service and sage advice. Many gained regional or national prominence from bases in the two small towns he served, mine included. Those needing a valued partner got it and then some; those who wanted an obscene financial handout got a heart and mind adjustment. If more cities, counties, states and economic developers thought that way, the problem would disappear and we could do some real business- and job-building.
8
It should be illegal for all States, Counties and Cities to use tax payer revenue to compete against another State, County or City for a business.
9
Perhaps, it is our broadly distorted mentality that permits us to believe without question that we should not only pay a very wealthy company to come to a locale, we should not voice any concerns about their impact and not expect them to make any effort to address concerns. Sounds fair and reasonable?
7
I can say from first hand experience that a tech job of the kind Amazon was going to produce would enable a person to buy a decent house in a good neighborhood and send their kids to a good and seriously overpriced college.
I don’t see how you can throw 25,000 of these away.
6
You are assuming that New Yorkers with qualifications for these jobs don’t already have these jobs.
One of Amazon's reasons for pulling out of the deal was Amazon's opposition to any efforts to unionize. This puts the story on another footing, that is, not only about corporate welfare financial handouts.
12
People on this thread must be fairly well off or do not see the repercussions that losing Amazon will mean.
The city's revenues have decreased and will continue due in part to SALT. The city will have no choice but to raise real estate taxes which could depress real estate values. As it is values will not increase very much due to SALT.
This Amazon fiasco has alerted business to stay away from the State, another bad omen.
AOC was constantly interpreting the $3B tax incentives as outright cash to Amazon and told her constituents that "we can do a lot with the $3B such as building schools,etc" This alone shows just how out of the loop she is. And she has made Trump a very happy man.
So,enjoy folks while you may, but the collapse of this deal showed that Cuomo and de Blasio were so out of touch. They should have been selling the deal to the community, but they left it to,the far left. Even the poor people in the projects wanted this deal.
Democrats, enjoy the real possibility of another GOP takeover.
14
The residents and local businesses did not want Amazon. Our public services are already strained—and Amazon, as you know, does not pay taxes even though services are used. We don’t want to build a heliport for the billionaire. We don’t need Amazon to tell us “no unions. “. We know how Amazon treats Seattle. Broken promises and bad citizenship.
1
But it was okay for the New York Times to take $26 MM in City funds for keeping already existing jobs in New York City. Also, the site of the NYT new headquarters was acquired with help of government eminent domain - taking the property from private owners.
Look, a better policy would be lower taxes across the board, but that is never part of the conversation, so tax abatements are what we have - again its a discount on future taxes, not a check to amazon. now there is no money from them.
This was such a bad sloppy mess up by the state and local government that it might just help keep Trump in office. As if this couldn't get worse.
7
The residents and local businesses did not want Amazon. Why don’t you try listening to them.
Is it the function of a city government to attempt to change society in general or to act in the best interests of the city they govern? I, for one, think it is the latter.
5
@mikecody
I for one would prefer US cities to cooperate with each other, rather than compete with each other. The competitions companies like Amazon engender benefit Amazon mostly, the "winning" cities next, and everyone else is worse off.
4
Well reading the New York City’s Mayors piece I get the impression it was some type of gentlemen agreement. Maybe you get the jobs and maybe you won’t.
As a protester I am not buying giving away the city for promises. I get on the number 7 train and pray I get to work on time. My kids go to schools that are dirt and overcrowded and the list of mismanagement go on.
Americans deserve better go to the south with our blessings because what you were supposedly offering was a pipe dream . Corporations Carr about there rich shareholders not about citizens . Amazon has put shops out of business in the vain attempt for convience shopping on line. Next time anyone purchases a product from Amazon think about the con they were running in New York and the Democrats who supported the con game.
3
The vast majority of locals I’ve met were excited about the jobs and economic activity that Amazon would bring to the community, even if they themselves wouldn’t immediately benefit. The local people I’ve spoken to who protested had the (misguided) view that keeping Amazon out would keep their personal housing costs down, irrespective of the opportunity-cost to their neighbors. Their argument is cloaked in principled objections to corporate welfare, but it’s really about their own economic interests — they’d be happy to support a company that offers the type of jobs they’re qualified for or interested in. This isn’t the girl in your story - It’s a child who doesn’t like the type of cupcakes the grownup is serving, and overturns the tray so no one else can get any.
12
You weren’t listening carefully. Everyone I know opposed Amazon for many reasons. The deal should have been Amazon’s insistence on no unionization and more public money for a billionaires heliport while our public services are overstrained. Try listening to what happened in Seattle. Amazon broke promises and is not a good corporate citizens. The jobs that did materialize went to HB1 visa holders. Housing costs skyrocketed and so did homelessness. Local businesses shut down.
4
It speaks well for the vitality of NYC that an 11% cut in taxes (from $27B to $24B) was sufficient to tempt Amazon to move here despite the stridently anti-business attitude of our political leaders and pressure groups.
If it is true, as the mayor contends, that tax revenues would actually have increased from such a reduction in the net rate, the city (and state) should cut tax rates across the board, and not just for Mr. Bezos and Amazon, in order to lure and retain the thousands of small firms we never hear of.
4
I agree -- thanks, New Yorkers, for saying no to Amazon! I hope other cities (hey, Austin!) take note. Tech jobs in NYC will increase because of the existing community of tech workers. You don't have to pay billions for that. Plenty of companies want to be in New York ... and that $3 billion can be spent for the benefit of New Yorkers, not thrown to the world's wealthiest corporation.
8
@Niamh
Actually, it was Amazon that said no to NYC, despite the offer of a $3B cupcake, after only a brief exposure to the anti-business attitudes of our political leaders and pressure groups.
10
@Niamh First, I'm not entirely sure I'm right on this. But I don't think with Amazon pulling out NYC now has its $3B back to spend on something else. The $3B was a _discount_ (Amazon was to pay $24B taxes over some period instead of the $27B they would have paid at current standard rates). So in fact NYC now has $24B _less_ than it would have had with Amazon coming to town. No? That's part of the sacrifice in question?
3
3 billion in tax give aways was not enough? Thinking workers have the right to unionize is too anti business? And then the billionaire wants the workers to cough up more billions for a heliport. We don’t need Amazon. New York already has high tech jobs—and can’t even fill them all. Unemployment is 3%.
1
Many communities do not have Amazon as an HQ within it and are thriving.
The assumption that bringing Amazon into your town simply means positive results is pretty silly.
Amazon is the only business that wishes to move into NY, and without them, doom and gloom is sure to follow?
Highly doubt that.
Sometimes the best deals are the ones you never make....
10
There seem to have been an area identified for development - there are other companies out there and other deals to be made.
3
The area doesn’t need any more “development.”
I dealt with Amazon as a vendor. They "destroyed" a $500 piece, claiming they'd informed me they were going to, but never were able to deliver proof. They then "lost" $2000 worth of merchandise. claiming I had to tell them within 3 months of it hitting their warehouse. They never indicated that it was missing, so how would I know? After months of trying and countless hours of phone calls with people in many lands, Singapore, India, three counties in Eastern Europe, Costa Rica, and others, I asked to speak to someone who could make a decision. And I was told by the person that they understood I wanted to speak to an "American." Finally, after endless "cases" I got my $2000. The original $500 was never refunded.
I'm not the only one this has happened to. I'm sure this sort of thing pays off handsomely for Amazon.
Also paying off, no unions. Horrible working conditions. would oversee the low wage jobs The land will be developed, that area is turning into a mini-Manhattan which will result in more income for New York. It's like walking into a casino, looking at the structure that screams wasting money, and thinking you can beat them. It's not for nothing that Bezos is the richest man in the world. And with his recent problem, he will soon need to rebuild. Fortunately, not at our expense.
We'll see what happens to wherever they go, and it won't be pretty.
9
What I did not see was a concerted effort on the part of the City to renegotiate the Amazon deal. If renegotiation was not attempted, the City made a most poor choice. I agree that big companies like Amazon should not get big handouts. That does not mean that some City infrastructure changes should not have been negotiated, partially at City expense. For example, how truck, car, and subway traffic route might have to change as a result of a large employer coming in and developing property so that net people traffic is more dense. That sort of thing should be a combined business and taxpayer expense.
But, don't forget to renegotiate, willing, regardless to walk away from bad deals. Walking away from bad deals while politely inviting good deals is the way to win in situations like this.
OK, was there a renegotiation effort?
2
@Loren Bartels They did. The unions were speaking to Amazon to promise to allow their NYC people the chance to unionize if they desired, meetings were scheduled between deBlasio and Amazon Execs and with Cuomo. Amazon pulled the plug because the public wanted negotiation outside of secret rooms. Amazon didn't want its laundry aired publicly and would never allow its workforce to unionize.
9
Is there a union for NYC tech workers?
New York choose to have 10 birds in the bush, rather than 1 bird in the hand. Offers such as Amazon don't come every week,and in the end, NYC will dearly pay for their loss!
18
@Majortrout,
The bird might have turned out to be a turkey vulture, but in any case, it was Amazon that pulled out. Should NY have offered more incentives or somehow squashed the dissent?
@Majortrout NYC has a GDP of 1.55 trillion dollars. Thats larger than south Korea. I don't think not getting 25k amazon jobs are going to really matter in the City.
No we won’t. This is New York City. We have jobs.
It’s interesting how the comments to an editorial this weekend by de blasio were mostly in favor of amazon and slamming de blasio and the objectors, but the comments to this article are the reverse. Am I the only one who read both articles?
The main difference is that leonhardt does not discuss the benefits to nyc in his article while de blasio does. In fact, the best estimates are that nyc was going to give up 3b in taxes to get 27b in taxes it would not otherwise collect. Nixing this deal on makes sense if you believe that nyc does not have a need for 24b of extra tax revenue. Good thing its subways and public housing are in fine shape!
17
@Rjm
This. There isn’t an organization in the world that wouldn’t give a 10% discount for the chance to acquire decades of revenue from a huge new customer (and the diversification it would bring.)
AOC played it perfectly. But she’s optimizing for her climb to the White House, not for her constituents — who would have made out like bandits, and gotten to live in a nicer and safer area to boot.
12
AOC responded to constituents who started early fighting Amazon. The residents and local businesses did not see any advantage to Amazon taking over their community. We know what happened in Seattle. We have jobs. Our public services are already strained. We don’t need a heliport for the billionaires. Amazon doesn’t keep promises and doesn’t pay taxes.
1
Get your facts straight. Amazon has paid taxes for years. The only reason they didn’t pay the last two years were the tax breaks created by tRump and the Republicans. They aren’t the only corporations who got this tax breaks.
1
Corporations are specifically designed to maximize profits for their shareholders. To criticize Amazon for seeking the best deal for shareholders is like criticizing a Lion for hunting a Giraffe (although maybe some NYT readers would want to do that too).
Our elected officials should also try to make deals that maximize resources for their constituents (stakeholders). Any tax benefits offered to Amazon, so as to deplete this pool of resources, we’re done so for the explicit purpose of garnering greater taxes in the future and expanding the pool.
These so-called corporate handouts might be called something else: an investment in the City’s future. What do OAC and our other wise politicians offer in return? Tax the income of the 1% at even higher rates so they move our of out of state and further deplete the tax base? Good luck with that!
11
@Joe Marcus When you write "Corporations are specifically designed to maximize profits for their shareholders" you embody the short-term thinking Mr. Leonhardt is criticizing.
You may be unaware of this but, as initially designed, corporations were intended also to benefit the communities in which they operated. Indeed, failure to do so could lead to a refusal to authorize a renewal of their charter. That's right, Joe, long before they became perpetual, a corporate charter was granted for a finite (usually short, say 5 or 10 years) time.
11
@Joe Marcus
Extorting taxpayer dollars to enrich one's own pocket is hardly an acceptable practice, although I agree that the railroad industry perfected the art of the government hand-out at taxpayer expense when they built their poorly designed rail system in the 1800s. Nonetheless, I'm just glad that Amazon finally got a taste of its own medicine and I hope that other potential candidate cities don't rollover in the name of lining Jeff Bezos's pockets. I'm in favor of capitalism - but no one needs $140 billion while their employees are on medicaid and food stamps. That's just obscene. (I'm looking at you, too, Walton Family.)
9
@BothSides So, please explain, how does NYC losing this Amazon deal help one iota in improving (or even affecting) wages for lower skilled employees? Why is Amazon responsible for the entire labor market and how we allow it to operate?
4
It needs to be said again and again that big tech companies like Amazon do NOT hire coders based on locality to their offices. Amazon wasn't going to bring 25k high paying jobs to the area, Amazon was going to bring 25k high-earning employed people and plop them right in the middle of Queens.
The results of this kind of tech campus are predictable at this point. It's good for the bottom lines of the state and city governments, but TERRIBLE for the people who already live there. Skyrocketing rents and gentrification can be expected. Low- and middle-earners are going to get pushed out of their housing as landlords want to increase prices and rent to the newly arrived tech bros instead. Small businesses get pushed out too, as the rent increases are larger than the extra customer base. There are a lot of negative effects from plopping this many high-earners into one location all at once. Take it from a Seattlite.
But really, let's all stop saying it's going to add 25k jobs. It's going to add 25k high-income employed people and their families.
28
@John-Paul
Forget about Silicon Valley, the exact same thing happened in Washington, D.C., where nearly all of the city's middle- and low-income earners have been pushed out.
6
@John-Paul Imho this is a larger issue of wages not increasing over time, and just happens to be very apparent in this situation. The problem is that wages are ties to (perceived) value creation and those lower skilled jobs are not getting valued very highly by employers, and there is a lack or regulatory or market pressure to increase wages for those jobs. And employers will not hire and expand rather than pay too high wages and lose money. Can you blame them? So how do we raise those wages and keep employers profitable?
@John-Paul
Your second paragraph neatly sums up what's happening in Cambridge and the Seaport area in Boston. I hope these cities do not set out any cupcakes for Amazon; the infrastructure is stressed enough as it is.
Amazon was absolutely attempting to play states off each other. That was the entire purpose of the HQ2 contest shenanigans. Actually, Amazon was attempting to setup a situation where Bezos could play Virginia and New York off each other indefinitely. $3 billion was only the tip of the iceberg. Virginia got lucky because Queens was smart enough to fold early. New York is big enough they probably won't notice the difference... in a good way.
I had a heated conversation about this with a former co-worker just the other day. We both worked in state economic development for long enough to know the business. I came from an economics background among other things though. She was an ascending marketing and PR person. My job was to figure out the local impact of economic development incentives. Her job was to sell the package no matter what the numbers said. You can imagine how conflict might arise.
Long story short: I think New York just dodged a bullet. You factor in all the local tax revenue and multipliers, Amazon was still shilling a pretty lousy deal. I'm really happy my home town was out of negotiations early. Arlington is probably going to live to regret their decision. I've heard all the talking points PR can possibly spin. The only point where agree is incentives need to performance based.
If Amazon wants a tax break, show me the money first. I don't see Bezos offering to fix the subway. He'd ask Cuomo to pay for that once his employees start complaining.
14
@Andy
Were communities supposed to compete under capitalism? Or was that supposed to be businesses that did?
3
@Andy: You are quite correct: New York just dodged a bullet.
And *nobody* is going to fix the subway - not the MTA, not Cuomo. And certainly not De Blasio, who is mostly interested in being SUV'd to/from his gym in Park Slope.
1
@Naples
In my experience, business and community are not mutually exclusive. Under our current corporate first paradigm though, you probably wouldn't notice.
IMHO, Amazon pulled out because they don't need two more headquarters housing 50,000 employees. They called off the "deal" hours after it was revealed that Amazon's federal tax liability for 2018 was $0. It will be interesting to see if even the VA campus gets built.
6
Hmmm... "corporate charity" to a company who already pays no taxes and will most likely continue to drive small business to their grave.
Living in CA, near Silicon Valley,rents have increased, traffic has gone way up, the average commute to work is much longer. Corporations have "outsourced" much of their growth for the community to pay for in terms of increased population. Who pays those costs, especially when politicians give out tax breaks?
Next... developers come in to build fancy high-rises, fancy shopping centers, etc.
This may be good in the long run, for certain people, but for the residents that live there now? They will be pushed out. Their rents will rise, traffic will grown, schools will be more crowded.
Does the tax break add money to current residents' coffers? Probably not. I know when we get a new development here, the money goes to the town, and not o the local school or road nearby. So the locals do not get much benefit.
I totally understand the locals feeling they got a bad deal!
When I was in Spain, I was struck by 1) the absence of Amazon to a very large degree and 2) the number of small, quaint little shops which make up the middle class and gave people dignity with their work.
Had Amazon worked with locals, and shown generosity and foresight, they could have gotten a warm welcome, rather than a cry of alarm. Enough people saw what I see to freak out and say NO. I get it.
15
@Patsy Exactly. D.C., Minneapolis, Phoenix, Denver (dear god, Denver has become unrecognizable) and even places like Cleveland and Buffalo are all starting to show the same signs and it's not pretty. People of color and the working classes across the country are being squeezed out to the point of no return. It's bleak out there.
There are many people who thought that Amazon would be bringing many well paid jobs to NYC in return for a massive tax break. However, I envision that most of those jobs would go to a raft of temporary support staff or contract workers, who are so poorly paid they are commuting from Pennsylvania across NJ to work since they can't afford anyplace else to live. So, how much in real estate taxes and income taxes will these people pay?
The executives would probably not be caught dead living in Long Island City and seek alternatives in CT and NJ. If they did buy homes locally, there would be a lot of unwanted gentrification.
The campus would likely be so large that many employees would not have time to go to nearby streets to shop and buy lunch, which would be of no help to local diners, sandwich shops and restaurants. Out of necessity, Amazon would provide cafeterias further keeping money in-house. Then, 25,000 people would be trying to get to work everyday on existing highways and trains, so those would need upgrading.
I am not seeing much benefit to the local area in terms of money coming in, but plenty of money going out for road, school and subway improvements.
If the powers that be had provided a more detailed cost benefit analysis to the NY public, it is possible Amazon would not have faced such pushback. Bezos did not become the richest man in the world by being a patsy, so the big question for many is just how badly were we going to get hosed?
13
A better and more accurate analogy would be an adult offering cupcakes to a group of kids - but offering half of the total cupcakes to the 2 kids who were willing to share their cupcakes with the adult. They kids would still get the vast majority of the cupcakes - but they'd have to be willing to give some of it back to the adult.
You may not find such a request fair or even nice, but at the end of the day it was an offer of cupcakes those kids didn't have otherwise.
The people in NY who made the most noise here simply said, I'd rather have no cupcakes than share some of them.
5
@Salman
The presupposes that there won't be cupcakes in the future that will come without that price, and that the adult who has a track record of shaking people down for more cupcakes after the initial deal won't do that here.
@Salman: No, the people of New York said that we have PLENTY of cupcakes here already, thanks, and plenty of ways to get any additional cupcakes we need!
Anazon says goodbye New York. I agree the taxpayer subsidies to one of the worlds largest companies is completely wrong-headed. But the FAR bigger issue that Amazon earned 11.2 billion dollars in profit last year and paid zero dollars in federal taxes.
12
@Michael: Amazon reinvests its profits into growth and pays no dividend all. Amazon's stockholders pay capital gains tax when they sell appreciated Amazon stock.
4
@Steve Bolger: How Amazon uses its profits has nothing to do with it. The fact remains that Amazon contributed 0$ to the federal government, which manages taxpayer dollars to keep roads, bridges, etc. maintained and safe for Amazon's various delivery services. Highway safety benefits not only UPS, FedEx, and USPS drivers, but all of us sharing the roads with those trucks. Amazon's zero tax liability means 100% avoidance of responsibility for public resources it uses heavily and depends on for its existence. That problem lies more at the feet of Congress as Amazon, but Amazon is responsible for how it fills out its tax returns to take advantage of the tax code.
8
@dbandmb Excellent points.
Tax breaks for companies like Amazon are just a recognition of the economic reality that 1) taxes are too high on businesses, and 2) businesses generate a huge part of the property taxes, and collect all of the sales taxes a community needs to survive, and 3) provide well paying jobs that small business cannot provide, 4) enrich the community through the spin off of the wages they pay and the activity they generate. Throughout the history of our nation it has been economic activity that lifts us all up and provides prosperity----not more taxes. We have never been able to "tax ourselves into prosperity" and we won't be able to do that in the future either.
5
Can you honestly make the claim that Amazon's taxes are too high knowing that Amazon paid 0$ in tax on $11 billions in profit? Should they be paid by citizens to operate their business? And why don't you hate Socialism when it takes the form of corporate giveaways?
David, mostly I love your work. But I think you have missed the point by oversimplifying the economic impact of the Amazon deal. $3 billion sounds like a lot of money. If you run the numbers, you will find out why both Cuomo and Deblasio supported this deal. Math is required. So bear with me. If I recall correctly, Amazon planned to Bring 25,000 jobs paying an average according to one report of $150,000 each. That means a contribution of $3.75 billion in income to the region. But wait, that’s not all. According to the IMF, the multiplier affect for developed countries is 1.5. So when you take into account the fact that for each dollar paid in salary a portion will be re-spent in the local economy, and then a portion respect again, the actual contribution of the deal to the New York economy each year would have been $5.6 billion. I could get really fancy and run a discounted cash flow analysis of the present value of that over 25 years, but let’s just say Amazon only stays for just 5 years. Or to put it very simply, souldn’t you be willing to spend $3 to get $25 in return?
9
@Bill Birrell What about the profound unfairness of this deal to existing employers who get nothing to keep their millions of jobs in the city? These employers also generate tax revenue now, but never have a chance at such tax breaks. How is that rational or good governance? And if your answer is that they get the scraps leftover from Amazon's presence, just save it.
2
Wrong, lots of firms in NYC get tax breaks, Wall Street firms in particular.
With that in mind, would it be useful to use as a case study to determine if this type of tax subsidy is beneficial in the long term for NYC?
(We already know the answer....)
How about taxing away local giveaways to corporations on the federal level. After all in the last Congress they removed deductibility for state and local taxes in order to achieve those kinds of objectives
5
@Peter anderson: The Constitutional "Commerce Clause" empowering Congress to block all forms of economic competition between states is as neglected as the "Establishment Clause" barring Congress from enacting faith-based legislation. Congress can do exactly as you suggest.
4
@Peter anderson Why should the rest of the country subsidize your state for high taxes?
Bezos couldn’t have explained it better.
I am not an economist but I studied it in college many years ago and that very basic level of education is enough for me to understand that your analogy of this situation to the tragedy of the commons is woefully misconstrued. As you are an Op-ed writer in one of the last bastions of respectable journalism left in the world, please do us all a favor and look it up on wikipedia so as to do the most basic level of due diligence that your readers deserve.
7
@Richard Wang
"There are fewer cupcakes than children."
Don't even get me started on Leonhardt's reliance on the economic fallacy known as "zero sum."
@Richard Wang
Gee, Richard - methinks a lot of ECONOMISTS who have a little less braggadocio than you would disagree with your comment. Do a little visit to wikipedia yourself.
You only forgot to mention bully billionaires who demand cities build stadium's for them or they will move the team
St. Louis said no and Rams moved back to LA.
Good riddance.
Once black mail is successful, then lots of businesses want THEIR sweetheart deal or they threaten to leave too.
Don't give in to economic extortion.
19
BRAVO Mr. Leonhardt! I totally agree with your cupcake analogy and guess what? NYC has LOTS of options for cupcakes and while Amazon is the richest company in the world, if there's one place that NEVER feels intimidated by ANYONE it's MY city ~ "if you can make it here you can make it anywhere" and Amazon did NOT make it here!
8
@ManhattanWilliam
Thank you, ManhattanWilliam - well put. So much criticism of NY for this, as if it's some anti capitalist hippie commune! If anything, NYC is the center of world capitalism.
I invite these critics to actually visit Manhattan to witness this hippie commune.
Sorry David, this article is a piece of journalistic trash. More kids than cupcakes? Socialism, which seems to have made strides in NYC, says every kid gets half a cupcake just like every kid showing up at an athletic event gets a trophy. What ever happened to capitalism and the pursuit of excellence? Proposed tax breaks for Amazon would not have been paid for by the city treasury. The money isn't there. The tax breaks would have come from Amazon paying less tax than it otherwise would have as an incentive to come to NYC. The massive influx of tax revenue, directly from Amazon, indirectly from Amazon's 25,000 plus new employees and the businesses that would have catered to these new employees (restaurants, Staples, etc.), could have funded infrastructure and other improvements the socialists like AOC have been whining about. Businesses need to reduce risk - Business 101. Doing business in NYC is too risky. According to Swisher's NYT op-ed, "Amazon Isn’t Interested in Making the World a Better Place". Wrong, it is interested but not at the expense of taking a hit on profits. You see, that's what businesses do in a capitalist model, they make profits so they can expand and pay dividends to shareholders. Cuomo and de Blasio get it - AOC doesn't. Having Amazon move in would have created a tax windfall for the city and state. As an Amazon shareholder, I think Amazon made the right decision to "fagetaboutit" in terms of an NYC facility.
5
Why should your dividend increase at the cost of the average taxpayers? Profitable businesses should not receive corporate welfare in the form of subsidies or tax abatements. As an entity participating in our country with many rights and privileges, they should pay taxes to support it, just as we all do.
9
@Mike...Speaking of Socialism: A Tax Break is a subsidy. It is a distinct form of Socialism. A successfully, for-profit corporation was asking for a handout. Moreover, Amazon has not paid federal taxes in two years. This is money that could have gone into the federal coffers and re-distributed to states/cities to repair needed infrastructure. Instead of contributing to Corporate Welfare, have them pay their fair share of taxes so that we call all benefit from better schools and roads.
9
@Mike Corporate tax subsidies are corporate welfare paid for by the taxes of the working class.
So you like the idea of the redistribution of wealth, as long as it's a river flowing constantly upward.
Substitute cupcakes in the example with college scholarships. Let's see if you'd like your kid to stand up to the "big evil colleges".
3
No doubt that not all corporate welfare is beneficial in the long run. But that isn't necessarily the case here.
And while the game may be unfair, that DEFINITELY isn't the case here.
Amazon wasn't being a bully. Nor did they receive some sweetheart deal. They were offered exactly what ANY business who is willing to bring jobs to NY and especially to NYC boroughs not named Manhattan can get.
Right here for ANY business, large or small:
https://www.tax.ny.gov/pit/credits/excelsior.htm
https://www1.nyc.gov/sit./finance/benefits/business-reap.page
The more jobs they create and the higher paying those jobs are, the bigger the tax credit they can earn, but also the bigger total revenues the city and state ultimately receive.
Considering that Amazon was ready to bring 25k high paying jobs to Queens suggests that maybe those incentive programs were working as intended.
4
New Yorkers acting like New Yorkers. Don't tell us we need you so bad that we should bend over backwards for you to like us. Our city is crumbling all around us. The only thing that is not crumbling are the new corporate offices that have bought their way in. But those workers go to work in those offices suffering huge delays on ancient subway lines and walk home on broken sidewalks with trash around their feet. The city is losing its soul, year by year, to the billionaires who care nothing about the importance of New York City to the nation and the world. The millions who work so hard to keep New York great deserve more.
11
@Jason Sypher Maybe your city is crumbling because of it's terrible tax policy and a company like Amazon can not survive so they need lower taxes to be able to operate in your city. If you were to lower taxes (better yet eliminate corporate taxes) more companies could operate there. (Look at your oh so praised European countries). Companies like Toyota and Boeing will keep fleeing high tax states and moving to Texas.
1
@Russian Bot Certainly that is part of a very complex problem. But, regarding Amazon, we don't want them anyway. I think Amazon and Texas are a perfect fit. Amazon belongs in Long Island City as much as Boeing or Toyota which is to say, not at all. I don't personally want another soulless corporation in my backyard. I want culture, arts, design, books, film, intellectual vitality...things worth living for.
Lipstick on a pig article, my opinion.
For starters, 25k jobs @ 100k per year x the NY income tax rate of 6.65% equals 200 million per year, to the state of NY. After Fed taxes of ?22% leaves over 1.25 B of income spent in the local economy.
Someone else do the math, but seems like a no brainer win win for NY.
Not a decimal point of math in this opinion piece?
5
@Chad It is a NYT article. Not to mention that any company that wants to operate in high tax states gets these kind of deals. California has the highest rates of deduction in the country. It's just another way big brother makes the accountants and lawyers richer.
- "The Age of man is gone.That of politicians, economists, and calculators has succeeded; and the glory of Europe is extinguished for ever."
1
@Chad
Not a decimal point of FAIRNESS in your response. What about all those other companies already there that DON'T get a break?
@Chad 100k per job, eh?
Where'd you get that number from?
You seem to confirm the obvious, that Bezos (or his 'rep') forgot that, in any business worth doing, reciprocity to benefit both the company and the community it chose to inhabit, is a given. That capitalism, potentially a powerful system to lift all boats if based on ethical values, may also show it's ugly face when unregulated...and leading to selfishness and greed, an ugly monster we must reject. Too bad, as Amazon is a strong corporation in capable hands, that knows how to be efficient and be of service...if only it were willing to share the pie more equitably. Oh well, lets make a pause, re-evaluate our purpose and allow social justice a say.
6
@manfred marcus Capitalism does not have an "ugly face." You can be as selfish and greedy as you want but unless you provide a service or good that people want and are willing to pay for you will get nothing. Dump in one hand and want in the other and see which one fills up first. You have to be willing to do something to provide something to create wealth.
"Refusing to play an unfair game is sometimes better than winning it."
This conclusion is utter nonsense!
The city and state offered the "deal" which you call an "unfair game." That was the deal Amazon agreed to.
When the city CHANGED the deal, Amazon is the one who refused to continue to "play" the game. Not the city!
5
@Mimi
So why wasn't this "Deal" made out in the open, for all to see before it was announced?
If I see one more human prop carrying a Sad Amazon box...
4
The bottom line is that the socialists don’t want people working and supporting themselves. The socialists want people dependent on them for food, shelter, healthcare, education, etc.
4
Amazon seems to have its hand out, paying 0 income tax. Maybe they shouldn’t lean on the rest of us so much and carry their own weight too.
6
@Larry: Ah, but you've just described Amazon! They want to be the 800 pound gorilla EVERYWHERE they have a location - and they get to decide how badly to pay their warehouse workers, when those workers get to have a bathroom break (IF they get to have one, that is), etc.
And THEN they take their obscene profits and pay NO tax!!
Who doesn't love themselves a little 'Corporate Welfare'? Let's be honest here -- it's Socialism, pure and simple. And it's very very Bad when Citizens, as a group, get it.
But it's GOOD -- for corporations, who, as the wealthy man once said, "are just people, too, much like you and I."
I think that man was a liar.
8
New Yorkers were always tough minded and yes, it is a Union town but in the end we were always pragmatic. After all, business is business. The New York City I grew up in would never have allowed this. The author gets it dead wrong when he says " "a coalition of activists and politicians took a principled stand". This was no principled stand. This was an attempted shake down which failed badly. The utterly corrupt lazy foolish mayor, his City Council stacked with Venezuelan Style anti-capitalist Socialists and their all too willing enablers in the State Senate all had a hand in this. Mark this moment as a watershed. New York is no longer the financial capital of the world. It is not even the financial capital of the USA. Our city has become a joke.
5
Interestingly, the socialism label is never applied when localities build NFL stadiums for billionaires or provide handouts for businesses owned by the world’s richest man.
8
@PMD Leftist politicians think that they are net positives so they take public wealth to build these stadiums because "we are creating jobs". We on the right have thought this for quite some time. Same thing when Obama did his cash for clunkers
A victory?
3b in tax credits measured against 27b in hard tax dollars is a problem?
Which does not even measure the additional income tax receipts that would have been generated.
Additionally, the ancillary benefits to virtually every business the company touches --- and the other companies that would have followed but will now got to more hospitable climates.
It's not corporate welfare. It's business --- it's sales -- and it's Amazon's choice to go elsewhere. They aren't leaving for more money but for a better environment.
Opportunity cost is the most difficult of things to measure and in this case people like Leonhardt have their head in the sand.
Whose favor?
4
The type of argument put forward by Amazon deniers ranks right up there with the lack of economic thought and ignorance that trumpists display. Cutting off your nose to spite your face, in this case can be a recipe for returning fiscally to the 1970s.
2
Incredibly absurd article. The jobs lost to low income folks is a disaster, never mind the increase in tax revenue to the city and state. Face facts, you have inmates running the asylum. NY has priced itself out of the job market and will simply rot away. Even the governor and mayor realize what has happened.
4
@James
Houston's current unemployment rate is 3.8%, NYC's is 4.0%. If we're rotting away, you're not doing much better.
@James
The Sandinista Revolution may have failed in Nicaragua but it's thriving in New York City.
Massive, long-term loss for NYC.
Epic failure.
Socialism, not so good.....
4
@Mike: "Epic failure"? Nah, not even close! NYC is doing just fine, thanks.
@Mike A Tax Break is a subsidy....AKA Socialism.
New Yorkers were got it wrong as evidenced in the comments sections of this paper. While the deal was a $3B tax break, most people thought it was a lump sum of cash that NY was giving to Amazon. For proof, read the many comments on these stories saying that “ now NY can use that $3B for other things”. It’s sad, really, how many people got it so wrong.
6
We let the perfect be the enemy of the good. we had the opportunity to get a great something for nothing...
2
Thank you. Amazon is just another soulless corporation killing other corporations. Until they pay workers 20 an hour and health, it is all a non starter. Let Surething, South Carolina get it.
1
How about 25,000 jobs paying $70 an hour benefits? That’s what was thrown away.
1
@Greg: NYC lost nothing on Amazon taking its ball and walking away. NOTHING.
How many employees do Google and Facebook have in NYC, and how much do they get paid? Go look it up, b/c those are very large numbers.
Not sure what Amazon's state and local tax burden is, but this seems relevant. Fact checkers have found that Amazon paid ZERO federal taxes in 2017
https://www.snopes.com/fact-check/amazon-federal-taxes-2017/
2
And now they won’t be paying NYC taxes either. DOH!
for a company that does not pay taxes(on news yesterday!),asking for hand outs is too much.
3
I'm not a big fan of corporate welfare.
But New York cut off its nose to spite its face.
6
Given that NYC bid for HQ2 and would have gotten only HQ1.5, perhaps the bid should have been cut in half as well. Same for Virginia.
2
Yes, 2 weeks ago it was "if not Jeff Bezos, who will stand up to a blackmailing bully." Last week it was "If not NYC than where." NYC is bigger than Amazon; good on them.
3
Mr. Leonhardt makes a good case. It seems to me that these payouts are bribes, pure and simple. "You play my game, and I'll play yours."
Big corporations have been calling the shots for way too long. They are accountable to nobody but their shareholders. The consumer is a byproduct of the money chain. The politicians and the corporations are at the top of the chain, and it is time to hold them accountable and stop being penny-wise and pound foolish.
2
By, what? Forcing them to locate their HQ somewhere? Who decides? A committee to drive jobs where they are “needed” most? Sound familiar?
@randomxyz
By increasing public awareness of the problem as N.Y. is doing with the eventual goal of ending corporate relocation subsidies.
And what would the rest of the children have done had the adult said, “No cupcakes for anyone now.” The child, much like the business illiterate politicians in NY, has no idea what’s really at stake.
Besides, I don’t think Amazon left over not getting $3B. I think it just didn’t like the business climate in NY. It’s probably the same reason there is no Walmart in the city.
1
@Joseph
"didn't like the business climate in NY." Really? NY is, if anything, it's own business climate. I suggest you visit some time and actually look around. Last I saw, there were "just a few" businesses there.
Great article. It’s how the south took automobile manufacturing from Detroit and surrounding areas.
I have never understood why taxpayers are compelled to subsidize private businesses, like sports arenas, auto makers, and ultra-super-mega rich corporations like Amazon.
It may be that those governmental entities sometimes do recoup the money spent on luring businesses, or at least break even, but there just as many stories of failures as there are of successes. And when the businesses abandon communities, they leave behind ugly, empty, derelict buildings and weedy lots mouldering forevermore as an eternal reminder of group folly.
Besides the owners, like Bezos, are very rich and could probably foot the bill for invading any community.
2
NY didn't stand up to Amazon - as in that's not the reason they left. A few big mouths dissed the deal. Frankly, I don't really know what happened. But "NY" wanted Amazon for the jobs. Whether or not Amazon would have worked out for the best, we won't know.
1
If amazon wants to build a second headquarters in Queens, they are perfectly free to buy land (or lease it), build buildings, hire people and build a business presence in NYC just like everybody else. No on is advocating barring Amazon from the city.
But they want subsidies out of taxpayer money. There is no rational distinction between forgiving a $3B tax liability and writing a check. That’s what people are objecting to. If the next Jeff Bezos starts a business in a garage in Queens no one will suggest paying him a bribe. So why are we willing to bribe the richest man on earth?
6
@Susan Foley
"There is no rational distinction between forgiving a $3B tax liability and writing a check."
This is a stunning statement, So you don't see a difference between the city writing a $3B check outright for Amazon doing nothing vs. the city forgiving $3B after Amazon has made a ton of money, and paid their taxes so that the city will be $27B ahead?? Really?
2
@Susan Foley
"There is no rational distinction between forgiving a $3B tax liability and writing a check."
This is a stunning statement, So you don't see a difference between the city writing a $3B check outright for Amazon doing nothing vs. the city forgiving $3B after Amazon has made a ton of money, and paid their taxes so that the city will be $27B ahead?? Really?
As for the garage owner, if (s)he can promise several billion in tax revenues and 25,000 new jobs in that new garage, I'm pretty sure (s)he can get a pretty good deal too.
2
That Amazon pays no income tax on millions in profits is bad enough but to demand that they get further financial rewards to open a business in any city is outrageous.
7
@Francine Fein
They demanded nothing. They accepted an offer and then walked away when their new business partners started bashing them.
As for demonizing their taxes. They paid exactly the amount of income tax they owed and not a penny more. How much do you overpay? If you don't like the tax laws, talk to your lawmakers.
@Francine Fein: Amazon absorbs profits as growth.
About Amazon's zero tax liability. Without getting too much into the weeds, corporations can and do generate actual operating losses, but they can also generate unused tax credits and non-cash expenses that result in negative income for income taxes, even while reporting positive GAAP income to its shareholders. Negative taxable income and unused credits can be carried forward and used to reduce or eliminate taxable income in future years. Amazon is rich in these and they comprise a significant part of their business model.
https://www.marketwatch.com/story/amazon-riled-up-the-left-for-not-paying-federal-taxes-and-its-in-a-position-to-offset-future-profits-too-2019-02-15
4
@Charles Tiege
Great explanation but no one listens or bothers to understand the facts. It's much easier to scream "corporate welfare" and "why should I give the richest man in the world a tax break??"
The amount of misconceptions in this whole story is staggering.
3
@Unapologetic capitalist: What's staggering are the obfuscations and back-room deals Amazon insisted on. Their terms were: no transparency, no answering any of the questions the ordinary citizen has a right to ask; give us what we want or we'll leave.
Therefore: G'bye, Amazon, we don't need another dirty corporation here.
Your opinion is seriously misguided. The Amazon deal was both sound public policy and good economic policy. Opponents made it seem as if New York were taking $3 billion in cash out of its pocket and handing it over to Amazon, when, in reality, the estimated $3 billion would have operated as future tax credits against an estimated $20 billion in future tax revenues that Amazon would have paid into New York’s coffers over a period of many years. The estimated net benefit to New York - now opportunity cost - was a whopping $17 billion. And, that is not counting the enormous taxes and spending that would have been generated in Queens and throughout New York by the individuals who would have filled the estimated 25,000 new jobs Amazon promised to create. The opposition either did not understand this reality or was more concerned with promoting their own selfish agenda. The result: NY has paid a heavy price for the greed and ineptitude of this new wave of political hacks. There is lots of blame to go around: DiBlasio for remaining silent in the face of irrational opposition to a deal he helped structure; Ocasio-Cortez and her cronies in the City Council and NYS legislature for misrepresenting what the deal meant to New Yorkers and failing to engage civilly and constructively with Amazon to address any legitimate concerns; and, finally, Jeff Bezos and Amazon for behaving like petulant children and walking out on New York when, in the words of Billy Ocean, the going got tough.
14
NYC made a deal and then broke it, losing credibility in the process. What economic drivers, other than the bloodsucking financial industry are left? Publishing? Garment making? Tourism? You can make a lot of affordable housing by killing the economy.
5
@David: The whole world is concentrating into cities. New York is a natural place to develop technology for this market.
@David - NY didn't break it.
1
@David: Pay attention: It's AMAZON who walked away.
I take it you haven't been to NYC in a while, or you'd know that we're up to our necks in, yes, tourism, as well as law firms, accounting firms, marketing firms, universities, hospitals, retail, restaurants, theater, museums, opera, sports events (ever heard of the Yankees, the Mets, the Knicks, the Rangers?), etc.
Don't worry your head about NYC; we're doing fine!
Subsidies to corporations such as this and and the 2008 bailout of mainly: AIG, Wall Street corporations (Goldman Sacs and others) large Banks and other large Financials and other “benefactors” of mainly but not solely Republican politicians with either no or meaningless unenforcible regulations are the very essence of No Fault Capitalism.
The Congress was further enabled and encouraged in this rob the common public to enrich the Plutocrats by the decision of SCOTUS that produced most egregiously Citizens United and a variety of decisions manifestly favoring large corporations over labor and consumers.
The chickens are now coming home to roost.
5
"If she were your child, how would you feel: proud that she took a stand, or disappointed that she didn’t act in her own best interests?"
Fact is she did act in her own best interests as well as the best interests of the other children. You only have to be able to think past right now to see it.
She was more mature than all present and doing the right thing in spite of the rigged rules the republicans, oops the "adult" set up to manipulate and stunt all those children still trusting enough of the adult in charge to not question this entirely unfair setup.
Did everyone forget that when the republicans first perpetrated this con game of making bribery and local/state government fratricide legal was because the corporations were willing to "create" jobs but they were just so broke because of government regulations costing so much? Amazon made $11.2B in profit in 2018 and paid no federal tax on it.
There has never been a lack of money or money making opportunities even in the 70's when the setup for this con started. The only problem all along has been the greed of the individuals involved who are so ungrateful to the nation that made them even though they have more money than any decent human being could spend in 1000 lifetimes they still want to be given tax breaks so they can make even more in spite of the harm that is doing to all of humanity.
4
This is like telling baseball teams that they should not pay top dollar for free agents. Take a stand. If all the teams do it they can bring salaries back to earth. Except they don't and so you have a lousy team for years. But hey you took a stand. His view is the short term one. These jobs would pay off for decades and that $3 billion in rebates which in no way hurts NYC will seem like a bargain.
The cupcake analogy fails to account for the 100s and 100s of smaller cupcake companies that would spring up around it, and the future tax revenue that the cupcake company and all the ancillary services that multiply around it would produce. This loss is not even quantifiable, it's so vast. This debacle is an embarrassment for NYC and especially the disfunctional morass that is the New York State Legislature and our Governor and our Mayor. Over time the tax incentives would have paid for themselves ten-fold. New York is a laughing stock, city and state and this issue damages democrats in 2020. Massive election fodder.
This utter lack of vision cements our inertia and is a reminder that our city and state governments get nothing, absolutely nothing done or worse.
2
@Npeterucci
It was quantified at $27B.
A figure that Amazon would surely "negotiate" to lower their portion of if they had managed to get started by making threats of layoffs or actually laying off people.
They bailed on NY because NY was serious about getting them started without problems. Amazon chose to see the people they claimed ot want to work for them as problems they did not want to deal with.
1
Regardless of the imagined benefits that might have been gleaned from having Amazon locate in NYC, going through with the deal would still have been an act of corporate welfare. Politicians and their puppet masters have been playing this game since capitalism came to fruition. Say Amazon built its HQ2 in NYC, then another state offers them a better deal. They would abandon NY in a skinny minute, leaving behind all of their detritus to rot in place. NY needs another abandoned hulk in its skyscape and the people left behind without jobs.
In other words, NYC just dodged a bullet.
2
This practice of getting cities to hand out tax breaks is nothing but extortion. “It sure would be a shame if something happened to all those jobs”.
Rick Scott handed out billions to business creating “many” jobs. The jobs were all low paid, and rick probably got a kickback. Meanwhile developers are destroying what is left of natural Florida.
3
This is pure baloney. Nobody forced New York to accept Amazon’s proposal.. perhaps more skilled negotiators could have wrangled a much better deal from the internet giant. We’ll never know. And I’m sick and tired of the old columnist trope of the shrinking middle class and income inequality when the middle class is as strong as ever and income inequality will always be a factor in a free enterprise society. As a younger man, when I didn’t make enough from my 9 to 5 job to support my growing family, I pumped gas at night.. it wasn’t easy, but it got us through the rough patch.. it doesn’t surprise me, though, to hear politicos and pundits from the People’s Republic of New York hailing the Amazon fiasco.
5
You sure about that? The wayI understand it, Amazon was to "receive" nothing. In other words, no existing funds were to "taken" or "diverted" to Amazon. Rather, Amazon simply would not be required to pay a portion, grant a substantial portion of what it earned. That, of course, did not mean Amazon got a free ride, just that it had to pay less than the going rate in taxes, fees and the stuff, some of which undoubtedly would be buried in City Coffers for things like, what, new desks and level expenses for the beuraucrats?
In exchange???????? Amazon proved hundreds of jobs to people who do not have jobs. Ask those folks who don't hav jobs who would have jobs if they care one whit that Amazon is paying the City outlandish fees for government waste.
Pretty darn shortsighted.
3
New York can become it’s own separate socialist entity with loftier ideals than other states but it will run out of other people’s money sooner that way.
1
New York is not the first city to stop the “tragedy of the commons”. San Diego did so 2 years ago when the Spanos family insisted on a $1B+ subsidy from the taxpayers for a new stadium or they were going to move the Chargers to LA. We are still paying for improvements done 15-20 years ago. So the Spanos’ moved and play in a 27K seat stadium for 3 years, that is usually only half full, awaiting the completion of the Rams new privately built stadium. If they can do that and still make money, why did they have the gall to ask SD taxpayers to foot the bill. As a former Charger season ticket holder, I say, “Go SD taxpayers, beat the greedy Spangers!”
2
“Modestly hurt the economy.” Just fine, if you are not one of the struggling Queens residents who will be hurt. No doubt though AOC, or Warren, or Bernie will create thousands and thousands of new jobs in Queens in the next ten years. Won’t they?
5
Now, it’s time for residents of once peaceful, low traffic neighborhoods to rise up and begin demanding that five to ten delivery vans speeding down your street everyday are unacceptable. Figure out how to consolidate this traffic and hire employees who respect neighborhoods they’re delivering in. I’m sick of amazon and good egg and uber and Lyft acting like the place I live, where children learn to ride bikes in the street and people walk their dogs, is their freeway.
2
“The city damaged its own interests, or at least its short-term interests, for the sake of principle.” What’s the principle? Only short-term interests matter? In the long term this is a net loss for NYC. The writer disingenuously refers to the one million jobs in Queens without referring to how many are salaried at the median Amazon was offering. How many lower paying jobs do 25,000 well paying jobs generate? What a lost opportunity. The only good that came of it is we all get to see what mindless jerks many local pols are, so we can kick them out next time.
4
@Gofa Kjerselvz
Not "median." "Average." You do know the difference?
The HQ2 episode was a ploy by Amazon to (1) collect a huge database for free, and (2) teach a lesson about bribing corporations with welfare. The "winning" city that was less generous and less obsequious was always going to be punished; it didn't matter which one. NY stood up for principle, and therefore got shot down.
3
Did everyone forget that when the republicans first perpetrated this con game of making bribery and local/state government fratricide legal was because the corporations were willing to "create" jobs but they were just so broke because of government regulations costing so much? Amazon made $11.2B in profit in 2018 and paid no federal tax on it.
There has never been a lack of money or money makling opportunities even in the 70's when the setup for this con started. The only problem all along has been the greed of the individuals involved who are so ungrateful to the nation that made them even though they have more money than any decent human being could spend in 1000 lifetimes they still want to be given tax breaks so they can make even more in spite of the harm that is doing to all of humanity.
They didn’t depart, they were never there.
1
When one party considers taking slightly less from someone "welfare" there can be no rational discussion. NY was only offering to take a fraction less in exchange for billions in new taxes and opportunities for workers and local small business who could offer them services. There never was any give away. The Democrat party nurtures and feeds on envy above all else. Gleefully cutting off their noses and calling it victory.
1
Actually, NYC competed with the other children, won a cupcake, then reneged on the transactional agreement.
It thought that merely because it had licked the cupcake that Amazon, the adult, wouldn’t take it away. Wrong!
4
Yeah! Why would any progressive (?) person want a high tech company that is expected to generate less than a lousy 28 Bn dollars, when the alternative is keeping the very genuine industrial slum that is the Queens´ waterfront..?
Only M. Bloomberg might be able to salvage this deal. This debacle mirrors Brexit as an exercise in self harm...SAD!
4
As long as we fool ourselves into thinking more JOBS at sub par wages is a good thing, we are playing into the hands of the US Corporate State and its investor suppprters.
We are seeing a Grand Theft of wealth from the workers/producers to investors over the last 40 years. Real wages have still not gotten back to the last peak in 1974.
https://en.m.wikipedia.org/wiki/Real_wages
2
David, you sure don't understand the Tragedy of the Commons .... as in, when I undertake to do a good deed in a commons I have to share the benefits with everyone even when the good deed is at my own expense, so what incentive do I have to do a good deed? And someone who is a bad actor alone gains financially from their bad action but the disbenefits are distributed across everyone ... ok, I'll get back to this ...
You fail to mention that NYC is addicted to Amazon and other mail order houses -- cartloads of boxers are unladed everyday kebside and fill up lobbies across the city -- in apartment buildings, it's like doormen have a whole new job on their hands ... but we benefit from this in terms of price and convenience (shopping from home) ...
So if, as you argue, Amazon is such a bad investment, then part of the benefit we enjoy is precisely at the expense of other regions and cities that have induced Amazon to locate there. That's how the Commons works out here, if the concept applies at all.
1
Amazon is like an NFL franchise owner telling a city to build a stadium for the team, where the team will get all the benefits of the stadium and only the city and its citizens will pay off the stadium for years instead of putting the money into schools, infrastructure, fire departments, etc. And then the owner of the NFL team decides after a few years to move the team to another city anyway, while the city is still stuck paying off the bonds used to build the white elephant of a stadium. Cities are suckers and should tell the NFL owners that life is fine without their teams.
Was Amazon offering to pay for the changes to transportation that their HQ2 would require? Was Amazon concerned about the gentrification and displacement they would cause? Let them go and scam some other city, and NYC should stand as a warning to them.
As to the high salaries Amazon promised: 10,000 people at low wages averages out to a pretty good-sounding wage when a billionaire's income gets included in the calculations of the average income. 10,000 people at 15 dollars an hour for 35 hours a week plus one billionaire = $127,000 average salary, even though all but the one billionaire are making only $27,000. Those who buy into the Amazon argument are suckers. This is a tide that lifts one ship and leaves the others high and dry in the silt.
1
Your math is erroneous. Tech workers in NYC make good money, so the salaries that were publicized were very believable—probably on the low side once Amazon figured out that they would have to compete with Wall Street tech which is where the best talent is.
2
"De Blasio and Democratic Gov. Andrew Cuomo said the $2.8 billion in tax breaks and subsidies they were offering Amazon would result in $27 billion in tax revenue."
Do the math. If you give me $3, I'll give you $10... Deal?
2
Ah, but what if I also have to pay out an additional 10 dollars in costs? I’m on the hook for 13 dollars and you’ve only given me 10. Remember cities provide service and infrastructure. That costs money. And that money needs to be taken into account.
1
How does a company pay no federal taxes on 118 billion in profits? How? And where in NYC were all of those imported from overseasAmazon tech workers going to live in New York?
3
And if Amazon pays no taxes why would it care about tax subsidies?
Three cheers to New York City!
"Changing the rules" requires teeth. How do we stand up against organized crime?
Hey, cupcakes have little nutritional value.
This column reminds me of the attitude expressed so well by the title of the TV series, "It's Always Sunny in Philadelphia. " As in: yeah, right. Sure, it wonderful that Amazon decided to pull out of having a HQ in Long Island City! How smart those New Yorkers are who protested and now want to blame, not their political "leaders" who cut the deal, but Amazon which withdrew! How noble of Mr. Leonhardt to stand on principle, particularly when his job does not depend on it!
This is not to say that the tax breaks were not of questionable necessity. But, on balance, it's better to have those new jobs and the satellite jobs/businesses that will be created, than not. That is also, according to the polls, the opinion of the poorer New Yorkers (including many African-Americans and Latinos) who would have benefited from this satellite jobs/businesses).
2
The Sears catalogue was the Amazon of the nineteenth century but they provided a service while harming no other businesses. A farmer in nowheresville, Montana could get virtually anything they needed as long as they were within a reasonable distance of a rail line. They could purchase items the general store could never afford to stock. I really think it’s amazing that Sears that invented remote selling of products could never make the transition to the computer age, but they managed to find the most incompetent CEOs on the planet and paid them millions.
Amazon offers nothing you can’t get elsewhere for 99% of the country, they are nothing but resellers, often never even possessing the product, it being drop shipped.
I used to use Amazon for a products reviews only, I’d make a point of buying elsewhere but now I believe the reviews are computer generated to sell products that profits Amazon the most.
Note to Jeff Bezos and the rest of you billionaire “geniuses” you too are mortal. Just ask old what’s his name, black turtleneck telephone guy.
1
“Harming no other businesses...”. Sure about that?
To the people who incessantly echo the claim "Amazon didn't GET $3 billion. It was JUST a tax break," here is how these tax breaks generally work:
"In 21 states, they’ve passed a law that says that taxes withheld from your paycheck, for the state, can be kept by the company. Now, every employer doesn’t get this windfall — you have to have to get a deal from the government to do it — 2,700 big companies, every big company you’ve ever heard of, General Electric, Procter and Gamble, Deutsche Bank, you name it, they’ve got these deals, where they get to keep the taxes. Billions of dollars are diverted this way." - David Cay Johnstone
Yes, you read that right. The taxes are still withheld from the workers' paychecks but the company - NOT THE STATE - gets the money.
Socialism? Yeah. For the rich. Tax breaks are trickle up economics.
https://emcphd.wordpress.com
5
This misses that NY did pony up benefits — it’s more as though the girl made a bargain to get a cupcake and then whined about the bargain she made — so much so that the adult said “enough” and took the cupcake away. We can agree it wasn’t a good deal. But that’s NY’s fault. Let’s not spin NY into some principled actor.
2
Not only should cities embrace the "End Corporate Welfare Act", they should create new acts that are diametrically opposed to corporare welfare. Create an auction like atmosphere where corporations have to give something to the city in order for them to establish businesses within said environs. Let these corps pledge new bridges, subway improvements and middle inome housing before they're even considered by a municipality. Why give it away when you know you got the goods they want!!??
2
It was Amazon who reneged on its HQ promise even before it made its selection . 50,000 jobs for the so-called lucky city turned into 25,000 jobs split between two cities. Amazon said that it would work with the surrounding community but secretly negotiated with the mayor and governor without input from the community and its local officials. Amazon even arrogantly told a pro-union town that it would fight against workers from organizing. Amazon wasn't really going to deliver on any of its promises. So just like a traveling con artist, they packed up and moved on to find another city with suckers too eager to throw billions of taxpayer dollars at them without receiving much in return.
2
The modern version of the “the tragedy of the commons” — is defined as:
“in which politicians hurt people’s long-term interests by acting in their own selfish short-term interests”
1
A lovely story with absolutely no connection to facts relevant to Amazon and NY negotiations.
3
When the major tech centers are far from NYC and when NYC is losing jobs and losing tax revenue you won’t be praising this decision. It may seem right at this moment but a city needs to adapt and grow if it is to survive. Another city will pay Mr. Bezo’s price. NYC will again fail to address infrastructure deficiencies. Perhaps housing prices will decline although I doubt that but ultimately we will be the losers.
43
@Stephanie Gould It is not Mr. Bezo's price. He had no price but NYC made an offer and he accepted. Then NYers complained about the offered they made and was accepted. Amazon walked away as i would have.
Progressive keep the area poor- which is needed to sell their "green jobs" agenda. They did not want American Yuppies but they welcomed illegals to their Sanctuary City. The low income demographic is ripe for progressive representation. Expect AOC and her backers to keep the area dirt poor for eternity.
5
@Stephanie Gould
The next recession is overdue. Wait till New York sticks out its hand and begs for another bailout. Looking forward to the nation telling them to drop dead.
2
Equitable taxation requires that everyone be subject to the same rules. This means that someone named Amazon or Bezos shouldn't get a better tax deal than Joe's Diner.
Since cities are creatures of the states, Albany should bar local politicians like Mr. de Blasio from offering such sweetheart deals. He and his ilk are the reason why the rich keep getting richer while the middle class keeps getting poorer.
3
Perhaps an equitable arrangement would be for the city to commit the $2 billion to improving the infrastructure, housing, transportation, safety and livability of the borough and the city as a whole.
2
@RGG
That is essentially what the $3B agreement was. Amazon was incurring the expense by moving to NYC, the infrastructure needs of business are part of the basis for taxation and new business is generally expected to pay for any new services or improved service they will require.
1
@RGG
There is no $2 billion without the tax revenue that was going to be generated.
3
@magicisnotreal
So no money was going to Amazon?
Amazon never arrived so its hard to say that its "departure" will hurt the city's economy. The loss of something we never had can't hurt us.
We also need to remember that the projections of "many" jobs paying $150K and millions of dollars in tax revenue were just estimates.
9
If I am the majority stockholder in a huge corporation that covers everything from warehouse to high tech jobs, and I want to expand, then I'll go somewhere that welcomes the future in business. If I want to see a good play, I'll go to NYC
7
@Scott
Way back when the US was still a country governed by the people for the people it was assumed that all business would pay the local and state taxes as they supported and maintained the community which they chose for reasons other than the tax rates.
If you are down to choosing based on tax rates one of two things has taken place: 1. You are nearly broke because of running the company poorly. 2. You are greedy as all get out and just want to maximize profits any way you can without regard for how it may affect anyone else.
6
@magicisnotreal Or you are acting in the best interests of the company and its shareholders? If you think that is greedy, then you do not care much for capitalism.
1
@Scott
Any big companies breaking down the doors to move to Memphis?
I don't recall Amazon even thinking about anywhere south of Virginia. I wonder why. LOL
1
I don't pretend to understand the complexities of the economics in a different state, but I will say that what strikes me from all of the NYT stories about this situation is that Amazon took an all-or-nothing approach, while not providing sufficient assurance that the local area would retain what it also needed and acquire what it also needed.
Take it from one of the many northern CA residents suffering -- yes, suffering -- from mega-growth (and I am not anti-business, anti-capital at all), that when restraints are not in place, and when housing and transportation are not part of the picture, the prospect of disaster in quality of life, and even residency, looms. Over half of all CA residents now want to leave the state. That figure is historic. About half of the reasons can be called collectively the result of the size of the population relative to the size of that population's needs -- the problem of governance. The other half is directly attributable to the outsizing of the technology industry, relative to quality of life, including middle class and even upper-middle-class affordability.
Listen up, NYC.
5
@calleefornia
We did and the locals made their voices heard.
Why did Amazon need an additional $3 BILLION to make this move?
Look deeper and you'll see greed.
6
@Butterfly
If you saw an item marked $100 in a store and in another aisle, that same item was marked $150, which price would you choose to pay?
If you chose $100, does that make you greedy or just sane and rational?
2
Success has its costs, just like failure. Which would you rather pay?
Leonhardt makes an unsubstantiated claim that "for years companies have been getting the better of govts and taxpayers". What data supports this assertion? Having been an ec dev professional off/on since 1985: every deal is about specific tradeoffs and must be judged on those specifics. How much does the deal help lower income residents get a leg up with their careers via access to higher quality employment opportunities and/or training? How much does the deal bring to a region/state an industry cluster that doesn't now exist, and is expected to flourish in the future? How much does the deal remedy unfair tax provisions that legislatures should have addressed already, such as property taxes the expensive equipment that allows high wage mfg jobs? How much does the deal help a desirable US enterprise facility, whether for-profit or non-profit or government, be globally competitive in the US? How much does a deal provide reclamation of blighted areas, especially brownfields?
A majority of people in EcDev likely hate the incentives game, but with legislatures too often being unresponsive to needs of new industries, and given ongoing fierce global competition, the deals will often be better than nothing. Fundamentally, I believe deals should apply broadly to all enterprises in an industry - not just a single facility. And citizens need to examine the details before whining.
Amazon's deal must not have been that good for them or they wouldn't walk away so easily.
6
@cljuniper
Amazon was attracted to the deep pool of tech talent available within NYC and was willing, at least initially, to hold their noses with other issues such as local politics and union demands. Once the deal was formally announced the opposition became more vocal, Amazon board realized this was no longer as good a deal as could be in other locations (over 250 others were initially considered).
Amazon could have saved themselves a lot of grief and money by researching the experience of their nemesis, Walmart, and its inability to crack the NYC market for decades.
The justifications for these give-aways never will fix the fact that it amounts to redistributing wealth away from the existing base of businesses, while making it harder for all the other businesses to compete with the new kid on the block. The Congress must outlaw it across the country.
1
@cljuniper
"And citizens need to examine the details before whining."
You're not aware, apparently, that Amazon walked away the minute they were told the citizens would get to examine the details. So much for closely examining each individual case.
1
I was glad to read that Mr. Leonhardt has seen the merit in the resistance to the amazon-nyc deal. However, there are two flaws in his argument: (1) This is not a story about "the tragedy of the commons" (as termed by "social scientists") in which a preference for short-term interests interferes with long-term interests -- indeed, if anything it was the reverse. In fact, opponents considered both short- and long-term interests, and simultaneously. The New York Resistance viewed the short-term gain in jobs as insignificant in relation to the short-term disruption of their communities (transportation, traffic, schooling, health care), for which amazon felt little or no responsibility. It also viewed the "deal" as unjust. Why should cities sweeten deals to a multi-billion dollar, non-tax-paying company with taxpayer money?
New Yorkers also regarded the long-term gains -- resisting the acceptability of cupcake-bargaining by cities to subsidize corporate development -- as wrong-headed. Neither of these rationales is "anti-capitalist." Secondly, it was the New York Resistance that stopped this deal -- not "New York," not The New York Times, not the Mayor or the Governor. So give praise where praise is due -- and don't dismiss the merit of their arguments with political labels (i.e., "the Left") OR coat them with sugar (as tokens of "New York").
1
Sorry Dave. New York may have "overpaid" when measured against the package offered by Northern Virginia but losing this deal cost the NYC economy a lot more and can only be considered an epic fail by New York's political leadership except Andy Cuomo. Amazon didn't just promise 25,000 jobs. It was 25,000 jobs in one of the most vital sectors in the economy that paid an average of $150,000/yr. Those jobs don't grow on trees and certainly not in that quantity from one employer. And we're not even counting the jobs that would have been created by businesses that would have served Amazon and its new employees. Progressives who fought the Amazon deal want more public spending for their many initiatives. You need a tax base for that. And not just a tax base created by taking every dollar from the super-rich. Amazon would have been a nice building block for growing the tax base in NYC.
8
@Waylon Wall
Sorry Waylon, but you pulled that $150,000 per year job out of thin air.
$15,000 - $50,000 is more realistic. Then displacing those workers further awaay from the workplace and costing more to live makes Amazon's deal not as enticing as it first appeared.
1
You must believe unicorns! That you really believe that Amazon was bringing 25,000 jobs means you haven’t paying attention. Look at FoxCon they get a deal then renege on it. There are many stories of this sort.
I don’t want hear anymore commenters on the 25,000 jobs that NYC lost.
We lost nothing.
Amazon probably knew that weren’t going to hire that many and would cut back on total amount once they got their tax break.
They knew since they already had opposition it would only get louder once they renege on the original deal.
I may be cynical but I don’t believe in unicorns and corporations that don’t have a good track with the public or governments
2
Sorry, that average salary figure was not pulled out of thin air. The lost jobs were mostly for skilled tech workers and $150k per year is consistent with current wages
Clearly you don’t work in or know the industry
3
Good for New York to have the courage to just say "No" to this very one-sided corporate socialism. I'll support these kinds of deals when they are made equally accessible to small business. Small business makes up 50% of GDP production. We'd get a lot more bang for the buck investing in hundreds of small firms than from allowing just a handful of big companies to call the shots.
5
NY didn’t say no. Amazon did.
A company doesn’t pay taxes. They just divvy up the cost of the tax and consumers pay it. Taxing companies is just another hidden tax on consumers.
3
let's see: 27,000 jobs ( no description of jobs, salary range, benefit to NYC) vs $3 billion in tax cuts and threats to overcrowded, failing public transportation system, and housing crisis for NYC residents making less than $500k per year. About time the people pushed back!
5
@BarbT--I've lived in a couple of places that would consider it a Godsend if a company like Amazon wanted to move there. I know people that would give anything for jobs like the ones Amazon offers--even the lowly warehouse jobs that big city workers think are beneath them. If you've lived in a community that has no jobs to offer, you're not so quick to turn your nose up at an opportunity. If NY doesn't want those jobs, I hope they go to a community that will be grateful.
2
If corporations can be people then it stands to reason that people can be corporations. So I think I will declare myself a corporation and from hereon not pay property taxes or income taxes and choose where to live depending on which city gives me the best incentives. That sounds good to me.
5
You have to negotiate a deal for that first. Good luck.
Tax incentives, sports stadiums and Casinos are not effective, longtime solutions. The cupcake analogy fits, sugar highs that evaporate , while the weight of the redistribution of wealth lingers on for the public.
7
Do you think the tax breaks that NYC has given Wall Street firms has paid off?
(I already know the answer...)
Oh, so sorry, I guess I've missed something here. I think, or was told somewhere, say, the University of Tennessee Business School about 50 years ago that true Capitalists believe that markets will resolve all question and issues. So we are talking about faux capitalists, or one might suggest, corrupted capitalists.
5
The premise is wrong. The city offered the subsidy. New York didn’t follow through on their offer, so I don’t really understand how this makes the city some kind of hero. Actually it makes New York appear incapable of keeping promises.
9
My firm does a lot of printing. Over the years, we have developed an arrangement with our printers. They print our marketing material at cost. In turn they know that by assisting us modestly in marketing, they will be share in the fruits of that marketing. It's a win-win.
That, to me, is a more apt analogy than cupcakes.
3
@Matt
Yet your analogy is not accurate. Amazon in essence wanted to have the city pay its operating expenses. You should know by what has been goin on since deregulation hit in the 80's that now that they know they can extort concessions Amazon will renegotiate every step of the way laying off a few workers here and there and making sure it gets big press to make sure they cut the current projections of tax they will be paying by as much as possible.
What's that old joke whose punchline is "We've already determine what kind of lady you are. Now we are negotiating price."
2
In law school our professors called the "tragedy of the commons" a "collective action problem" based on a book on the topic by Mancur Olson. Some of the examples we discussed were hours restrictions on workers, such as coal miners. If a system relied on the workers themselves to police their hours, they would just work as much as possible because it would become a de facto requirement in order to gain employment. Similarly, a system that gives the workers the ability to waive hours restrictions would again result in anyone wanting to gain employment effectively having to waive them. In each case, the workers would harm their long term self interest (vis a vis health) in order to meet their short term, immediate needs (income to make ends meet). The only solution is government regulation.
The situation here is very similar to that of the coal miners'. NYC is due some kudos for standing up to the modern day coal company, but the real test is whether Congress will follow suit.
12
@Michael
I bears mention that we used to have these regulations in place. They were De Regulated because they allegedly caused unfair expense to the corporations.
Amazon made $11.2B in profit last year and paid no federal tax on it. What basis was their asking for tax breaks based on?
5
There is more to this than meets the eye. In particular, it is the manner in which Amazon, after significant expense in time and moneys, decided to unilaterally withdraw from a hard-worked deal.
Yes they faced opposition and political movement that might have ultimately vetoed the deal. But instead of countering, they abruptly closed their briefcases and left town.
While I believe in the deal that would have brought 25,000 jobs to the New York area, I also understand that this type of move would have placed strains on public services. Smart policies could have mitigated the downward affect and improved such services at the same time.
And yes, low-income housing would have most likely been pressured for increases to rent costs, but couldn't state and city government have come up with creative solutions to mitigate these factors.
If the answer to all of these questions is no, then we drastically need new visions at both the city and state levels because 25,000 jobs is not something a region easily comes by. And if a recession were to hit, and the question here is not if but when, these jobs will be sorely missed.
While I blame government for not answering the concerns of citizens and their representatives, I am also questioning Amazon's knee-jerk reaction to withdraw given the fact that there was very little time available to address these concerns.
So for me, while there is ample blame to throw around regarding concerns, I question why Amazon threw in towel so quickly?
5
@It Is Time
I thought it strange too. One idea was Amazon's need for these jobs had evaporated when the market got soft. They started looking pre-tariff. I think they were going to pull out anyway. This is bolstered by the fact they didn't go to the second city on their list, instead halted the second HQ2 altogether.
2
@It Is Time
Because they can. Amazon actually was wielding the the power here. They were bringing in 25,000 jobs, at a livable income to New York. As in ANY business deal, one must weigh the pros and cons. I hope that New York made the right decision based on what is best for them, not some arrogant notion of "we are New York, take it or leave it, baby!" Easy call for Amazon, they left.
1
Because that’s what arrogant condescending full of themselves corporations do. “Do as I say or I take my job offers elsewhere. It’s time to put boundaries on these pay no tax companies. A
1
When we envision city governments as children and a large corporation as a parent, it implies that our state and local governments are innocent and dumb. That should not be the case -- we should hold our elected officials to higher standards. We also should not regard corporations as benevolent adults -- corporations are formed to deliver a product that makes money for their shareholders. However, corporations have to play by the rules set by the government -- so if you don't like the rules talk to your government officials and change them in a democratic way.
The problem with AMZN and NY is that AMZN played by the rules set out by the government. The $3bn subsidy was a result of the investment AMZN was bringing to NY and already available subsidies. In return, AMZN was expecting NYC and NYS to play by the same rules -- they didn't.
Many articles have been written to say NY is better without AMZN, and, furthermore, NY is so great that we can do without AMZN. The truth, however, is more painful -- in the modern age, cities will need corporations more than corporations will need cities. Yes, NY is a financial capital, but so was London, and another article in NYT, https://www.nytimes.com/2019/02/17/business/brexit-banks-wall-street-london.html, makes it very clear that banks are able to avoid London very easily.
The outcome: just like Tea-party radicalized republicans, progressives radicalized democrats, and most of us, in the middle, are stuck in horror.
6
I know a mid-sized financial firm that is moving from London to Paris. The timeframe is about 6 months so it can happen REAL FAST.
Communities that are behind the curve in economic development feel that attracting new employers with incentives is their only path to growth. If incentives are banned, then locations with better schools, better current infrastructure, and other existing advantages will continue to grow at the expense of places that are behind. It is genuinely challenging to find a way to level the playing field.
5
@Eaton Lattman
Good point, but banning bribes would create incentives for cities and states to invest in infrastructure rather than more tax breaks for millionaires. Minnesota's higher taxes on the rich hasn't kept up from outpacing tax-cut Wisconsin in jobs and economic growth.
Progressives are now attempting to weaponize economic inequality to pursue actively anti-business policies. Instead of lifting the poor, they want to punish the successful. Because relative equality trumps absolute well being in their mindset.
So they got their wish. And now what? Are the rest of us better off for it?
Nope.
Hopefully this doesn't deter more national companies from coming to NYC, but somehow I don't trust the likes of Bill DeBlasio to create a more welcoming business environment so that NYC's economy and tax base continues to grow and diversify to pay for all the social programs that progressives want to expand.
Now I agree with the author that you can view this like NYC took a principled stand (sort of)--which I agree would be a sensible policy if pursued globally or nationwide. But since local subsidies are a fact of life, NYC should play ball. The principled stand represents nothing but a pyrrhic victory for New Yorkers.
5
I forgot to add another thought. David Leonhardt's initial analogy is awful! There is no benefit to the adults from offering cupcakes to children! The Amazon deal was a quid pro quo. We will offer you special tax breaks and incentives, and in return you will provide our city with 25,000 jobs and all the additional jobs and services that go with it. In the end, we think we will get more benefits that we give. The better analogy is of the parent who moves to a more expensive area of the city where she thinks her children will get the best education, because in the long run all her financial sacrifices will provide a better opportunity for her children. The questions here are how much sacrifice is worth the cost. Do the benefits outweigh the costs?
5
@ES
The republicans oops the "Adult" get to know what kids they can easily influence and what kids will do dirty deeds dirt cheap and what kids will "be a problem" like the girl who saw the facts and spoke up to let everyone else who was missing them know.
That info like any data can be very lucrative especially when you are the person in that adults position.
A Prediction:
Over the next few years, Amazon will be quietly setting up warehousing here in NYC, hiring thousands of new employees.
Using distant warehouses and shipping by USPS, they can't keep up with the competition, much less dominate it, here. Too many people live in multi-family residences with no doorman. USPS can handle letter sized items to that group, but is weak when it comes to packages.
So, now that the scheme to have NY tax payers ease the warehouse burden (and, using the same tax relief dollars to steal away top flight home office workers from local competitors - from what I hear there are just not enough qualified people) has collapsed, they may have to go to Plan B.
Of course, that would mean acting in a legitimate way, using some ethics, so they may just take a pass. Time will tell.
4
So you think that low paying warehouse jobs are equivalent to 25,000 middle class skilled jobs?
1
I should also note that they have not yet named a replacement city. Until they do, I will assume they used the prospect of all those well paying jobs as a come-on to cut the costs of them setting up to service their NYC customers competitively.
They seem to have forgotten that we in NYC sell that bridge over to Brooklyn, not buy it.
@Brian
"I will assume they used the prospect of all those well paying jobs as a come-on to cut the costs of them setting up to service their NYC customers competitively."
Amazon was not setting up another warehouse; they were building another CORPORATE HQ.
Unless you have solid info to the contrary...
1
It's not a victory against bad economic policy if the practices continue, which they will. The Amazon about-face will not change anything. Officials from other cities were probably dialing up Amazon executives within minutes of the decision going public, reiterating their deals or even upping their incentive packages.
Now, when the state runs "New York is Open for Business" ads in other US states and internationally it will be even more of a punchline.
If NY politicians had handled this property, by reaching out to all stakeholders and gauging potential opposition, it might have turned out better. At least New York City could have waved off the "competition" and looked high and mighty. Now, NY just looks hapless and incompetent.
Given all of that, I still think Bezos' decision was suspiciously abrupt. There's more to this story than has been told so far, I suspect.
4
@Duncan
"Now, when the state runs "New York is Open for Business" ads in other US states and internationally it will be even more of a punchline. "
Perhaps you haven't seen those messages in L.A., Duncan. We have seen them further north in CA, however: literally, ads saying, "Businesses, come to NY."
@calleefornia
I don't doubt there's more of them playing in Northern California. New York has even had some success, most notably with Google. Of course, Google handles things differently. No trolling for tax breaks, directly at least.
I have long agreed that these tax-incentive giveaways by cities and state governments essentially amount to extortion by greedy corporations. The most egregious examples being sports franchises that demand new stadiums in order to keep a team from moving to another city that will, and foreign automakers building “American” manufacturing plants in right-to-work states with strong anti-union laws. However, this problem doesn’t get fixed until all states and municipalities play by the same rules. New York’s loss today might be Arkansas’ gain tomorrow, at least in the short term. To use this article’s analogy: the adult bully isn’t going to lose unless all the other children also refuse to offer anything in exchange for a cupcake. And while we’d all hope our elected politicians might be smarter and more mature than a child, reality seems to indicate they are not.
4
I welcome Mr. Leonhardt's argument being applied by state and municipal governments regarding subsidies for the construction and operation of professional sports stadiums.
3
As someone who lives in Greenpoint, less than a mile from Long Island City, and who spends a great deal of time in Queens for transportation and leisure, this was not an intellectual question for me. My political views are quite different than AOC on a lot of issues, but when I heard the news that Amazon would be opening it's new headquarters in Queens, I felt devastated. I am thrilled they won't be coming here.
I was certain it would be a matter of a few years before I could no longer live in my neighborhood because the rents would rise drastically. In the meanwhile, I expected my commute through Long Island City every morning to be a nightmare. And most importantly, I thought this would be the end of large areas of Queens as I knew it.
Queens is by far the most interesting and dynamic borough in New York right now. There are more languages spoken in Queens than any other city on Earth. No matter how jaded I become with New York City, no matter how much huge areas of Brooklyn and Manhattan seemed to have lost their soul and changed beyond recognition, Queens is the place where I feel that the American dream is still alive and well. And there is a good chance that would all have been lost.
For 25,000 jobs, millions of people were going to lose their homes and their neighborhoods to rising rents. Is anyone in Seattle or San Francisco happy with what the "job creating" tech companies have done to their cities?
16
@WST
"Is anyone in Seattle or San Francisco happy with what the "job creating" tech companies have done to their cities?"
Yes, the few folks who made money. Same as the gold rush.
7
@WST
You raise a good point. Seattle has become unaffordable for working-class families and Amazon has rebuffed attempts to add a small business tax in the city to deal with the housing crisis and homeless problem. Not a pretty picture.
6
@WST. Long time resident of the San Francisco Bay Area here, we just moved out. San Francisco was a beautiful city years ago. No more. Astronomical rents and house prices, immovable traffic, a giant and intractable homeless population, the construction of giant ugly apartment warrens...the reasons go on and on.
NYC did the right thing. There is more to life than “improvements “ to the economy, especially the kind that gives all the loot to a few at the top.
3
It's amazing to me that Amazon is being blamed for a bad deal. All businesses try to get the best deal for themselves that they can. In Philadelphia, Comcast has all kinds of perks, but brings huge benefits to the city in the form of jobs and other benefits. If the Amazon deal was so bad, why was it proposed in the first place? As happened in Virginia, why wasn't the deal discussed in public before it was submitted? When Amazon announced their decision for jobs at LIC, why didn't politicians against the deal go to Amazon with a friendly (instead of hostile) voice to voice their concerns and negotiated changes? The good news for other cities is that they now might have the opportunity to have 25,000 additional jobs instead of New York City. Maybe in the end that will work out better for all.
3
Many readers seem to misunderstand the nature of the deal with Amazon. NYC was not offering to give Amazon money, rather they were offering a temporary reduction in taxes that Amazon would have to pay. The city would still have gained a net income from Amazon's presence, and it would not have cost the taxpayers a dime. The impacts on transportation, and gentrification are real issues that the city might or might not have successfully addressed, but there was no promised give away of money as many people seem to think.
9
@Grover That's not true. If a fire breaks out at Amazon's headquarters and the firetruck comes to put out the fire, Amazon didn't pay its share of the firetruck and the crew. Everyone else did. So you can't say it doesn't cost taxpayers a dime.
1
@Grover
The activists who opposed the deal had absolutely no interest in correcting any misunderstanding so long as the misunderstanding suited their agenda. Their job was not to educate; their job was to stop Amazon.
3
Many very costly municipally-funded projects have been of dubious financial value to the cities that paid for them - take for example huge stadia or sports complexes costing billions. Yes, they bring in money during events but provide few permanent jobs, permanent residents and other infrastructure improvements.
The LIC/Amazon project would have easily repaid NYC for its tax break and revitalized Long Island City and surrounding areas with 25000 high-paying jobs, huge permanent benefits to small businesses and community development.
It is a shame that Amazon did not engage enough with local resident groups for feedback and accommodation, relying instead on a fiscally-based State/City contract. Cornell Technion, even though on Roosevelt Island, went through an extensive local vetting process - and it is now immensely successful for all concerned. Amazon/LIC could also have been had a bit more time been invested in its deployment.
New York has lost a great asset. Perhaps a city like Trenton can profit from this - it desperately needs revitalization and is on the Amtrak main line to the entire northeastern corridor. As a virtual Tabla Raza, Amazon could not only have a great campus but leave a lasting legacy to urban success.
3
@RealTRUTH
My hope is that Amazon accepts Newark's offer to locate there. Let AOC and her ilk see the results every time they look across the river.
Bravo! New York for making a principled decision.
It really sticks in my craw that our real estate taxes (Riverside Drive, Manhattan) have gone up 20% ANNUALLY SINCE 1991 (!), making living here for someone on a fixed income increasingly questionably tenable. Evidently the city’s tax income, among the highest in the nation, makes it flush enough to subsidize companies such as Amazon billions in taxes.
In my view the benefit of Amazon coming to NYC should be to -in moderation - increase the city’s tax income so taxes on the rest of us can be reduced within reason.
Me. Leonhardt makes all the right points in his argument. The question is why didn’t de Blasio
et al see it this way from the get go?
6
@Henry H P English
Yes, Henry P—and Rozenblit made the point that competing Mom& Pop and legacy small businesses have to pay. Corporate extortion is what Leonhardt calls it—bullying.
The history of corporate subsidy would be an interesting topic. Supposedly began to help incipient struggling industries—like solar power, for example.
But no. We give them to big oil.
Because—why is this again?
People who are anti- Amazon and I am one should quit buying stuff from them. All those anti- environmental cardboard boxes! And they aren't necessarily cheaper than real stores orc even Wal-Mart.com which sends everything for free, and I remember when the chief corporate villain was Wal-Mart! But I digress. When Bezos bought my Whole Foods and started selling electronic gizmos in the grocery store some food prices went down but others went up. And you had to join Prime for $99 to get the really good deals. What makes everyone think those 25,000 jobs would have gone to the people of Queens? Some, of course, but not the high paying tech positions unless you had the qualifications. Finally, there is more to urban life than growth, like being able to get around (the billions NY paid Amazon in incentives could have fixed the subways, or started to). For me, a former New Yorker, what made the City great and still does is its amazing cultural offerings, and how, pray tell, was Amazon intending to finance or support them?
5
@Vicki lindner I just cut the cord by declining to renew my Prime membership! Painful, because I miss the convenience, but I no longer want to support a company that 1) feels no responsibility to pay taxes, 2) underpays it's workers, 3) wastes resources, 4) creates another billionaire with too much power.
1
@Vicki lindner
"Finally, there is more to urban life than growth, like being able to get around (the billions NY paid Amazon in incentives could have fixed the subways, or started to)."
You don't understand the nature of the $3B in incentives. The city was not writing a check to Amazon for $3B; the city was going to provide Amazon $3B in credits/deductions. It's not as if the $3B is lying around somewhere waiting to be spent on the subways if the politicians would on have just changed their priorities.
As for this: "For me, a former New Yorker, what made the City great and still does is its amazing cultural offerings, and how, pray tell, was Amazon intending to finance or support them?"
It's not Amazon's job to support them. That's the job for state/local govts and private citizens if that's their priority. No one can mandate/dictate which charities/cultural offerings must be supported.
1
This is thoughtful column. But it would have been stronger if it added to the $3B tax break comment a reference (as de Blasio did) to the $27B in projected new tax revenue. It would be useful to know what the net $24B revenue increase would have meant in terms of income, sales and property tax revenue and historically what proportion of projected revenues are actually realized. WIthout that context, the $3B may be a bribe (or an "incentive"), but not necessarily a giveaway.
4
@Jonathan
You understand that by agreeing to the $3B Amazon knew it could balk and renegotiate at every step along the way and cut that "projected" $27B in half at least by making threats to the jobs that would be far less wonderful than portrayed don't you?
@magicisnotreal Amazon might have been as aggressive a renegotiator as you suggest, but the $3B is not an out-of-pocket gift, but rather a credit against part (the City and State seem to expect that will be 1/9th) of expected increased tax revenue. The expected increase in revenue may be unrealistic (that's why I wonder what the typical outcome is), but the likelihood of increase, not Amazon's bargaining approach, would have been the key risk factor for this deal.
@magicisnotreal Amazon might have been as aggressive a renegotiator as you suggest, but the $3B is not an out-of-pocket gift, but rather a credit against part (the City and State seem to expect that will be 1/9th) of expected increased tax revenue. The expected increase in revenue may be unrealistic (that's why I wonder what the typical outcome is), but the likelihood of increase, not Amazon's bargaining approach, would have been the key risk factor for this deal. One other note: while the $27B revenue stream might be threatened in the future by Amazon, a well-designed incentive plan can include delayed tax rebates or benefit clawbacks for reduced performance by the recipient. I don't know whether or not this plan would have included that.
Kudos to New York for saying no to corporate welfare! Score one for the good guys. I hope the tide is turning against these corporate greedheads like Amazon.
12
Hooray -- but can you help -- I know a few thousand people that would love a good job --- that would love to buy lunch locally --- perhaps hire a plumber --- etc etc
Amazon has over 600,000 employees and has lowered prices for everyone --- has provided a distribution venue for small business
1
Yes, such bad deals for the commons does pass rewards on to shareholders. This makes shareholders happy while the commons are placed firmly in the back seat. Why do we allow this to happen?
The genesis of our present non-anti-monopolistic attitudes may be another gem left for us by the GOP-deified Ronald Reagan. During the early eighties, we moved quickly from defined-benefit retirements to defined contribution benefits (Ah, the FREEDOM--that word again--to self-determine our retirement.) . While they both sound similarly happy, they are very different. The acknowledgment of this may be why the private sector rails about public sector's having the better plan, and wants to take it from them when they can.
In 1990 ~20% of Americans participated in the stock market. By 2012, and mostly through defined contribution retirement savings, it was nearly 70%. I'm sure that it's over that today. This means that crackdowns on corporations can end up with decreased funds available when the time comes to retire.
Today the majority of Americans serve two masters. One, their immediate interests related to corporate activities, which is hard to quantify. Master two is their nest-egg retirement account which will be decreased by doing things to rein in corporations from their quest for profit.
While I don't know exactly what to do about it, I do consider my duplicity in the starvation of the commons. We all should think about this when we make investing and political decisions.
7
@Brian W.
I'm glad you bring up the quagmire of investor wealth. It's a part of every contentious issue, from health care to fossil fuel energy.
In a sense, we are eating our own when we put money in the Wall Street casino, knowing it will only grow off keeping wages low and doing the wrong thing for climate change.
4
NY was giving Amazon tax credits, not a check for $3 billion. There was absolutely no financial risk to the city having a financial powerhouse like Amazon come aboard. The cost of the massive infrastructure improvements would have more than been covered by the ongoing tax base that would have accompanied Amazon.
Are the socialist, liberal wing of the Democratic Party totally clueless that giving tax credits for businesses locating in their area is a very common practice, around the world? Are their heads buried so far in the mire of providing jobs, a sparkling environment and free healthcare for all that they are totally out of touch with how the supply side of providing money for all that stuff works?
It's not a good time to be a Democrat in NYC.
6
Kurt Pickard, it has been PROVEN that free stadiums, arena and building do little good and often harm the cities they are in. Walmart is the #1 example. Walmart employees are often on government assistance. I never heard of a hardware or grocery store that had employees on food stamps.
Amazon wants to be in NYC, fine, build your own building and pay your taxes.
If you still believe in trickle down economics you truly have no clue.
1
@Kurt Pickard
The 3 billion giveaway IS socialist. The people trying to stop it were trying to stop socialism.
And you don't need to point out it wasn't a 3 billion check. 3 billion discount on Amazon's share of the taxes IS a give away. What Amazon uses and doesn't pay for (infrastructure and services) have to be paid for by everyone else.
1
@paulie, I think you are trying to compare unlike items to make your case. Office buildings that employ middle class workers are not like stadiums as they provide continuous employment and in this case the salaries would have been at least as high as the numbers quoted $150k. Another thing that is being overlooked is that NYC is an extremely high-tax area and getting knocked off a really high tax bill is like Neiman Marcus knocking $3 off a $30 pair of socks.
1
My parents were shaped by a childhood in the Depression. They were first generation children of 1890s immigrants who dropped out of grammar school and worked in factories. They bought everything with cash. They never had a checking account in their lives, let alone a credit card.
And this was New England, where manufacturing began leaving in the sixties, after they dumped all their heavy metals into the beautiful streams. I have this memory of my Polish father telling me robots would take his job, that some state in the South gave the factory he worked at—gave them money to leave and move—all this before I was in double digits. I knew he was laid off most summers.
I just have this memory of dread. Of instinctively knowing, in the 60s, that this was a potential loss of my life. I remember wondering why one state would do that to another one. I thought, I learned in school, that this was one country, a union. I knew it then.
Small business provides most new jobs, and they must pay taxes, but their massive competitors need not pay. How is buying jobs capitalism? How is paying someone to give you crumbs equitable.
What I don't understand most is the abject surrender of any dealmaking in this Art of the Deal Age. What states need is to be ready to say sayonara. States have what businesses need— MARKETS. California has a huge market. If your company doesn't want access to it on our terms—someone else will.
Go pack.
7
HRH Jeff Bezos may have to rethink his strategy next time around. Communities are beginning to smarten up about these corporate "deals." Yes, he has just raised wages to comply with Bernie's modest call for a new minimum wage of $15 an hour, but what does that include? A fifty hour work week? And what about healthcare and other benefits. I don't see any real attempt on his part to treat his employees with respect. His "jobs" amount to a work force that cannot rely on a union to protect them from his Nobles Oblige....
6
Anyone looking for bad economic policy need look no further than the Progressive Anti-Business robots.
5
I'm always amazed at the math involved with these offers to billionaire companies.
$3 Billion for 25,000 jobs? Heck New York, why not just give the money to 25,000 of your poorest residents and see what good they could do with it. I'm betting the jobs created by their new spending would cancel out the jobs Amazon isn't bringing. Not to mention the 25,000 lives moved further out of poverty than a grueling minimum wage warehouse job would ever do.
11
@democritic
"I'm always amazed at the math involved with these offers to billionaire companies."
And I'm amazed at the amount of misinformation that has been repeated ad nauseam about the $3B.
The city was *not* writing a $3B check to Amazon. It was going to give Amazon $3B in tax deductions against any revenues. That $3B was not sitting around, waiting to be spent. And if the deal had gone through, people projected Amazon would bring a *net* $27B in tax revenues to the city and state. In other words, *after* the $3B was credited.
And the 25,000 jobs were *not* warehouse workers; they were hiring professionals with high-paying white collar salaries.
1
@democritic - NY doesn't have the money. You think a bunch of $3 billion in cash is just lying around? Why don't people understand this? This is how it would have worked: Amazon would not have had to pay $3 billion in taxes. They are not being given $3 billion from NY's coffers. Amazon would have "given" New York $12 billion, in jobs, taxes,etc. And then they would been given a $3 billion break. That's $9 billion in REAL money to NY. There's no $3 billion lying around to hand to Amazon or anyone else, including citizens of NY. You're answer is as uninformed as AOC's.
Sorry for sounding callus and trite, but the world is not fair. Bummer! Competition for resources and opportunities IS the way the world is. Yes, the Federal government could try (with an emphasis on “try”) to level the playing field in the U.S., but the U.S. is not an island anymore. Take a look at Ireland. The Irish economy has grown three times faster than the wider Euro area, due in large part to the fact Ireland has successfully competed to draw multinational corporations to Ireland. According to a recent study, Ireland has grown faster than Europe, even if you strip out the impact of the multinationals. Multinationals have choices. That’s the real world.
Re Queens - I only wish that Amazon had picked another location to replace Queens. If they had, it might be possible to evaluate whether the overall impact of an Amazon HQ in Queens was worth a $3 billion carrot. My guess is that the Democrats in Albany and NYC did their homework and concluded that the $3 billion investment would generate a positive return to the Community, the City, and the State. As it stands now, New Yorkers will never know, but one positive: they can continue to argue about it.
5
I'm equally proud of my city for standing up to the NFL. Yes, we lost "our" team, but it was never really ours in the first place. It was just a big corporation that temporarily set up shop here, sponging millions from the city while employing few locals.
A new stadium would have cost around $1000 per city resident. Now we can use that money to fix potholes, or whatever. Good riddance to the Chargers, let them be someone else's expense. Welfare should be for the poor.
11
@Jomo - The stadium would have cost us NYers. Amazon wouldn't have.
And if this corporate welfare hand outs competition is problematic among states in the USA, imagine in the global arena. The tax breaks where taxes are so critical to build infrastructure. It is not enough with the low cost working force (jobs for low salaries), there are demands for tax breaks, no environmental restrictions, and whatever other perks they can extract from the starving economies. And then, they often move to new shores after the ten year tax break is over, or labor costs begin to increase.
7
@tdb Talking 'corporate welfare" in this case simply displays utter ignorance of the details situation.
1
Having worked with Amazon for several years now, there is one truth I've come to know: business for them is a zero sum game. You may be in their favor for a while, but they are always trying to figure out how to render you obsolete, and at some point they will succeed. They are not looking for partnerships.
14
Perhaps cities and states should focus money not given away as tax incentives into their local infrastructure and education. That may cause industry to choose cites based on already existing positives for the business. Maybe it would make industry vie for the best location rather than forcing cities to wrestle for industry. This approach would benefit ALL citizens not just hose benefiting from the tax break.
7
@Chris Coffin
That's the problem. The anti-Amazon crowd thinks NY has a bank account with $3 billion in it that will be paid to Amazon for showing up and hiring 25,000 people. They think that NY could simply write checks totaling $3,000,000,000 right now and fix the subway, improve the schools, and solve a myriad of NY's problems. Nothing could be further from the truth. Over the next 10 years, Amazon will avoid paying $3 billion in taxes to NY. Over that same 10 years, well over $10 billion will be paid to NY by Amazon and it's new 25,000 employees in taxes. And there will be over 10,000 new jobs created by the companies that will serve the needs of Amazon and it's employees.
4
@Chris Coffin
That's exactly what the DC area did to attract Amazon, and it apparently worked perfectly.
1
Initially my sentiments rested with Amazon until I learned about the massive incentive tax break and the number of low paying, minimum wage jobs amazon was offering. The film industry has been doing the very thing with tax break incentives from the local governments to lure film production. It cost those local municipalities more than they took in. Wages, hotel, restaurant, and material goods purchased weren't enough to offset the tax break. Good job NY
8
Concerning the film credits, it depends where you’re talking about. New York quadruples it’s dollar on investment in film production. Both union and non-union business are boosted along with all the collected taxes and commercial rents.
But, in other states, it hasn’t worked and tax payers have lost most definitely.
3
@Armo
The prospective salaries were a measly average of 150 k dollars...New Yorkers should not work for salaries lower than of transit workers`.
1
@indisbelief What is the mean salary. If Bezos includes his own salary how many people making $20k does that take to get to average?
1
The 0.1% have gotten into the nasty habit of asking for bribes from cities, as if they were struggling startups. I was furious when Minneapolis subsidized the building of a new stadium for the Minnesota Twins, even though the team owner was a billionaire.
Cities would be better off using those millions and billions to improve the quality of life for their residents by building more parks, repairing their water and power infrastructures, and retrofitting themselves for increased walking, cycling, and public transit--and hiring local businesses to do the work.
12
@Pdxtran
Circus, football stadiums, and junk food for the masses.
So basically, NYC shot it self in the foot, for the benefit of others, and thank you for doing that?
I don't think this was a minor short term loss. NYC needs a middle class - the city does not have industries that create good paying middle class jobs. Sure the wall street crowd makes a lot of money but that's a tiny elite minority - almost 75% of New York households make barely 55K a year, almost a third make less than 40K. Compare that to Northern Virginia/Wash DC metro area, where the new Amazon HQ2 is going to be located, which already has average household incomes near $100K.
NYC is losing its middle class, or what's left of it - people are leaving because of lack of opportunity. New Yorkers need opportunities for better paid jobs, and the city needs a bigger tax base to fund necessary improvements in public transport, education, etc. This deal could have opened that door - creating tens of thousands of new middle class well paid jobs, directly from Amazon and ancillary jobs, as well as the technology ecosystem it would have created. Even if some of the Amazon tech jobs went to people who were moving into the city, the city would have benefited from that - it would have substantially increased the city's tech talent pool, which increases the number of people likely to start their own companies and create more jobs long term. Now we will never know.. the changes we will see in Virginia over the next 5 years will tell the story of what could have been for NYC.
6
You’re verging on gross exaggeration. The fact is you’re talking about the poor, who also need jobs. Middle class in the 5 boroughs is 150k household per year.
And, Wall Street is not the largest tax payer. It’s healthcare. Television, Other Media and Fashion are not far behind. We are not in a dire situation for jobs at the 150k mark. Its jobs to support lower middle and lower class that have almost completely disappeared in NYC. The opponents to Amazon knew this quiet well.
@South Of Albany
The stats I am referring to:
https://usareally.com/2345-three-big-reasons-why-middle-class-is-leaving-new-york-city
http://thejewishvoice.com/2018/12/26/nycs-shriveling-middle-class-fleeing-the-city-in-droves-2/
Great analogy, great article, undeniable truth.
10
Bad economic policy? Maybe in an idealistic world but we don't live there. We live in a world where massive companies like Apple and Google are setting up corporate headquarters in Ireland to avoid even paying taxes in the U.S. At least with Amazon, they're in the States.
Giving tax breaks to get them in the door doesn't compare to the long term income the state and the people will eventually get back from that investment.
Not only did NYC lose 25,000 jobs but also lost out on growing businesses all ready here as well as the development of other new jobs.
All the food carts, restaurants, clothing stores, supply shops that are already here miss out on growing and the potential for new businesses across the board to support the company and the 25,000 people who work there - all gone.
5
@Scott
We keep hearing about 25,000 jobs. But that figure was an estimate. No one knows how many jobs would have materialized in fact. No one knows what percentage of jobs would have gone to LIC area residents. No one knows what would have happened between the promises and the actual execution of the project. Amazon's unwillingness to engage looks like a bad omen. And Amazon's bullying tactics aren't excused by the fact that big tech profiteers try to shirk their tax obligations. How much will Amazon be paying in federal taxes this year?
5
@Maggie Mae
What "bullying tactics"?
Variables are always present with such a large deal. The details you expect are unknowable. Companies pitching huge deals with cities need data to support what they're asking for. It's not written on a napkin.
Maybe it'll end up being 20k jobs instead of 25k and maybe some if the workers commute in from the Bronx or even Connecticut. The result still is the same: more direct and indirect jobs locally as well as much more tax revenue for the State than what would be invested in tax breaks.
NYC did not and does not need Amazon. If the biggest companies want to locate in a particular place they should use some of their own money to do so. The companies derive the benefit of the expansion in the new locale and the locale gets tax revenue and jobs. Mucking up the free market with "incentives" for the mega-rich does not sound like free market capitalism to me.
16
I believe that Amazon was offered approximately $3 Billion in tax breaks.
I believe it is estimated that that Amazon and its employees would return approximately $25 Billion in payroll taxes, income taxes, property taxes etc. The $3 Billion to be returned to Amazon would have come from forgiveness of taxes and not a payment of actual money up front.
So in sample math, Mayor De Blasio, Alexandria Cortes and their supporters including labor unions rejected approximately $24 Billion in new revenue to the city and the state.
Surely gentrification of Long Island city could have been controlled so as not to force out the middle and lower middle class residents of Long Island City. Surely Amazon could have made some concessions. Surely the city could have come out a winner but instead it chose to to flex its newly vocal and newly powerful Progressive Left muscles and throw away benefits that vastly exceeded the costs.
Surely there is a better way to run our government than employing class warfare to win an argument rather than real facts that would have helped the city make a truly informed decision.
4
@SBS
These anti corporations and growth people if given the chance will bring this country down. No mention of all the lost construction jobs needed to build all the buildings
Amazon would have needed. How about new construction
For housing,etc. I’m going to start investing in wagons and buggy whips, because I’m afraid that’s where we are headed with these people.
@SBS
There is another way to think about it. Using your own numbers, the income to the city without the tax break would be 27 billion. If it actually would cost the city 27 billion to provide the services required for the amount of economic activity represented by Amazon then the 3 billion incentive is a bad deal. The comparison between the incentive and the amount of total revenue to the city is completely irrelevant. The important comparison is between what the city would take in and what it would have to pay out. And that we simply do not know. If the city’s taxes are fair and equitable (a big if) then it simply cannot afford to give out subsidies without essentially overcharging someone (or every one) else.
1
Amazon chose to leave when the city asked it to remain neutral when and if its employees wanted to unionize. Tells you all your need to know. Good riddance.
It is past time to end socialism and entitlements for corporations. It should be law that if a state or municipality grants a tax break as an incentive to retain or attract one of these corporations that they must match this with an equal tax break for all existing small businesses in their jurisdiction.
11
The reason that Democratic Socialism is (thankfully) taking hold has to do with escapades like this. We can tell that Capitalism has become an object of ideological worship when workers are being set up to pay in order to work.
7
@Kent R Please enumerate what workers would have been paying for and how much. These were reductions in taxes owed not a direct payment between New Yourk and Amazon. No tax payer dollars were going to the company.
2
@John
It's tax revenue that would have been received. Amazon gets a free ride because it doesn't shoulder any expenses incurred by the community, city, etc. by them moving to LIC.
2
Just another example of how wrong things are in this country, Used to be, when a business planted itself down somewhere, there wasn't extortion for getting a free ride. It paid its taxes just like everyone else. It didn't hold the threat of "we are providing jobs" over everyone's head. Of course jobs were provided; it was a given. Conversely, skilled labor was provided to the business; it was a given. One never heard, "well, we have labor that you need, so how about you pay our city double the tax we charge everyone else?" So, amazon would have provided jobs and NYC would provide the labor it needs to survive (and exploit) and make itself richer in the process. No labor, no business. Now these monster corporations present themselves as kindly, beneficent entities that we should grovel and beholden to. They have to plop down somewhere, and they NEED bodies.
7
@Zoli. You've got your history wrong. Government giveaways to big corps go back at least to the railroads of the mid-19th century. More recently, in the 1950s and 60s, states would compete for industry by eliminating environmental regulations. This didn't end until the Federal government required uniform environmental regulations throughout the country.
5
@Zoli--I don't know what wonderland "used to be" you're talking about. In fact, going back as far as Henry Ford and Andrew Carnegie and the great industrialists of the 19th century, communities were at the mercy of factory owners. The whole concept of the "company town" was to give complete control of the workforce over to the owners, and politicians held out their hands for their payoffs. Politicians refused to pass laws that would provide better and safer working conditions for fear of upsetting the owners of the businesses. Everyone bowed down to the millionaires, and they still do. Just because Amazon won't be going into NY doesn't change a thing.
1
Are New Yorkers unaware that they as taxpayers are paying $50 million per year on TV ads being aired in other states advertising that New York is "Open for Business"? These ads are expressly for the purpose of attracting businesses in other states to leave and relocate to New York. Why would New Yorkers spend spend so much tax dollars to steal companies from other states, and then tell Amazon to stay away? I don't get it.
5
In the late 70s downtown Toledo was on an office building boom, spearheaded by a locally owned bank. When that bank was bought out ten years later, the buildings were sold to out-of-town investors who demanded 20 year tax rebates.
The 1990s owners then sold before the 20 year rebate was up, but city leaders were still pressed for continuance of the rebate for a new term of 20 years. Give in or mothball a perfectly good building?
There is no end to it. And our local schools, streets, and aging infrastructure illustrates the unfair burden placed on resident taxpayers.
It is good that Mr Leonhardt has pointed towards solutions against this corporate ransom game. My guess is that corporate lawyers will still find a way around any well laid plans. Perhaps we'll need a constitutional amendment, considering this practice has been going on since the days of Daniel Webster.
8
Why did New York give so many incentives to Amazon, when the other cities did not do the same? I have no idea, but it does not speak well of New York’s negotiators.
2
@Areader
NY offered the same incentives to Amazon that they offer to any business.
2
Apparently some places offered the likes of 7 and even 9 billion. NYC was certainly not the highest bidder.
1
@Daphne
And then they couldn't deliver on those incentives.
1
The 4 million jobs number cited is incorrect as this only refelcts private sector jobs. NYC payrol is allready over 4.5 million so the total would likely be well over 5 million.
Not to mention entities such as the Yankees. So... David, you are 100% correct. What if a company such as Amazon promised to do some combination of: build/improve nearby NYC Subway facilities, build a school, library, park, improve roads, improve Internet infrastructure (etc.).... in exchange for some tax breaks; and leave the job / labor issues to the marketplace... how would that have played?
3
The deal, of course, is that the companies moving in will pay more in taxes than they receive in subsidies. It’s up to the state government to ascertain the long term viability of the company. In other words, it’s an investment, just like investing in a college education, buying stock shares, etc.
From my perspective inNJ, the deal seemed good as Amazon is a really amazing company, will use many local businesses as suppliers and is certainly cutting edge technically and would spread NYC tax base out of Manhattan.
One more point: the present powers in NYC who label themselves progressives seem to need more and more money for their plans I.e. more tax revenue but also seem to hate all big businesses, present or future who pay the taxes eg financial/ big banks. It showed in the hateful words many politician
used to describe Amazon.
Bottom line: big mistake!
2
@Mel It's easy to draw convenient conclusions when you choose to leave out all the pertinent facts. Like the impact to the Queens neighborhood regarding infrastructure, the electric grid, water, sewer, transit, schools. As well as the impact on real estate prices which would force out long time residents and family owned businesses in favor of the newly arrived Amazon employee from everywhere except Queens and corporate big box stores. Not like this hasn't happened before, it's all very common Mel. Lastly amazing companies don't fold their tent and skulk out of town like thieves in the middle of the night if they're committed partners working toward an equitable resolution that works for everyone which obviously Amazon is not. So save your tears Mel, Queens is better off without Amazon.
1
If only we learned this long ago.
I grew up and lived in Cleveland until 1985. I met Dennis Kucinich several times when he was irreverently referred to as the "boy mayor." In 1978 he refused to sell the public utility to the Cleveland Electric Illuminating Company, being adamantly opposed to privatizing a public good. It ruined his career for many years although, as most know, it was resurrected decades later.
Kucinich was right then and he is right now. Although he may have made a terrible president, he was prescient and principled, albeit with dollop or two of ego.
He has never gotten credit he deserves.
9
@Barking Doggerel He would have been a great president, in the mode of FDR. Dennis Kocinich precipitated this 21st century socialist agenda by many years. He was a winner of all the debates in the 2008 primaries, until Wolf Blitzer had him barred from the final debate. Figure that one out!
On one hand people say, ‘no big deal the 25000 jobs not happening; NYC can handle it’. On the other hand, ‘OH MY GOODNESS, $30 BILLION; HOW COULD WE EVER GIVE SO MUCH!’
So which is it? Are we strong or are we victims? Also comparing NYC to smaller towns or cities whose abatements didn’t seem to work is a false comparison as the complex economic dynamics are vastly different.
1
This is absolutely 100% right.
As long as state and cities fall over each other trying to bribe these companies the most, communities and workers will always lose. Amazon has a long and documented history of low pay and bad treatment for its work force, and showed here just how brittle its willingness to actually care about the concerns of a surrounding community.
Those who sound the alarm about “socialism” and wax rhapsodic about the magic of the capitalist marketplace conveniently ignore government subsidies for corporations, which amount to socialism for the richest shareholders rather than ordinary Americans.
It was messy, but good for you NYC. The rest of America’s local governments should follow suit. These companies need the modern infrastructure and skilled workers our cities provide; we don’t need to bribe them to attract them.
10
Look to Seattle to prove this article is spot on. How this city has changed. How Bezos has put nothing really back into the city. Where we don’t have rent control and rents up by 80%.
6
It's sad that a few politicans scared away Amazon. The 25,000 high paying jobs would have bumped up the economy of Queens as well as the rest of the city. It would have pressured the city and the state to finally do something about public transportation. Public opinion was highly favorable to the Amazon deal across all demographics especially among minorities and including residents in LIC the effected area. Yes $3 billion in benefits that would have accrued to Amazon is a lot of money but it's not like the city/state was going to write a check on day 1. It would have taken years for Amazon to earn those savings. The city/state on the other hand lost tax dollars that would have been paid by these new employees and local businesses that would have grown up around the new Amazon campus
2
It wasn’t politicians. The community —residents and local businesses—did not want Amazon.
"Somebody needs to make a principled stand. In New York, a coalition of activists and politicians did so." Indeed! ... This coalition created, introduced and passed the Amazon Corporate Abomination Act of 2019. Other jurisdictions - municipal, provincial, state, national - would do well to emulate it.
3
The residents of NYC who bemoan the loss of Amazon and believe $3 billion in tax relief is an "investment" should visit Rochester, NY For years both Dem and GOP politicians showered tax relief on Xerox and Eastmen When other and smaller businesses complained, guys who wanted to set up Wendy's franchises got into the act Eastman and Xerox are now dead dinosaurs, but every penny of the costs of tax incentives remains a burden on private citizens The results if a property tax rate that is among the top 5 in the US (higher than NY City or New Jersey)
11
From my understanding the Supreme Court, by their ruling, has allowed, under' immanent domain', to leverage corporations over community interests. In the past 'immanent'domain was reserved for government sanctioned projects NOT private corporations. Ruth Ginsberg, unfortunately voted in favor of this decision.
4
For far too long, American cities and "company towns" have put all their eggs in one corporate basket. When the corporation pulls out (for any number of reasons: bankruptcy, expansion, outsourcing, executive whim), the municipality is left with an abandoned property (sometimes even a Superfund site) on top of the loss of jobs and tax revenue. The results are devastating because there is no other economic driver to fill the void. New York has been spared this because of its commercial diversity, but many cities in central Pennsylvania, Ohio, and other parts of the Rust Belt, for example, have not recovered. Mega-corporations like Amazon and Wal-Mart, while promising jobs (usually at lower wages than boasted) actually suppress entrepreneurship by undercutting small businesses. Meanwhile, while taking advantage of the tax breaks offered by the towns where they settle, most of the revenue they generate leaves town, going to stockholders. Kudos to New York (which can make up the difference in other ways) for saying, "NO."
9
The author makes an interesting argument. However, in this instance, I believe it would have been relevant to specify just what type of cupcake we're talking about.
Caramel Apple? Snickerdoodle? Pink Champagne?
Also, will I be able to find these cupcakes at Zabar's? Or will I have to join the masses and stand in a line that stretches around the block at some trendy cupcake emporium?
@Daniel
You do realize that none of the cupcakes would ever be offered at an open market...they're an exclusive commodity and are offered mostly to those who know and treasure other "cupcakes."
1
Mr Leonhardt, you make some very good points. But the issue now is how do places like NYC correct the problem. With the NY Governor reporting tax revenues are way down because of a migration out of NY driven by high taxes, and Wall Street Taxes are down because of lower profitability as these businesses also leave NY, and struggle with a decade long slide in Financial employment numbers, it is apparent taxes are slowly killing NY. Absent incentives like Amazons, a level playing field will result in large business avoiding large facilities in NYC and set up bases in no Income Tax states like Washington. And Florida, and very low state and real estate tax states like Texas. NY and NYC have put themselves in an uncompetitive position forever. What is your answer? More high priced real estate investments in homes and apartments for people that never live here?
2
One thing most people don't mention is the fact that NYC already has a strong tech industry, and it's already hard to find qualified people to fill existing positions. Amazon moving in with 25k jobs would have greatly exacerbated this problem, and I think it's safe to assume that most of those jobs would be filled by transplants and HB-1 visa holders.
6
@Alex Melman
Gosh! You mean that there are never any new "qualified people" created?
Well said. I'm glad enough people in New York made enough noise that someone was embarrassed enough that amazon packed up and left. Now maybe there will begin to be some common sense applied to this stuff. Corporations should build their own corporations. If they want assistance, it should come in the form of infrastructure development around them which benefits the community, not just the corporation.
People need to smarten up about tax incentives. All of the talk about how the Green New Deal won't work because it is too expensive to subsidize the new technologies? We have subsidized oil/gas/petroleum technologies from day one--roads are nothing more than public subsidies for the petroleum industry. Without them, cars couldn't be used and without them....
So yes, I'm glad amazon is walking away from New York. Hopefully, no one else is going to run after them throwing money at them. It's time they paid their own way.
7
This is a complex question, from the perspective of a town that had both benefitted and been damaged by such offers to corporations. To some extent it depends on the corporation. And on the local tax structure. We in Nevada have no state income tax, which in many other states goes to education. So both our K-12 system and our system of higher education are difficult to fund, and these types of tax breaks do fundamental damage to education.
One such deal, with the sporting goods retailer Cabella, had a negative impact because Cabella itself did not do well. But the giveaways to tech powers such as Tesla and Apple have changed the very texture of our community, bringing in hope that had been lost with the collapse of the gaming industry. But our educational system is suffering terribly. K-12 students have insufficient textbooks and huge classes; professors are underpaid in the national scheme of things and there is a fair amount damaging churn at the universities. Will the tech companies step up to ensure that the children of their employees grow up in enriching circumstances, or will they exploit their opportunity to do what has been done to Nevada for so long -- take the money and run elsewhere?
3
How many Cities, Counties and State Governments are willing to sign a pledge not to bargain against each other by giving corporate welfare? Governments would still be free to change planning and zoning laws, clean up neighborhoods, educate their citizens, promote working class housing or otherwise improve infrastructure to attract business, but no more giveaways to the corporations themselves. Which politicians will take the lead on this issue?
3
Amazon wasn’t offering a handout to children conditioned upon groveling. It offered a contract to adults, in which both sides would benefit. Amazon would provide huge investments and tens of thousands of jobs. It return, it asked to be allowed to keep more of its own money than the kleptocrats in NY generally permit. The benefits to NY were clear and concrete, and there was NO downside (except the $500M thrown in as a sop to NY labor unions).
But it DID require NY to tacitly admit that it’s generally applicable tax policies are so awful that, absent relief, many businesses will choose to be elsewhere.
That proved too much for the AOC’s of the world: admit of the possibility that they might be wrong.
States inevitably vie against one another. If every state forswore incentives, NY would get buried; it can’t compete against freer, less graspy jurisdictions like TX. NY dangles incentives because its tax policies are obscene. VA didn’t have to offer as much; its tax policies aren’t as nutty.
Businesses are not charities. Abolish relocation subsidies? GREAT!! But a business will ALWAYS consider the bottom line – as it should – and if its taxes in PA are half of what they are in NY, odds are that there will be fewer NY-ers benefitting from the presence of businesses.
So, NY, listen to the fools you elected and end incentives. Proudly say, ala Bloomberg: "yeah, we're expensive, but we're worth it!!" Let us know how that works out. You can write us in FL.
11
I don't think that cities and States should be in competitions for corporate investment. I am from Boston and the mayor and governor here didn't seem to be in any frenzy to offer incentives to Amazon.
In the case of NY, both Cuomo and de Blasio came out in favor of the Amazon HQ2 deal but, apparently, had done nothing to make sure it was a "good deal" for their jurisdictions. And de Blasio seems particularly lame in his dramatic flip flop on the issue.
And having local politicians whipping up crowds with "death to Amazon" or whatever they were screaming doesn't seem a good idea.
I suppose if there is anything good to come out of this, it is that large corporations and local governments may realize that they should negotiate reasonable deals that are win-win and palatable to the local constituencies.
2
Local politicians supported the residents but I assure you the leaders came from the community that has been engaged in forestalling gentrification for some time. Also a ban against unions should be enough to break the deal.
1
OUR FIRST PRIORITY MUST BE RADICAL CAMPAIGN FINANCE REFORM to eliminate the ruinously anti-democratic, corporate/ political hegemony that is able to monopolize and dictate our economic fortunes while basically blackmailing our politicians and governments.
The Amazon model, in all its greedy monopolizing practices—outsourcing, disregard for fair market economics, anti-union stance, and outrageous CEO-to-worker pay ratio, to name a few—is nothing less than a neo-feudal dictatorship.
Part of the answer, as I see it, would involve some version of good old “trust busting, which prevents monopolizing firms like Amazon from controlling politicians, governments and agencies, and restore power to the politicians and agencies that should be controlling them.
4
My opinion is that this is a drop in the bucket compared to New York's economy, and that Amazon folded much too easily for this to have been a straightforward business proposal. Note that they are not bothering to look for an alternate location; they don't really care. We were part of a larger bargaining process, to see which city would go for the most profitable deal for Amazon. And when faced with New York's requirement that workers be given the opportunity to organize unions, Amazon probably wondered how long it would be until their warehouse workers in other states decided to organize rather than wear diapers at work to avoid bathroom breaks.
6
I've been following this story with great interest for the past few days and have read numerous articles and opinion pieces, all written by people who had jobs and did not need anything Amazon has to offer. Originally I was in awe of a city that was so well run and whose citizens were so well employed, that they had no need for the economic boost a company like Amazon would bring. I mean, even their congresswoman whose job it is to see to it that opportunities like this one exist was celebrating their decision to leave. But then, the more articles I read and the more subsequent comments I read, the more I realized just how misinformed a lot of New Yorkers were and how equally ignorant their politicians were. Most of them seemed to follow the AOC belief that someone was writing Amazon a check for 3 billion to come to New York. They did not realize that if Amazon did not provide those 25,000 jobs they would not get anything first of all. And what it boiled down to was if Amazon delivered then they would only pay 27 billion in taxes instead of 30 billion. I imagine by now AOC's people have straightened her out and her only hope is that her constituents remain ignorant. Otherwise there are going to be some angry people when they realize how the 3 billion dollar thing really worked.
I can't see any future companies considering a place so hostile to business in the future
6
Amazon’s stance was hostile to workers.
Thank you David for your view on Amazon and their bully tactics with cities bidding for their favors. My New Years' resolution this year was to not use Amazon. I did this after reviewing my purchases from them during 2018. My business with Amazon wouldn't create the tiniest blip on an Amazon audit. But they do account for my modest contributions to the economy - including local.
When I considered how many things I could have purchased locally, it was disturbing that I had become hooked on the company owned by the world's richest man, while the local clothing stores, booksellers, hardware stores struggle. Yes some of them are national chains but at least they employ my neighbors. I try to shop Mom and Pop businesses when ever possible.
It doesn't take an economist to tell me that what I'm doing hasn't a chance of spreading, but so far I have found it satisfying.
I'm pretty sure I'll be able to keep this year's resolution.
8
I have mixed feelings on how things turned out for NYC and Amazon. On the one hand it seems to make perfect since that both sides should be able to offer the other some incentive for entering into a long-term relationship. However, how many times have we seen companies come to a community and make promises to provide jobs and other indirect economic activity in exchange for tax subsidies and other goodies. In my hometown of Wichita, KS this is just what happened with the Boeing Company. State and local leaders gave huge incentives to Boeing who then committed to maintaining a presence and jobs in the community for a specified period. Within a couple of years Boeing sold its Wichita operations and moved on, which is exactly what it said it would not do. Across the country and particularly the Mid-West too many communities have been burned using the same approach NYC and Amazon attempted. My hometown is dead in spirit, which is very sad because it was once a thriving community with so much to offer. While I have mixed feelings about the Amazon and NYC debacle, I am also angry and disappointed with those companies who played on the goodwill of state and local leaders to extract supersized incentives and then leave communities financially strapped in a number of different ways.
2
Amazon's move is hardly a cupcake, computer of scholarship to be given to all children, least one feels left out. Amazon is not making a donation by moving it's HQ to a city nor is it receiving subsidies. Rather, Amazon's move is a tangible product that is marketed for sale. As with all purchases, you buy that product only if it is advantageous to the city/state. Cities/states are free to play the market or not.
1
Amazon did not demand to come to New York or demand the tax breaks. No, instead, the mayor and governor begged Amazon to come to NYC and threw as much taxpayer money as possible at Amazon to get them to "yes". And, Amazon is somehow the bad guy because they accepted NYS's offer. Well, good grief.
The problem is not with Amazon in this case, but with the politicians who obviously are doing such a poor job of not listening to their constituents to begin with. If NYCers did not want Amazon to come, then their representatives should have never courted Amazon in the first place.
8
If I was was running a company and had an agreement that became a new negotiation I wasn't willing to have, I'd simply offer an ultimatum- either the deal we struck or no deal at all.
The fact that Amazon didn't employ this obvious tactic makes me wonder what exactly was their motive for pulling out. I suspect it was fear of bad publicity and perhaps future labor problems.
If a corporation wants to maintain the upper hand with labor, NY might not be the best place to establish important headquarters.
This country needs cooperation between states more than by way of collectively holding back from expensive bidding wars, states also need to work together to support labor. Unfortunately, that cannot be done in the current political climate without strong support from the federal government.
Perhaps the leftward swing of the Democratic party will include stronger federal support for union power. We need to push for that.
192
The problem is not with Amazon. The problem is with states and municipalities who create the auction. We need regulation that limits government giveaways
122
Yes, of course, more government regulation. That will surely fix things.
2
@Fred Round Yes, the government needs to regulate the economy. As the economist John Kenneth Galbreath said, "It is the job of government to put a human face on capitalism." Specifically, state or local government giveaways to corporations should be illegal. This should be made specific under the federal government's responsibility to regulate interstate commerce.
Lack of government regulation of the financial sector was the major cause of the 2008 recession. Lack of government regulation is causing a severe climate change problem.
20
@Fred Round
No, he is proposing to limit government, not capitalists. That is less government, not more.
7
New Yorkers thrive on competition while Amazon thrives on wiping out competitors by engulfing them. Send Amazon to someplace in the Midwest, where farmers, like Amazon, thrive because they drive out the small farms and call their monopoly "free enterprise." As Bloomberg said about Trump can be said about Bezos's Amazon: con game of bait and switch. New Yorkers don't dream about jobs, we dream about success.
71
@Max & Max
So NY thrives on competition eh? Thats NY has such wonderful rent control problems?
You do realize that Amazon isnt a brick and mortar retailer? They will still sell as many products to New Yorkers, NY just wont be getting any jobs from Amazon.
Considering that the people in NYC were overwhelmingly in support of the project according to the recent Sienna College poll its interesting to ponder why a vocal minority killed the deal.
2
Imagine if New Yorkers got out and shopped in their local stores instead of clicking on their Amazon Prime accounts.... and imagined if these stores actually provided helpful and pleasant service.."
2
@Richard Poore
Vocal minorities have brains.
Bullies (like Amazon) have brawn.
We have both, in New York.
Yes, we buy the stuff. Because we can. That doesn't mean we have to shake up with Amazon. We prefer to keep our distance and preserve a culture. Sadly, the Midwest traded theirs in for an Amazon-style industry and it's taken them over, hasn't it?
"absolutely a godsend to those of us who have been trying to reform economic development.” Perhaps, but only if the Nameless One, everpresent, all over, was really concerned about NYC-Amazon secretly walled-in performance when there are so many other WE-THEY walls and barriers which could his sacramental=doings. Perhaps IT could be usefully semanticized as a "peoplesend," reminding each of us that each day is a gift of unexpected opportunities to choose to contribute to making a difference that can become a much needed equitable sustainable difference. For all of US.
I've heard Mark Cuban use this phrase on Shark Tank: Don't let the "perfect" be the enemy of the "good". I just believe NYC lost a good deal, and while we debate the ethical ramifications of the issues, in the end those Amazon jobs, the peripheral jobs that would've been created and the tax revenues will be somewhere else. Isn't it that simple?
And I heard this argument from a person on some news broadcast: Well if Amazon comes to Queens offering jobs that pay 100K plus then rents in the neighborhood will rise. True but so what! Isn't this an example of twisted logic: We fear that more money in our neighborhood will make us poorer.
57
But unions not permitted. Taxpayers pay for billionaires heliport. Property taxes go up. Public services strained. Local businesses far from benefiting shut down. Promises not kept. Some of us studied what happened in Seattle.
28
@Stephen
Well said.
Somehow everyone is to think that there is nobility in a community never having new investments? The alternative is decay.
If politicians don't want opportunity for their constituents. What do they want?
4
@Stephen Those of us in the neighborhoods bordering Long Island City care quite a lot about how this would have sent rents soaring, displacing us. Those of us in the surrounding communities would have been hurt by the huge negative externalities (strained subways, soaring rents, strained sewage, etc. ), yet we would not have received any compensation since that was not part of this deal/con job. Amazon wasn't paying its fair share of taxes to offset those negative externalities, as all other corporations do.
Furthermore, if, as research on these decisions suggests, the relocation decisions are made largely independent of the corporate welfare subsidies, then those subsidies are simply a $3 billion giveaway in exchange for exactly zero. The city got NOTHING from its subsidy, because that subsidy was irrelevant to this greedy, deceptive billionaire's decision.
12
NY lost 25k well paying jobs and billions in taxes and related economic activity. Amazon was making the pie larger. Sure, they drove a hard bargain but that is their right in a free economy. NY didn’t need to apply for Amazon’s HQ, but they did, and Amazon doesn’t have to go there if unwelcome.
This was a HUGE strategic error by the Democrats and wait for Republicans to pounce on it during the next election. Great way to loose those suburban independents and the middle of the country.
8
If suburbanites want Amazon then let their politicians offer tax incentives and promises of no unions and a heliport.
The affordable housing in the NYC area is so severe that people are renting out spare rooms in their homes for $500 per month to individuals. The subways have always been an adventure. People commute two hours one-way from three surrounding states to get to work in Manhattan. Some even fly in. On top of this you add a behemoth of a company whose top executives want to live in NYC for vanity reasons. If Amazon wanted to create jobs in NY state they could have done so in Buffalo or Utica. The outrage manifested with the announcement of a $3 billion giveaway, reached behind closed doors, to a company that does not need a subsidy. This exposed Amazon's search criteria. Amazon was not looking for a highly motivated productive and educated workforce, or access to a transpiration and communication hub. Instead Amazon was asking municipalities to prostitute themselves to benefit Amazon's bottom line. The people of Queens understood this, so did the unions.
815
@Angela
It's been widely reported that Amazon was looking for 25,000 employees at $150,000 annual salary - mostly technology hires. NYC is one of the very few areas where such a resource pool is still available. Also, no one wants to live in Buffalo or Utica - obviously Angela has not been to either place.
$3 billion is not a subsidy - I recommend you go to WSJ to read an article about the nature of NY State and City's contributions to this project.
33
@Angela But what is the underlying reason for the extremely expensive housing in NYC? That should be the point you address first rather than pivoting blame over to Amazon. Rent control, high property taxes, outdated zoning laws, and laws making it hard to evict tenants to name a few. Address those before bringing housing into the argument.
The $3 billion also is not a giveaway. New York doesn't get to spend that $3 billion now that we stopped Amazon from getting it. It was a tax break. The New York government still would have gotten plenty of tax revenue from Amazon directly and thousands of employees and customers would be paying their share of taxes if that's really all we care about. Now we get nothing.
And I can only hope your claim that New York City is not desirable for a quality workforce or transportation/communication hub is a joke. Don't treat Amazon as a single narrow minded human being trying to "prostitute" municipalities whatever that's supposed to mean. It's a a massive company acting in its best interests, for better or for worse.
11
@Angela. This is the kind of non-sensical comment that helped drive Amazon out. Buffalo is a dying, frozen town a 40th the size of NYC that peaked about 100 years ago. The best and brightest young people don't go there. Utica is a parking lot.
Amazon's intent wasn't to create jobs in New York state it was to build a tech hub where talent and resources are plentiful. The $3 billion tax abatement would be a fraction of the actual taxes paid. The chance to diversify the city's economy has been blown. We will dread this decision for decades.
5
Mr. Leonhardt offers a very welcome and original take on the Amazon deal. Many people, including myself felt a bit queasy about this arrangement, without the ability to fully articulate why. Mr. Leonhardt has put our feelings into a coherent argument.
Obviously, the $3 billion in tax breaks felt wrong. But the avoidance of precedent felt a little silly, as such subsidies are very much the norm these days. But that doesn't mean we have to perpetuate the norm.
The mayor and governor should have offered better counsel to Amazon on what needed to be done, both substantively and in community outreach, to make the deal fly with the public.
The whole episode was unfortunate, from Amazon's national dangle to the eventual crash and burn in LIC. One has to wonder about the real purpose , now that we know Amazon has no intention of naming an alternative to the Queens location.
130
@Squidge Bailey
yep, both the mayor and governor were so eager to add Amazon's 25,000 new jobs to their resume that they forgot to add value for that $3 BILLION shelled out to Amazon.
2
@Butterfly They 'shelled out' nothing. The 3 BN was a tax break that would only come from future jobs. It doesn't exist yet and now never will. Don't listen to aoc, that economic genius.
1
Many of us who live in Queens cannot reliably use Amazon to buy stuff. Why? We live in apartment buildings with more than a few units and no front desk or doorman to receive safeguard packages. Amazon uses the US Postal Service to deliver parcels. The USPS does not deliver packages to our doors; it leaves them downstairs by the mailboxes and doeesn't even ring us on the intercom to say the parcel is there. For a while everyone in the building was getting plaintive notes from neighbors slippped under our doors asking if by some chance we had mistakenly picked up their package which was said to have been delivered. I think the note writers have wised up and aren't getting USPS parcels anymore.
I do shop on the internet but I only deal with merchants who use UPS or FedEx whose delivery people bring things to my door and ring the doorbell or with those who do their own delivery to my door. I cannot but think that there are many, many apartment dwellers who face the same issue.
5
If property values and tax rates were the same everywhere, the argument that we should avoid a racer to the bottom would make sense, but the reality is that the municipal taxes of opening a business in NYC or LA are much higher than Wichita. Cities are already in a contest, making an impossible tradeoff between voter demands for better services AND lower taxes.
The other disingenuous side to the argument is $3B in tax breaks would bring how many billions in new tax revenue?
2
Better to have enterprise zones that encourage small businesses than be under the heel of a behemoth monopoly.
8
Those added jobs were no favor to either the people who already live and work in the NY area or to the people who would move there from elsewhere. There are many places in the US as interesting and much more livable than NY. Amazon pays well but the rents and living conditions for even their professional employees mean that they would have been living in tiny, often pretty ugly (dark with views of airshafts) apartments. Escaping the city on a summer weekend would mean hours of sitting in traffic to find a few inches of beach space. If you exclude Seattle, DC and the Bay Area (prettier but equally unlivable to all but the top employees) most of the country would be a better choice for the ordinary Amazon employees than NY.
8
It's worth remembering that promises the subsidies buy don't always come to pass in the ways they're envisioned. A couple of years ago, Boston lured General Electric to the city with subsidies, tax abatements and other rewards. Last week, GE announced that they won't be putting up a new headquarters building in Boston; instead, they'll make do with two existing buildings they're renovating. And the number of jobs the company will bring to Boston has fallen from an estimated 800 to about 250. Boston still gets to be GE's headquarters, but those eagerly touted promises are looking tarnished today.
14
Well, we are getting some of those subsidies back in cash, so that's a help. And there's no shortage of developers salivating over the parcel GE is freeing up, which could (If played right) result in more diverse jobs than would be housed in the GE building. I don't know how NY and NYC make back the money they spent to lure Amazon.
2
@Lauren McGillicuddy
I agree with you, and I'm glad we're getting back that $87 million. I just hope those negotiating the next deal make sure that the city gets a hard commitment on jobs and training for area residents. Along with a willingness to contribute directly to the city's tax base. I get a little queasy when corporations offer charitable contributions in lieu of paying fair taxes. They ought to be willing to contribute directly to the infrastructure and services that are helping build and sustain heir enterprises.
To apply for corporate welfare just announce the businesses’s intention to move to another city and then watch the perks flow-to the shareholders, not the workers. 50 years of business schools irresponsibly demanding the lowest costs (including labor) and highest shareholder return have done immeasurable damage to the country. Here’s looking at you HBS. When will you teach civic responsibility, not just old fashioned profiteering?
14
Have they no Shame? Amazon, the richest company in the WORLD, earned more than $4.5B last year and PAID NO TAXES to the federal government. They do not need -- nor do they deserve-- tax breaks from any State where they would like to operate their business. Any politician who supports such a scam does not deserve to hold public office, "pretending" that they are acting in the best interests of their constituents. The first question any politician should ask of a company that wishes to do business in their State should be "Tell me what your company has to offer to my constituents for the privilege of using our roads, water, electrical, and sanitary systems? " The second should be "Are you able to operate your business without adversely effect the environment (air, water, and soil) ?" Let's see how they respond to such questions.
15
I look at exactly opposite from you. I’m proud of Amazon (and trust me, I’m no fan of the company and what it has done to some of its competitors) for standing up to the petulant children who whine and complain, well, now they have few jobs and less taxes to waste.
7
@Thor
Those "children" are entitled to expect something like respect from companies that come to their communities with a lot of rosy promises. When Amazon's potential neighbors and perhaps future employees didn't immediately bow down to the company's desires, instead of engaging and negotiating the company made a show of walking away. Amazon is the petulant child in this situation -- or the bully; take your pick. New York probably won't have much trouble replacing Amazon with more responsible and genuinely committed development partners.
1
We are not children. We are residents and local businesses who do not want Amazon. We have jobs. (3% unemployment in NY). Public services—paid for by residents, not Amazon—are already strained. And don’t bully us and tell us “no unions.”
@Maggie Mae
You don't seem to understand: The negotiating had already been done, and a deal reached. But the NY pols could't deliver on their end of the bargain.
1
It's not a victory is other jurisdictions don't follow suit. Otherwise it's like shooting you self in the foot. My guess, NY's feet are gonna hurt a long time.
5
Not every job is a good job. By all accounts, working for Amazon is dehumanizing and awful. Even if this only applies to the warehouse jobs and not the office jobs (I doubt it), I would not want to work for a company whose profits rely on treating people like disposable cogs to be ground down and I do not favor economic incentives that reward sociopathic corporations. There are businesses run by people who try to find a balance between profit and employee well-being - if you’re going to waste $3 billion, give it to them: at least then some of that money will filter down lower than the boardroom.
9
@Philippe Egalité Could you share data that shows your claim that working for Amazon is dehumanizing? Just curious how you got there.
1
There needs to be legislation banning tax breaks.
6
@John Stroughair. Agree. Like the EU. EU countries cannot bid against other EU countries by offering tax inducements and other freebies like a taxpayer paid infrastructure improvement that the company would need for example. Also, union rules are the same across EU, so no company can threaten or move to another EU country due to weak or nonexistent unions, and environmental laws are equally enforced.
If we did this, fewer jobs would leave the rich northern US states (strong unions) to flee to southern "right to work" states.
2
@John Stroughair you mean like the SALT deduction?
Hilarious! All of these boosters went from "We are so great, we got Amazon!" to "We are so great, we got rid of Amazon!"
Meanwhile, the DC area is quietly preparing for the future.
5
Would that be the future where Jeffrey Bezos an a few other stolen/inherited wealth Robber Barons own OUR United States of America and the world, JustInsideBeltway?
No thanks. You can have it. Move to Syria or Russia.
2
If you want Amazon, go ahead offer to build a heliport for the billionaire who as you know pays no taxes and forbids unions.
In the 60's there was a revolt against commercialism and big companies shaping our lives and ambitions. Now we embrace business by naming sports areas with their name, having their logos on everything and glorifying the technology by paying ridiculous amounts of money for things we don't need. Businesses are not our friend. Their primary function is to make money at almost any cost. They are powerful money making machines that must be kept under careful watch by the government. If we fall in love with them they will swallow us.
10
How those that celebrate this pyrrhic “victory” over “naughty business” do their math is a mystery. Even Mr. Cuomo skewered the disingenuous critics that ignored the fact that Amazon would have contributed 9$ in tax revenues for every1$ of tax relief. This seems to have escaped also to Ocasio-Cortez. If there’s a downturn between now and 2020 one can only smile thinking about how the Dems will dispose of AOC now bragging about her success in killing Amazon jobs. How she became the representative of a community that needs jobs and economic development more than it needs campus lefty moralizing rhetorics remains a bit of a mystery.
9
AOC supported the residents and local businesses who did not want Amazon. It’s not even her district. Funny how we were all supposed to accept all of Amazon’s demands, no taxes, heliport, no unions—with absolutely no consideration given to the concerns of the community. This is apparently how Amazon behaves in Seattle ( which is s mess, thanks to Amazon).
Good riddance to a company that posts $11B in profit but pays not one red, white, or blue cent into the system that supports it. Whatever city gets stuck with their "deal" will rue the day they invited Amazon in...this from an Amazon customer, but I still think they need to pay their fair share to the city, state, and feds.
10
I doubt New York's rejection of this deal will slow the race to the bottom America has created with corporate taxation. You can't be effective being the only one in a sea of the unprincipled.
4
I have another take on the story: a bunch of adults are sitting around when a rich kid enters the room and offers them much-needed food in exchange for words of praise and some lollipops. The adults are incensed, shoo the kid away and stay hungry but proud.
...Or they behave like adults, even shrew ones, and woo the kid, get the food and then do as good adults do, share it among themselves.
Some day our populist politicians may grow up. But not soon, and not during the rest of our lives.
3
Oh please. That’s not what happened.
Thank you NY for the favor of cutting off your nose to spite your face. Thank you NY for the favor of electing social democrats like De Blazso and Cuomo who remained mute as Jeff Bezos made his decision to flip off 25,000 NYers who would have been on his payroll . Thank you NY for electing AOC who as Woopie Goldberg said needs to "learn the job." Thank you NY for being the least business friendly state in the country.
6
AOC supported residents and local businesses who did not want Amazon in their community—for good reasons. Was she supposed to thumb her nose at the community—like most politicians? Unemployment is 3% in New York. Our public services are already strained and we don’t need to build a heliport for the billionaire. Bezos can take the overcrowded subway. Oh and banning unions? Come on.
But America is far from considering big companies owners as robbers and put them in jail if they ever try to use taxpayers' money at their advantage.
1
Amazon definitely needs to take stock and reassess their attitude. I would also suggest that NYC needs to do the same. Many people view what happened not as NYC politics, but as thuggery & extortion.
2
Amazon deliveries to NYorkers reset to snail mail pace.
1
OK ... how about the same story-line on rent control? Talk about bullies forcing bad policy on the rest of us.
The Democrats goal is to keep as many people on welfare as possible so they'll have to vote for their horrible policies ... like in Detroit. This is another step toward that end.
3
We have jobs. Unemployment is 3%. Do you think Amazon was going to hire people on welfare for those $150,000 jobs?
Imagine that a bunch of children are sitting around a table when a seemingly beneficent adult walks into the room carrying a plate of cupcakes. The kids burst out in excitement until they notice a problem
http://www.mobile-phone.pk/infinix-mobiles/
Everyone is talking about the "25,000 jobs" as if they actually existed, except in Amazon's give-us-a-free-ride propaganda.
7
I’m not sure why this is a big deal. Toronto refused to play the “race to the bottom” game and it’s not newsworthy. Stop trying to outdo each other with financial incentives.
3
Politicians achieve their socialist goals and the people suffer. Venezuela? or New York City? Economies managed by socialist politicians have a bad track record.
4
We aren’t suffering. The community did not want Amazon. Do you consider the right to unionize too far left? Socialism? Then call me proud union member—and socialist.
It’s an interesting and clear article, but what Leonhardt is describing is not an example of the tragedy of the commons. It sounds more like Bezos was setting things up so he was in the Catbird seat, “a phrase used to describe an enviable position, often in terms of having the upper hand or greater advantage in any type of dealing among parties.” https://en.wikipedia.org/wiki/Catbird_seat. It would be a tragedy of the commons if Bezos had just left the cupcakes in the room, and all the children selfishly grabbed as many as they could. The tragedy of the commons could be overcome if the children had enough sense to stop and organize and select someone to distribute the cupcakes. However, the person so selected would now be in the Catbird seat. I encounter both types of systems daily. I find it a challenge try to figure out how to overcome them.
3
Principle without a plan to make enough cupcakes? Sounds like a mini-Brexit.
You should forget the gloating, and call out the forces of principle to present their alternative plan to remake LIC and let the country know that NY is not anti-business, just anti-Amazon Deal. Bill DiB, Andrea S-C, and thier Democratic and Labor partners (they consider Cuomo to be a de facto Republican now) should waste no time creating a plan to develop the same area.
The line to sign up to be their baking partner will be a short one, for a long time
The area does not need development. Residents and local businesses have had enough of gentrification.
While I reside and own a business in New Jersey I am heartened by the collapse of the Amazon deal. Nearly twenty years ago a study by New Jersey Policy Perspective underscored the cynical nature of the deals brokered by large corporations and state and local officials. Once the ink dries on such arrangements the regression and abandonment of promises by the corporations begins. The attitude seems to be, ‘what are they (government officials) gonna do if we don’t stick to our promises, throw us out?”
As a small business owner I empathize with the local restaurant owner who imagined good things would come from the deal, but how good would she feel when her rent tripled or when she is forced to relocate as developers swoop in. Inevitably small businesses and local taxpayers pick up the tab for these massive revenue give- aways.
These deals rarely yield the promised results, whether they occur in New York or North Carolina. It should be hoped by every tax payer in the country that the collapse of this deal will be the turning point in the idiotic race to the bottom that pits North against South, rural against city, a plague perpetrated by big business on state and local communities for a half century. Enough is enough indeed.
150
@Kelly Very well written and a salient point, great contribution.
6
@Kelly
One need only look at the Foxconn 'deal' in Minnesota to give a recent example.
7
@Kelly
Well written and presented, Kelly.
When a city/state offers a massive tax break for a business, all it means is that the jurisdiction is the one paying the salaries, at least until whatever tax break runs out, while the business reaps the benefits.
To me, this isn't unlike what pro sports owners do when they're trying to wangle a new ballpark out of a city. Simply put, they do it because it's (a) not the good deal that business owners make it out to be and (b) if they can get another sucker to go in on the deal and do most of the heavy lifting, so much the better.
Putting it another way, if Amazon moving into LI City would be a bonanza for Amazon, NYC would say 'We'll fast track zoning and all that, but the rest is on you.' Then Amazon would cheerfully rake it in with both hands. That they're looking for a deal means pitching their tent, in NYC or anywhere, isn't the great deal that all parties would have you believe it is.
2
Amazon deal would bring billions in tax revenues.My property taxes doubled since I bought my house 15 years ago, but my income stayed stagnant. Can I say no to the government in the unfair game?
3
This piece is very choosy in the subsidies it wants to use for comparisons to rank success or failure of the policy. We have a long history of subsidizing Wall Street firms and the financial exchanges that are the lifeblood of NYC which is conveniently ignored. This is understandable as this would negate the entire premise of his argument.
4
New York did no favors to anyone least of all 25,000 New Yorkers who will not have jobs. Long Island City will continue to stagnate. The parking lots of taxi cabs will stand in stark contrast to the throngs of working people and new buildings new businesses that would have been built and thrived in a new technological and economic age of research and development. All of that is lost.
First of all let's not tell anymore lies to New Yorkers and others that a bucket with $3.5 billion in cash would have been raided and that that money would have been better spent of New York schools, transportation and infrastructure. That is a bold-faced lie. There was no bucket of money. There were incentive offers totaling that amount if Amazon met its obligations and commitments. There were tax abatements and a grant commitment of $500 million IF Amazon met the promises of jobs and other requirements to qualify for those commitments by New York. There was no giveaway!
Let me be clear. I am not a fan of Amazon. I don't use it and I don't like the way it conducts business or treats employees or fails to meet its social contract responsibilities in the communities in which it is located. Amazon can and should do much more. It should pay more taxes.
The battle was won but the war was lost. New York lost. Twenty five thousand New Yorkers lost. There is a larger picture here. Principals matter but jobs and progress matter more. The fight should have taken place after Amazon was in New York.
6
I doubt Amazon had any plans to actually hire 25,000 current New Yorkers. Certainly not 25,000 residents of Queens, Brooklyn or any other other boroughs. Most of the jobs would come from either relocated current Amazon employees or new hires from wherever Amazon gets its technical staff from. Then, at some point, the other shoe drops and Amazon announces that it may not meet its hiring promises because of “strategic changes” or some other corporate jargon. It’s happing in Buffalo right now with Tesla, in Wisconsin with Foxconn and around the country.
1
Long Island City is not stagnating. The residents are employed. Local businesses are doing well. We do not need or want Amazon especially with their anti union anti tax paying stance.
1
Quite simply, it's time to end placing billionaires' and corporations' interests above those of the majority of the population. Maybe this is a step in that direction.
3
It's a lose, lose situation. Yes, New York would have benefitted from Amazon's HQ2 but New York will be just fine. We are big, we are resilient. The bigger loser is Amazon, and not just to its reputation. There was a reason they wanted to come here: the talent pool in the NY area is second to none. Same with the airlift, LGA, JFK, EWR, Westchester and Teterboro airports all within easy reach. Law, advertising, media, consulting, accounting, recruiting firms, top universities, the list goes on and on, all right here in NYC. With this short-sighted decision, Amazon has proven that it's not ready for Prime time.
2
New York is one of five states to lose population for the last 5 years consecutively. Not a good track record to highlight of win/win.
3
3% unemployment. People leave because real estate interests make housing exorbitantly expensive. Amazon would only exacerbate the housing crunch.
@AM Aigner I think Amazon will be just fine. They had cities lining up to welcome them, and still do.
Ms. Ocasio-Cortez and Mr. Gianaris have single-handedly accomplished at the borough level what the nation was able to prevent many bad actors from accomplishing at the Federal level.
The economic fallout from their posturing will be felt, or correctly, not felt by generations to come. The missed opportunity cost to the city both tangible in run rate tax dollars and intangible in an entire new ecosystem with trikle down effect and firm foothold in the tech corridor is irreparable. A beacon of failed socialism is not a good tag for any city.
Make no mistake. New York is the loser here. Amazon will continue to do business. Elsewhere. And, a hundred cities will line up to take that business. And avoiding New York's misfortune. A city gets the leaders it deserves.
4
AOC supported residents and local businesses who have been organized against Amazon from the beginning. Politicians are supposed to support community interests. We are better off without Amazon. Our public services are already strained. We don’t need a tax payer funded heliport. And we will not stand to be told “no unions. “
1
If cities and states give away to much to corporations why is that the fault of the corporations? Amazon and other companies are entitled to negotiate for whatever is in their best interest. Why shouldn't they demand as much as they can get? States have never had to acquiesce and offer huge tax breaks, but they do. I don't see why the companies are blamed for that. For politicians to whine about it later and claim they were coerced into making a deal that was one-sided is ridiculous. Any state could have said no to corporations long before now, but they didn't. That's not the fault of Boeing or Nike. Maybe these states need better and smarter negotiators who will know how to deal with corporations, strike deals advantageous to both sides and keep the jobs in their states. Losing 25,000 jobs is nothing to feel proud of.
5
NY unemployment rate is 3%. I don’t believe those 25,000 jobs (over ten years) would ever materialize. And if so, would be filled by HB1 visa holders and out of towners. Amazon makes demands that the community could not accept —no unions, heliport for the billionaire—and refused to listen to community concerns. We don’t want or need Amazon. Our public services are strained enough.
Maybe, just maybe, NY has to offer tax breaks to businesses to relocate there, because it has [significantly] higher taxes than the businesses other alternatives.
And maybe, just maybe, there is no "strong arming" going on here by businesses because multiple states are voluntarily competing to bring the business to their state because new jobs = new related businesses and a higher tax base.
And maybe states colluding not to compete among themselves for new businesses is just a way for high tax states to protect their unreasonable tax rates. There is noting stopping NY, CT, IL, CA from lowering their tax rates to be more competitive with other states.
Like it or not an economy must grow to provide a better standard of living for all citizens. Instead of always seeking corporate greed maybe we should also be examining government greed (in the form of high tax rates) as well?
7
Amazon doesn’t pay taxes. And those high paying (if they materialize) aren’t going to New Yorkers.
@Zejee Amazon doesn't pay taxes? Well great! Because the way this deal was structured is that Amazon doesn't get any of the $3b in tax incentives unless it generates tax revenues. So no harm no foul if Amazon doesn't pay taxes. But... if Amazon does pay the $24 billion in taxes anticipated over the next decade, then LIC /NY is ahead by $21 billion (for schools, infrastructure, etc.) that it never would have had. Win win for everyone. No risk for LIC / NY.
The tragedy of the commons is immaterial, and wrong, here. Putting another cow on the common land appears to have no cost to the freeholder who puts a second cow there until everyone does it, the common is overgrazed, and everybody has to get out of the cow business. It's not a problem of looking at short- or long-term interests, but of a public good that appears to come at no cost to the user.
It’s remarkable that many people don’t understand that the 3B doesn’t exist absent new revenue. There may be good reasons to not do this deal, but ‘realocating’ imaginary money is not one of them.
6
"For years, companies have been getting the better of local governments — and taxpayers — by pitting them against one another. If a city or state won’t pony up cash or tax breaks, companies threaten to go elsewhere."
The above comment in the article could have included sports teams/venues and of course the Olympics. Until there is comprehensive transparency in accounting, corporate welfare will usually win as a result of superior marketing. New York has taken a position!
7
Amazon made $11 billion profit in 2018 and paid $0 in corporate taxes. Zero.
Now they want the jobs they create to be subsidized by the government.
Clearly we’re on the wrong path here.
12
@Liz
Source, please. If true this is truly astounding.
@TLJ At least Bezos' own paper reported it:
https://www.washingtonpost.com/us-policy/2019/02/16/amazon-paid-no-federal-taxes-billion-profits-last-year/
New York didn't "stand up" to Amazon, nor did it call Amazon's "bluff," as others have said. New York attempted to recast the deal materially after the deal was reached, and Amazon called New York's bluff by walking. I agree that these corporate tax deals are not smart tax policies, but De Blasio's complaint that Amazon was unwilling to be a good "partner" is nonsense -- who wants to partner with a city that immediately wants to modify a deal and whose politicians attack you?
7
@laroo The ordinary people who saw that Emperor Bezos had no clothes were the ones who caused the collapse of the agreement. De Blasio would have gone ahead with it but he saw the way the winds were blowing.
2
The real story behind Amazon’s departure is the pressure put on Amazon by unions and their politician enablers to accept unionization of Amazon’s workforce.
5
@Working Stiff The people who would have worked in the NY HQ were never the ones who would have been the target of unions. Those are the people who work at the fulfillment centers scattered all around the US.
I personally think people are placing too much importance on losing Amazon because of standing up to them. I think multi billionaires aren't in it for the money, they had something in their life that drove them to succeed. I seriously doubt Bezos sits around worrying about Amazon and New York issues. Whoever bullied him in middle school didn't know what they were creating at the time, it wasn't about the money it was about that episode. SNL was close is their skit that Trump and Bezos were feuding and NY was on the list of thorns in Trumps side. Trump wins round one with the photos and Bezos having to deal with that atm (which I think is the real reason for NY pullout). However watch out for round two, the billionaire vs the under suspicion millionaire....
If he’s not in it for the money, then why doesn’t he give it away? Why not more charity? Why demand tribute from cities hoping to score HQ2?
@Reader At some point , like others before him, he will probably start giving it away. As for demanding tribute, you assume Bezos handles all the aspects of the company, my guess is that he has "people" that do this. He may not know all that goes on, he does know that he wants to know who put his pictures out there and that his and his soon to be ex wife's lawyers are talking. The lawyers are making at least some of the business decisions right now.
I would say all parties did a lousy job communicating the benefits of the deal. The secrecy of it backfired, as it excluded any input from Queens residents which made it easy to create backlash. Lack of information and Amazons unwillingness to get their nose bloodied ended the deal. Poorly done by the state, city and Amazon. Not everyone can make it here!
2
I have several thoughts on this:
1: What is the cost to NYC beyond the tax breaks? Infrastructure enhancements alone will run into the billions to support these 25K jobs. Transportation to Long Island City to support 25K people? Has anyone even considered this?
2: What about housing? Where are 25K new people going to live? In Queens? In the City? In a city notorious for out of control housing costs, this seems to increase the problem.
3: If Amazon is such a good corporate citizen why not move someplace where 25K jobs and a new Amazon Campus could make a huge impression. South Bend Indiana for example. It's close to the lake and it a rust belt city with a college Amazon could mold in any image.
Amazon could throw up a tent in the Gobi desert and people would clamor to work for them, so location to talent is no excuse.
No one thought about this. Jeff Bezos wanted to have a footprint in NYC and he was going to have it. This is a bullet dodged, IMHO.
6
Transit - Citibank is about to vacate 1.5M sq ft in the skyscraper out in Queens. AMZ was going to absorb 1M of that space. Net change - probably negligible overall.
1
@mj NYC infrastructure is already decaying and the city and state have no effective plans to address the issue. Having Amazon there would at least provide additional tax revenue to start to address issues that are in desperate need.
1
@mj Yes. The points you made are the same reactions that I had. Only difference was that as an alternate location, I was thinking that towns north of the city, like White Plains or Yonkers, might have been good locations -- still within an easy commute from NYC to tap into the high tech work force, and more realistic housing prices for other workers. Plus, commuting would be reverse commuting -- putting more money into the coffers of mass transportation without adding to the congestion. I think NY State should have stepped in to offer this an alternative, or even as a more realistic initial bid.
1
Mr. Leonhardt offers a very compelling framing of the nature of the deal as it were. As an outsider that frequently visits NYC and reads The Times daily, I am equally impressed considering the revelation that NYC is experiencing a Billion dollar shortfall. The net effect drives home the magnitude of what constitutes the strength and resiliency of possibly the strongest city on earth. However, here's the rub and the deeper concern for me. Global finance is the lifeblood of NYC particularly Manhattan. It plays out in infinite ways, particularly through real estate and the connected economy. The real danger that emanates from Mr. Leonhardt's premise is everything that constituted the Great Financial Crises whose causes still aren't clear to the general public or consequences. My point is, the looting of America began nearly 5 decades ago and the downward spiral has only intensified. Amazon is but one strand.
2
Totally agree with this article. Professional sports teams have used the same strategy for years, begging for tax subsidies to build larger and more lavish stadiums for the benefit of the teams' owner. San Diego did the right thing with the Chargers football team, effectively letting it relocate with San Diego's refusal to bankroll a new taxpayer subsidized stadium. The economic impact studies put forth by companies and sports franchises are often one-sided and filled with dubious economic assumptions. It's a variant of the Republican tax bill of last year: trickle down economics, which hasn't enriched the American economy and never will.
7
Leonhardt's framing on this issue is peculiar. I'm not sure that 'economic benefit', as nebulously claimed here, ought to be maximized at the expense of quality of life (which would likely tank with HQ2). Moreover, Amazon failed to provide convincing evidence that HQ2 would benefit current Queens residents, as opposed to an incoming wave of techies who'd be displacing them.
The cupcake metaphor is apt, however, though not in the way intended. Desserts are great over the short term (higher tax receipts are a nice sugar high) though in the end they leave you less healthy (arteries and roads do clog). Frankly, if the richest company in the world is the one catering, I'd say NYC deserves a well-rounded meal - not just junk food.
8
With Amazon in NYC, the city had an opportunity to impact Amazon. Now that that’s not happening, only the city is being impacted. Amazon isn’t going to do any less business in NYC without this deal. Amazon isn’t going to make any less money off of NYC residents without this deal. This was NYC’s chance to get tax revenue out of a company that makes its profits mostly from afar. The smiling boxes will still flow through NYC as they did yesterday and the day before.
6
Great column, Mr. Leonhardt!
You say, "Somebody needs to make a principled stand. In New York, a coalition of activists and politicians did so."
Hurrah for them! Hurrah for all American citizens who are standing up and taking action to preserve/restore communities and save them from the Robber Barons like Bezos.
Seattle citizens took a stand and passed a tax on the wealthiest and Jeffrey organized supposed construction workers to shout and yell about "lost jobs" so the City Council reduced the amount. It's so stupid that politicians and people buy into it. The construction industry was decimated when the stock market crashed in 2008. No one is going without work that wants it.
WE THE PEOPLE are done with politicians and corporations trying to rob OUR communities. WE are the only ones who can/will and are stopping it.
Good Job, Good People of America. This is OUR country and we will fight to our dying breaths to preserve/restore social and economic equity for all.
8
Actually, "corporate welfare" seems like a misnomer. Corporate welfare is the areas like steel that have been propped up over and over and are still failing.
For successful companies like Amazon, it is actually "corporate bonanza".
I don't know what we can really do about small shops. Here in Tokyo, I see someone's dream go up all the time, and it disappears after a year or two. It was surely someone's life's savings that when into paying to open the shop, stock it, and pay the rent to keep it open. The turn over is less depressing than it used to be, but it seems an impossible road. I don't know what it is like in Queens, but like many economically powerful urban coastal cities, rent is probably absurdly outpaced for the genuine likelihood of an original and interesting idea to thrive. So quite likely all the shops start to look the same and sell rather similar things because that is all the shop can do to survive. Innovation that must be ready to run full speed the day the doors open is not innovation at all. Along with the tax breaks and the demands on the city for services, this is the real crime of gentrification and these corporate bonanzas.
2
I am reminded of the Scorpion and the Frog.
"A scorpion asks a frog to carry it across a river. The frog hesitates, afraid of being stung, but the scorpion argues that if it did so, they would both drown. Considering this, the frog agrees, but midway across the river the scorpion does indeed sting the frog, dooming them both. When the frog asks the scorpion why, the scorpion replies that it was in its nature to do so."
This was a truly amazing deal for NYC. NYC/NYS has very high taxes and Cuomo/de Blasio were simply offering a discount amounting to 1/9 the overall taxes which would net $24 billion with 25,000 good jobs created as well as a great deal of contraction jobs. Amazon would diversify the economy.
There is no need for Amazon to do even more since the tax revenues can be used by government to improve social services.
Amazon is not unique -- other firms are also offered discounts on our exceedingly high taxes.
Yet, Cuomo and by far the majority of New New Yorkers, the Frog, has to deal with the Scorpion of the "progressive" left that would willingly destroy a great deal.
5
Wait, what "tax revenue" ?? Last I saw Amazon does not pay taxes. The " tax revenue" would come from the taxes the employees would pay. And they would be paying for the infrastructure that Amazon would use, roads, subways, etc. And what is a "good paying job" ? Last I saw Amazon starting lay is $15 an hour, and that after years of $11 an hour.
3
@Patricia shulman
The average salary of the deal is $150,000 per job. Half the jobs, 12,500 would have been in tech.
Other jobs were in administration, custodial, HR....
https://www.wsj.com/articles/half-of-queens-amazon-jobs-wont-be-tech-positions-1542829226
Amazon has two major division. The "store" that people frequently think of but Amazon also provides Amazon Web Services (AWS) which is the largest cloud computing platform which among other things provides streaming services for Netflix.
Ultimately the increase in tax revenues is $24 billion. That is how much NYC/NYS is losing because of the Scorpion.
Taxes paid by employees ultimately come from Amazon so Amazon is ultimately paying the tax indirectly.
Totally agree. The jobs would have been great, yes. But do we really want a company here that campaigned AGAINST ameliorating the homeless situation in its hometown? The entitled way they handled the negotiation says everything about how they would have acted in NYC if they had set up an HQ here, and from that, I really think we’re better off without them.
6
These tax subsidies seldom, if ever, work for the public. They are socialism at it's worse, unlike Medicare, Social Security, public education, roads, et al.
5
I loved the first four paragraphs, but it seems to me that it was Amazon that walked out of the room after deciding that even a $3B cupcake wasn't worth the aggravation of dealing with the anti-business attitude of New York's politicians and pressure groups.
10
Looking at the comments it is abundantly clear that most people don’t understand that:
A) Amazon was building a technology center, not a wharehouse. The average salary would be 150,000+
B) the State/city was not handing them 3 billion dollars. This was mostly a tax break on the estimated 27 billion that would be coming to the state. There is NO 3 billion that can now be redistributed. And of course, there is now no 27 billion that might have been used to fund infrastructure and social programs.
C) Maybe some of the jobs would have gone to folks outside Queens but 25,000 high income jobs brings high income families who need restaurants, grocery stores, dry cleaners, painters, movers, beauty parlors,, dentists, clothing, furniture, nursery schools etc...
You get the idea - economic prosperity.
23
@Born In The Bronx You get the idea - gentrification. And that's just the tip of the iceberg. Sure, business and property owners in LIC would generate even more money for themselves than they do already. Is that worth abrupt displacement of residents who can no longer afford the rent? If so, do you think it's wise that we pursue this model citywide? If we replace every neighborhood with one filled with residents who make 150k and push out the riffraff, then: economic prosperity.
To your "b" point: Can this philosophy also be applied more broadly? If every single tax payer threatened to leave NY unless they only paid 10% of their taxes, would you opt for a universal 90% cut? After all, we would still be getting something, right?
Taxes aren't something that we can just forego willy nilly. For those first ten years during which Amazon would have been paying zero tax dollars, the city would not have had a 10-year break on the expenses involved with the sudden appearance of a new city on the edge of LIC as well as the influx of residents and traffic that comes with that. The idea behind taxes is that we're all chipping in for something we all use/rely on. Amazon would have been relying on the infrastructure provided by NYC far, far more than the average bear. Why then, paired with the fact that they're the last entity on the country who needs to rely on such breaks, would we let them go a decade without paying any?
5
@Born In The Bronx
I think we understand all of that just fine.
What you don't understand is that the $3 billion tax abatement offered to Amazon was part of a long pattern of extending such abatements to big companies that don't need them but that gives them an enormous competitive advantage over smaller businesses that do not recieve those perks.
You also don't understand that 25k workers making $150k each would drive thousands of lower and middle income families from their homes in surrounding neighborhoods by driving up rents and real estate prices which are already outrageously high. All of those restaurants and small businesses won't do the current residents of those neighborhoods any good if they have to move elsewhere.
You also don't understand that while its elite tech workers might make $150k, Amazon is refusing to let its warehouse workers in Staten Island who make $10 an hour unionize to secure a living wage and other benefits.
There is an assumption in your comment that all development is good that ignores the ways that it can exacerbate already unacceptable levels of inequality.
Poor, working and even middle class New Yorkers are being driven out of their neighborhoods and even out of the city in order to build more and more playgrounds for the rich and entitled. Some of us are sick of it and refused to be blackmailed one more time by a corporate bully that dangles promises of jobs before cities in order to dismantle the basic features of a fair society.
7
I am not an economist. I live in San Francisco and see what a tech boom can do to a city. If you are not part of it, you may still derive some of the trickle down benefits, but have to compete with those who are for the basics of life.
My doctor is 70 years old and easing into retirement and trying to find a GP to take over his practice. With medical school debt coupled with the high cost of living here, he can’t find a young doctor who wants to work here.
These are doctors who can’t afford to live here. I worry about where we will find good teachers to teach our next generation of children who can afford to live in the community without being married to someone with a hefty salary.
Not to mention what it has been doing to the art scene in the City. There is a lot of money, but also a lot of people on the edge of homelessness.
It may make for a vibrant economy, but in a lot of ways it seems like we are becoming a much less vibrant city
3
I know nothing about taxes and economics, but the thing that really bothered me about this deal was that part of it apparently involved taking a chunk of property on the East River (some of the most expensive and desirable real estate in the world) and using it as a heliport for Amazon executives to use as they whiz from one Amazon office to another.
Why couldn't they take the subway or bus like the rest of us? What, just too posh to sit side-by-side with us lowlifes on public transportation? Or, if it was that the current subway stations were all too far from the proposed site for the headquarters, then maybe Amazon could have used some of its massive wealth to build a new subway station? And, in the meantime, turn that East River real estate into a lovely park for inner city kids to play in?
Heliport, my left foot. How obscene.
16
I fully agree with this piece - well argued. Although the point of the game theory analysis is that non-cooperation is the strictly better choice. Cooperation only works as a long term strategy if it can be enforced, so the rational strategy could be to take the Amazon deal while simultaneously pushing hard for the kind of regional/national policy that David advocates.
3
Let’s do away with all corporate tax incentives. New York will have to stand on its own merits. Let’s see... higher wages, higher taxes, higher cost of living, new laws passed daily to make it harder to do business. Who will want to come to New York.
9
@AviasHigher taxes to develop public infrastructure. Higher taxes to handle weather disasters. No federal subsidies for water supplies.
2
@Avias Very true. California is doing the same thing, and companies are finding other places to go. Yet they stick with these policies, and then celebrate loss of business and residents. SMH
New Yorkers' rejection of Amazon is understandable, considering the immense wealth of the company and its CEO, and how unpalatable it is to give tax breaks to that ilk. But it also demonstrates a remarkable failure of leadership on the part of New York city's and state's politicians. They could have used the opportunity to negotiate with Amazon for the infrastructure improvements that the residents desperately need: a reliable public transit system, affordable housing, better services for people attempting to survive on minimum wage. Instead, they squandered what might have been a once-in-a-lifetime opportunity.
10
This morning's comments by Mayor de Blasio make it clear that the $3 billion in tax incentives was going to come out of the $25 billion in revenue Amazon was projected to earn for New York City.
If one is not a politician with a guaranteed paycheck for the term of office, the Amazon promise of a significant number of jobs carrying paycheck of $150,000 looked really good.
As a member of the legal profession, where the number of jobs has not grown in a decade, the availability of full-time, permanent jobs with a pay level that supports a family and pays off educational debt is the most important issue.
The legal profession is starved for jobs, and as someone on the outside looking in, I am amazed that there is such resistance to bringing those jobs to New York City. My lawyer colleagues, even graduates of the most elite law schools in the country, are often precariously employed, with nothing close to $150,000 in income, after several years of practice. Most of my colleagues would jump through hoops for the type of jobs that Amazon was promising in New York.
Ms. Ocasio-Cortez did not understand that the $3 billion cost of Amazon was going to come out of revenue Amazon generated. No revenue, no cost.
Huge mistake to have politicians who do not take the time to understand issues of major importance that they are taking a very public stand on. It is embarrassing for anyone who voted for Ms. Ocasio-Cortez, given the magnitude of her ignorance about the Amazon deal.
14
You are absolutely right that in the short term NYC has taken a big hit. But the author’s point is that the “race to the bottom” of all cities competing to offer subsidies impoverishes the nation as a whole. If you add up all the tax subsidies granted by cities and states across the US, that’s a massive transfer of wealth from cities to shareholders.
1
@spelgrift You nailed it. Massive fail.
The desecration of unions, the alchemy of shareholder value , the innovation of automation and the religion of efficiency have made jobs the scraps for which people and places must beg.
Unchecked capitalism demands surrender and a Stockholm Syndrome materializes which perpetuates a multi-generational cycle of pernicious dependence until some other place and some other people present a better a deal and they are abandoned to fend for themselves. Or not.
9
Thank you, Mr Leonhardt for a healthy dose of common sense about this egregious - but legal - form of corporate welfare.
Boeing scared the living daylights out of the State of Washington when it moved its corporate HQ to Illinois, and all Nike had to do was say that they were considering other states, and Oregon had an immediate, bow down to Nike special session. (Note that Washington and Oregon are not exactly red states...)
The Macarthur Genius Grants should pay some creative policy wonk a billion dollars to come up with the best anti-"state-shoppping" plan.
102
Excellent column.
I was always torn about this deal, whether the net benefit was good or bad for NY ( like stadiums which are never good for the host city if give aways are in the mix).
My gut feeling in the beginning off the process, was that NY should have not played on Amazon's terms and instead said - we offer ....NY. We really don't 'need ' them as much as they may need us if they are considering moving here ( still not sure why a warehouse type business should be in the heart of a city and not outside it - queens is not quite a suburb or a rural part of NY) and that the secretive nature of the negotiations, considering the Mayors history in dealing with real estate moguls and speculators is wanting to say the least. The abrupt cancellation by Amazon smells funny.
My guess is it was a Tony Soprano move to send the message to any other states. The message ?
Amazon : " we can cut you off at the knees, we can ruin politicians, and we can destroy your economy if we want. Pay or die!" Sounds like an old movie - but the unsaid speaks volumes.
9
What makes it so certain that Amazon would have provided 25,000 jobs? Isn't the tendency toward robots replacing humans?
If I remember correctly, back in the 1980s when a corporation (I think it was then American Express) wanted to build a huge building on Greenwich Street in Tribeca they promised 3,000 jobs, but the reality was a much lower figure, and the current occupant has projected that many of the existing jobs will be taken over by robots.
10
Great observation but if it helps—a significant part of the tax subsidy would not have kicked in unless those jobs were indeed created so at least on paper there were some teeth in the deal.
1
Let's hope this sets a precedent. Corporate welfare, socialism and hustle does a great injustice to taxpayers.. Did it occur to anyone to stipulate a large community center be built at Amazon's expense with a theater, music, dance, arts, baseball fields, basketball courts, day care be built in order to provide entertainment and education in the arts that schools can no longer provide due to budget cuts? A commitment by Amazon to present and future residents that myraids of employment opportunities outside the tech sector would be available through the community center but most importantly their personal lives would be enhanced. A neighborhood between the corporation and residents would exist.
9
@rhdelp
I really don't understand. Why would Amazon build theaters and stadiums? How about we just don't throw money at them in the form of tax breaks, and let them do what they do with their own money. Then if taxpayers want a theater, they can use their own money on that.
4
@rhdelp ilsomething like what you suggest did occur, and that’s another reason Amazon pulled out.
I agree. The right way to attract business is to invest in education and infrastructure. The San Francisco Bay Area seems to do fine without paying these bribes.
8
SF also paid these bribes to companies like Twitter. In the minds of many residents, this choice seriously altered the city for the worse. And it created a housing crisis throughout the region. So I'd say the Bay Area is a good example of my NY made the right call.
16
As is the case with most complex issues, there are always two sides to every story.
Supporters of Amazon's presence in Queens clearly saw the exorbitant price of tax breaks as a worthy expenditure in return for jobs. Opponents finally made enough noise in protest about governmental bribery, using taxpayer dollars, paid to large, wealthy corporations. Ultimately, they won the day.
Both sides, of course, are correct. Both, to a certain extent, involve principle and morality, the principle that more jobs are good for people, on the one hand, and the principle that bribery is simply wrong, on the other. There is no easy answer.
When all is said and done, however, bullying is bullying, whether by individuals, presidents or corporations. Public, taxpayer-funded subsidies paid to companies might be justifiable when they are in their early stages of growth, promising future benefits, and actually in need of them. That cannot be said for the likes of Amazon which has shown its true stripes in this sorry episode, and was finally and very publicly called out for what it is: a bully.
We should all regard this as a teaching moment. Lesson learned.
14
New York's economy doesn't have to be "slightly worse off because of Amazon's departure." The city and state could take the incentives they were piling on Amazon and use them to jumpstart infrastructure construction. Lots of jobs in that.
9
@Nan Markel NYC and New York weren’t giving away cash. They were offering tax breaks. Without Amazon coming to NYC, the money doesn’t exist. New York has a budget deficit, not a surplus. They have no additional money for infrastructure which is why they needed Amazon.
9
This must be the millionth comment I’ve read that says, “Let’s give the $3 billion to a worthier cause.”
There is no $3 billion laying around to spend anywhere else. It would have been deductions from Amazon’s owed taxes.
I really think some of these left-wing politicians pulled a fast one — most people don’t understand this tax concept, and the pols simply screamed, ‘They’re taking our money.’
6
@David G. You and John seem to have imagined what Nan said rather than read the text of the comment. You, David, even invented a quote for her/him to make a bad (and bad faith) point on their behalf so you could argue with it. Let me provide you an actual quote:
"The city and state could take the incentives they were piling on Amazon and use them to jumpstart infrastructure construction."
There it is. Incentives. Not a bundle of $3B in cash. And it's not a bad idea. If we can afford to forego that much tax money, we'd do well to spread those incentives out towards projects that will make the city more habitable for everyone, rather than create a new city for the richest man in the country to helipad to. [
Why should any city or state *need* to stand-up to Amazon? Because Republicans love big corporations over individual citizens' rights, and will never allow any breaking-up of companies with too much power (Amazon, Walmart, Facebook, etc.), even though breaking them up is the only to get some actual competition back in the market.
6
Didn’t NYC invite Amazon to come to the city then made them feel very unwelcome?
11
@John The governor and mayor made a secret deal with Amazon and then presented it to the public as a done deal. Once the people found out about the deal, they rejected it.
@John They mayor and governor invited them without asking anyone else what they thought. Apparently, NY is not of a hive mind.
"Enough New Yorkers raised enough of a ruckus about the nearly $3 billion in tax breaks that the city and state were bestowing on Amazon that Amazon finally had enough. "
But is it not true that Amazon would have generated some 30 billion in tax revenue while receiving 3 billion in tax breaks?
The story about the cupcakes is charming but is there ANY employer who offered to employ ALL New Yorkers? So what is the point? I personally was not expecting to work for Amazon and as for buying things through them, I have already been doing it without any New York deal.
What I would like to see from you David, is analysis of the plus and minuses. What I am getting instead is a fairy tale in lieu of analysis. But hey, fairy tales work in a country of mostly uneducated people!
17
They offered to bring $30 billion per yr in employee income. Who knows how long it would take to pay back the tax subsidy.
1
@Ludwig Taxes are something that should correlate to activity in the city. Every footprint on the sidewalk brings that sidewalk closer to repair. Every rider on the subway increases demand for service. Pointing out that Amazon would eventually (specifically after the first ten years, during which they would have paid zero taxes) generate money for the city doesn't do anything for all the expenses incurred as a result of a massive new mini-city appearing overnight.
So you seem to think that the $3B in incentives were worth it since they would eventually, over another decade+ past the free one, being in more tax revenue. Would you be willing to apply this more broadly? NY brought in $71B in income tax dollars from 2016-2017. If residents start threatening to leave, wouldn't the philosophy apply? Give them a tax break for ten years, and then eventually, we will start seeing $71B per year?
Or is this only applicable when you're a massive company that is the last entity in the world that is in need of a financial break in order to make its money?
@DataCrusader "So you seem to think that the $3B in incentives were worth it "
Actually I did NOT say that. I do NOT know what I feel about the Amazon deal or non-deal as it turned out to be. And yes, I did mention the plusses, but the pluases as well as the minuses are part of a full analysis.
My hunch is that the plusses would have outweighed the minusses, but it is only a hunch.
What I said was that I would have liked to see an analysis instead of a fairy tale about cupcakes.
1
If Governor and Mayor had told AMZN that they would limit government support to traditional state responsibilities like transportation and other infrastructure needs and then have provided effective leadership in selling the project to local politicians and the public, Queens might still have gotten HQ2, but on politically acceptable terms. Unfortunately, NY is led by a couple of pretty mediocre fellows.
5
@Steve, maybe this isn't what you intended, but the current interpretation of "traditional" public responsibilities in city after city and state after state do NOT include the costs of road improvements and other infrastructure that is attributable to the development in question.
The only problem with the way those costs are being divided between public and private now is the very narrow interpretation of what constitutes private costs that should be attributed to the developer. Of course those interpretations are the narrowest in GOP-controlled states -- another way Republicans are shafting the average citizen.
"Silly anti-capitalist rhetoric"?
Far right is always welcome on this page. Center-right is dandy. Neo-liberal -- delightful in every respect.
But skepticism about American capitalism, in a country with a 21% child poverty rate? And with about half of all workers earning too little to meet the threshold to pay Federal income tax?
Never!
11
@jrd, it appears that every piece in the NYT has to include at least one severe dig at a progressive position, even if the author has to build an impressive and most times completely ridiculous strawman to justify the criticism.
Yes, NY just did a big favor to all the other states. Because NY will move WAY down the list the next time corporations go looking for a home.
8
@Jeff W Awesome. Have fun competing with everyone else to offer the biggest tax incentives to the company that payed $0 in taxes in 2018. Perhaps they can call their next HQ "Thunderdome."
Mr. David Leonhardt should look into the subsidies and tax breaks given to real estate developers under the various programs allowed to flourish in NYC for decades. $ 3 billion is a drop in the bucket compare to J-51, 10-year tax abatements, selling land for $ 500 per dwelling unit, Mitchell Lama financing. Those tax breaks allowed NYC to build new housing which would not have been possible without those incentives. Today, those first costs (tax abatements) have run out on thousands of properties and represent the backbone of NYC finances while socialist policies like rent controls brought the city to its knees and bankruptcy in the 70s because thousands of buildings couldn't pay taxes when only collecting rents frozen in 1945 dollars.
Let's see Mr. Leonhardt's economic calculations proving that "standing up to Amazon" was a net gain for NY. My calculations show the opposite. Nay sayers never do the math (opportunity cost analysis). Sour grapes for NY is a sweet victory for Amazon shareholders. Thank you NYC.
9
According to SubsidyTracker.com, Amazon has received a total of $1,519,969,183 in subsidies from state and local governments since 1996. Jeff Bezos - founder, president, chief executive officer and chairman of the board of Amazon - has a personal net worth of $133 billion. According to Amazon’s fourth-quarter 2018 financial report, the company’s Net sales increased 31% to $232.9 billion, compared with $177.9 billion in 2017; and its net income increased to $10.1 billion, compared with net income of $3.0 billion in 2017.
There is something very wrong with this picture.
10
@Linda Billings so, the subsidies are now paying dividends to the cities that offered them, as Amazon brought jobs, and now, income to be taxed. And it only cost cities $1.5B. You’re right - Amazon got the short end of the.... oh, wait.
1
And Amazon’s tax bill for 2018?
ZERO.
It's funny, no one is talking up a boycott of Amazon. Where are the calls for people to cancel their Prime memberships?
Boycotts don't work and people are addicted to ordering toilet paper at at work and having it delivered before they get home.
1
@Mike Clarke You just answered your own question. A boycott of Amazon at this juncture is futile. Community activism can help protect you from an abusive deal made in a backroom though.
We should all be clear that NY did not stand up to Amazon. NY played the standard game of groveling for corporate overlords and offered a $3billion bribe. There were, as always, a few dissenters who objected but who had no chance of stopping the deal. Then Amazon cracked the whip and said that without complete and unquestioning subservience, we will take our ball and go home.
10
The analogy is superficial and wrong. To start with, the amazon negotiations were between consenting “adults”—the power imbalance you describe just isn’t there. Amazon wasn’t bullying cities, it was negotiating with them at arms length, and the cities were doing the same. You might disagree with the city’s negotiating position, but it wasn’t being bullied.
Second, in your analogy, what’s the alternative? There simply aren’t enough cupcakes for all, and even if “bullying” isn’t used as a means of distribution, some other means will be used that inevitably will be regarded as “unfair.” The implicit assumption in your analogy is the classic liberal fallacy—that we need only wish and imagine enough cupcakes for all for it to be so.
14
@Jake
Good points.
I would say Amazon is abusing its power, because smaller companies do not have the muscle to negotiate in the same way. Only businesses of Amazon's size can demand free stuff in exchange for providing jobs that they were doing to create anyway, because its already in their interest. That would suggest that the victims are not the people of the city offering the tax breaks, but rather Amazon's competitors, and people living in other locations who might have benefited from a shot at living near Amazon's new HQ, had NYC not offered their deal. Whether NYC residents would have benefited from the deal is a purely economic question, and I don't see a reason to doubt that in the good faith analysis of the plans proponents, they would have.
Federal legislation is desperately needed to stop this practice of playing communities against each other for tax breaks; tax breaks even when the business doesn't need help and they're turning a profit ...and Bezos is only the richest man in the world -- and most shameless. What happened when the Cleveland Clinic got a tax Exemption ...retroactive was my city turned right around and floated a huge property tax levy. They call themselves non profit but all that is is a "pay yourself first" strategy then afterwards it looks like you're struggling. Republicans and their investment class handlers never stop scheming for ways to enrich themselves. We've known it but are powerless.
3
Just one point here! Many commenters have bemoaned the fact that big rich Amazon paid no federal taxes. Did they do something illegal? No!! Did they take advantage of all legal deductions provided for by law like you and I do when doing our taxes every year? Yes!!
I agree that there is “something wrong” with huge corporations paying no taxes. But don’t blame them for taking advantage of what the law allows, just like you and I do. Blame our illustrious people in Congress who write and oversee our tax laws! They were quick to pass Trump’s SALT limitation of $10K. They could fix the tax laws in other areas just as quickly if most of them weren’t bought and paid for, or didn’t fear get clobbered at the next election by tax payers big and small!
So blame Congress for keeping bad tax law. Not the corporations and individuals “big and small” for taking advantage of what is absolutely legal. If Congress wanted to fix it, they could do so in less than a week!
11
Absurd to link “tragedy of the commons” to an extended article on an unrelated matter. There are more consisce definitions that are more easily understood.
1
Yay! Got rid of careers and development. Way to go! Queens has so many other options for growth and prosperity. (Sarcasm).
8
Stop it already with the myth that an Amazon headquarters would have helped ordinary New Yorkers economically. Those jobs would've gone to new arrivals in New York City whould would've pushed out long-time Long Island City residents. The idea that anyone now living in Long Island City who doesn't already have a job in this economy would've gotten one at Amazon headquarters, of all places, is ridiculous.
Ask Wisconsin how all those tax breaks given to Foxconn helped ordinary Wisconsinites out!
6
Neoliberalist capitalism is a race to the bottom where only the Billionaire Class wins.
2
Anyone notice that Amazon isn’t saying where the third “headquarters” will now be located?
Or if it will now be built at all, anywhere?
Maybe the biggest reason for NY losing Amazon was Amazon nixing the 3rd headquarters altogether.
NY will never know, because it and every other city was always in the dark and Amazon has every reason to let us believe that a harsh word or two toward it will cost 25,000 jobs.
1
Thanks for a great column Mr. Leonhardt. It's about time someone pointed out the inequities of such corporate give-aways.
Corporations have gotten free labor from all of us. Amazon and other retailers get us to put in our own orders instead of hiring someone to take them. Gas stations get us to fill our own tanks. Banks get us to use debit cards. Now Uber and Lyft get employees to use their own vehicles and insurance. Independent contractors (hah) use their own computers, houses, etc. And no, they don't get paid extra for it. Furniture companies get us to put together our furniture. Grocery stores get us to check ourselves out.
I am sure accountants have calculated how much all those free minutes of free labor would cost if employees did it instead of us. Maybe someone should figure out how much our labor subsidizes these corporations. Call it the new micro-slavery - work for nothing. And if you think prices are lower because you fill out the order form, I have a bridge to sell you - after you build it yourself, of course.
1
What’s overlooked here is that the N.Y. socialists never had any intention of living up to their end of the deal. Their plan was to lure Amazon to NY and then tax, tax, tax and regulate Amazon into bankruptcy.
4
It was foolish of the NY politicians to give Amazon a hard time. The entire area would have been revitalized. There would have been plenty of opportunity for local business. Instead they are told there will be resistance. Blame to socialist Democrats for not understanding economics.. What a tragedy for NYC.
5
Yes. Thanks for speaking my mind.
Next, dump all the real estate breaks for privately developed condos. All they do is cut real estate tax receipts and increase the price the developer gets for the apartment. It is a transfer of money from the taxpayer to the luxury apartment developer.
Do it now, make it effective immediately.
2
Amazon deserves every unkind word written against it for its circus like manipulation of America's communities, who are also its consumers. Its brand will pay a price for squeezing cities for every dollar, as if they were not communities but for-profit corporations supplying Amazon with spare parts.
2
Forget Queens, Amazon has already taken over New York City. Just look at the empty storefronts growing like a cancer on every block as you dodge the mounds of Amazon Prime boxes thrown out with the recycling.
We get the city we deserve.
2
Apparently so-called ‘progressives’ like Ms. Alexandria Ocasio-Cortez would rather their constituents be on welfare than working a living-wage, non-union job.
7
You're wrong. Amazon's departure will not hurt the city's economy at all. You give Amazon too much clout, maybe in other desperate, small cities but not New York, it's just too diverse and is flourishing and will be for a long time. Regarding the bad ecomonic policy, and tax laws; they've been written by the lobbyists hired by outfitts like Amazon and rubber stamped by Trump and the Repubicans. Why people worship these tax cheats, middle income and poor people destroyers, I haven't a clue. Maybe it's those traitor-Centrist Democrats(Republicans in disgiuse) that have benefitted from their investment over the years and don't want to see their "Golden goose" get cooked.
1
Jobs, tax revenue and opportunities are limited in reality. Your analysis and comparing them to cupcakes is laughable.
3
Out whole system works like this. Isn’t very democratic, is it?
I wonder what tax breaks other corporations get in NYC?
JPMorgan Chase & Co
Citi
ABM Industries
Pfizer
Carl Icahn
Philip Morris International
Omnicom Group
PwC
Don't blame Amazon and don't be naive. Every big company gets a "side deal" in capitalism today.
3
Absolutely amazing how NY’ers demand that they be allowed to deduct their high local taxes on their federal tax return (the federal government and all Americans thereby subsidize high N.Y. taxes) but scream bloody murder if Amazon gets a break on their taxes for creating 25,000 jobs
7
Captain Furillo on a long-ago Hill Street Blues:
"This is a short-term job."
So with almost all other politicians.
How about a deal where those 25,000 New Yorkers move to Indianapolis, get those jobs, and maybe unwind a bit?
The socialists again demonstrate that they have no idea how the economy works. Money and investment go to where they earn the highest returns. Always have, always will. Always.
3
Seriously. All New York did was promise Amazon a 10% tax break in the future. Talk about looking a gift horse in the mouth.
5
Why not give the richest people in the world billions in tax breaks and incentives? Don't stop there: Bring back slavery, but this time for everyone. Don't want to be free? Sign write here and become a slave. But there's more! Bathing in the blood of infants might prolong life, and our new overlords deserve the best! And then there won't be Junior's pesky college fund to worry about. And speaking of colleges, they could easily be converted into centers of worship after we deify the ultrawealthy. A ziggurat or two, and you're good. Best of all, having read the other comments, places like Virginia and Texas seem cool with all this.
New York did not promise to give away $3 billion, it agreed to take $3 billion less in taxes. In opposing this deal, they walked away from $27 billion in taxes over the next 10 years plus all the increased taxes that 25,000 well paid employees would have paid to the City and State.
Now the city will get nothing and will establish its reputation as an unfriendly place to set up a business. Truly a very dumb move by some very self destructive politicians and activists.
9
I wished I could throw Amazon out of Seattle—until they pay their warehouse workers decently and treat them decently. And, the poor, poor Bezos. The Seattle Spineless City council caved on charging them a head tax for the homeless. It would have been very injurious for the 135 billion Bezos to pay ten or twelve million...very injurious.
3
A major priority for the Democratic Congress and Democratic President after the 2020 elections, must be the passing of legislation eliminating "handouts that cities and states have been strong-armed into giving to corporations !
The days of billion dollar corporations, paying little or no taxes must end! The legislation must also include a minimum tax on large corporations and the rich ! It is time for Americans to take back our country from the wealthy and big business !
3
The lack of commitment to precise language in this paper is often concerning. Referring to tax relief incentives as handouts is more than a little misleading. I can assume most people understand NYC would not be actively giving away money, but the piece certainly reads in that way.
7
This also applies to the handouts given to sports teams! Cities build new stadiums and arenas or give tax incentives to lure teams away from other cities or to keep them from moving to another city. One city benefits at the expense of another city. But, the real beneficiaries are the team owners at the expense of taxpayers.
2
It has been generally overlooked that this was a logistics decision for Amazon and many variables entered their decisions. They selected the locations primarily because the logistics analysis lead them to that conclusion. After that, they tried to extort money from the states and the cities on their list for a decision already made.
If I were a "person of means" and offered Amazon $3 billion to locate their HQ or other warehousing facilities in a remote town do you ever think they would go there? Absolutely not!
That's why I call their behavior what it is: Extortion!
4
I suspect New York did some other city a favor by turning down 25,000 high-paying tech jobs, a $4 billion payroll and $27 billion in future taxes. Sure gentrification causes housing problems in many cities, San Francisco and Seattle among the more glaring examples, and rich corporations should not get tax breaks that poor American's don't. But it's not Amazon's fault for seeking the best deal it can get, and the math favored New York.
8
One thing we've learned here in Connecticut is that if you offer a Corporation a taxpayer-financed feast to attract them to your table, they will stay until the food is gone and then chase the next dinner invitation right out of state. The businesses that come and stay, are the ones we persuaded to invest in our human capital. We can't offer a cheap cost of living, cheap housing, or super low taxes. But we have livable communities and human capital in abundance at all levels from world-class university-level to first-rate industrial workers. You need to compete on what you have, not what you will give away. And NYC has more than almost anywhere else to offer.
6
Thank you. I like your concept. Municipalities and states should invest in their human capital, teaching them to fish, instead of chasing companies to get fish scraps. (Awkward analogy, I admit). But all too often, helping people with training, medical care, and housing is seen as a handout, while tax breaks for billionaires aren't.
2500 jobs a year over a ten-year period, not all for locals, hardly seems worth $3B in tax relief for the richest man on Earth.
I'm so happy to read this editorial. I was disturbed to see the pullout celebrated as a victory. It wasn't. We in New York were hurt by Amazon's decision. But I was even more disturbed to see how many people began to defend corporate welfare and corporate greed as if it was how our system was meant to work. It may be a given that corporations are self interested, but it's not a given that we the people must give in to them.
4
The federal government could prohibit the practice. The constitution forbids the states from interfering in interstate commerce and grants congress authority to regulate it. What are enticements corporations to relocate across state lines if not interstate commerce?
A federal statute that prohibits tax and regulatory incentives would end the beggar-thy-neighbor competition that everyone — economists, politicians, and voters — understand is overall harmful. It’s a zero-sum game that, as David says correctly, has the effect of increasing income inequality: by reducing corporate taxes, the tax burden is shifted onto everyone else.
Vote for universal healthcare. The congress that passes that law will address climate change and corporate power, and a host of other long-simmering problems, thus among them.
6
It’s worth considering what the future might look like for Amazon. The retail industry changes rapidly. How long before Amazon become the digital twin of the failing retail mall? Can they stay relevant?
I already see big problems with fake reviews and certainly their shipping and delivery system does not fit into anyone’s idea of a green economy. And of course, their CEO has made some questionable decisions lately. I guess we shall see.
4
Call me cynical but it seems to me when Amazon really, really wants something they get it. So, did they really, really want Queens?
I was surprised that NYC was inviting them at all, since I've heard that pay at Amazon is low.
Did anyone granting these breaks ask Amazon if it was going to pay all 25,000 employees a wage sufficient to meet their expenses in the city?
Yes, NYC's minimum wage is higher than most places, but the price of housing is off the charts. I hate the idea of a company getting all these benefits in exchange for jobs that only put another 25,000 people under severe financial strain.
1
@Tokyo Tea
I may be mistaken, but I think Amazon proposed some kind of regional headquarters for Queens, so likely above minimum wage jobs. But that does not change the discussion about subsidies, either way.
1
There were guarantees made regarding salaries so that probably would not have been an issue. It would likely have been a benefit for Queens. The issue for many liberals is that it was another example of political extortion: Give me $8B in tax incentives and you can brag about creating jobs. Cities should stop submitting to to political extortion.
1
The progressives in NYC have decided that they don’t need jobs here.Our social service and welfare state will be funded by tax increases on wealthy people.It might work out for a few years but is totally non sustainable over time.
11
@Michael. The rich are fleeing NY in droves. Soon there’ll be no taxpayers left in NY
2
You need to decide upon a vision for the city. If you concentrate people in high-rise apartments, you need to concentrate jobs. The sprawling bodega, push-cart, open air market economy is inadequate. Companies that are mature enough to offer a large concentration of jobs with a wide range of wage levels, don't grow on trees. Amazon offered a unique economic opportunity.
Also, much is being made of the tax discounts offered as part of the "beauty contest". It is highly doubtful they made a difference over other considerations such as present and future transportation infrastructure or housing availability. These are quality of life considerations for worker satisfaction. Equally important is the potential labor pool. To make self-funding incentives a rallying cry for rejection missed the boat by a large margin.
1
This is another of the many reasons we need corporate reform. Corporations were originally formed for public purposes, not primarily for private gains. They were given limited legal liability to encourage investment in things that were considered to be beneficial to all. Over time courts have changed corporations into super-individuals which have no responsibilities other than to make money. There should be more public control over corporations - other countries have done this.
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@skeptonomist let me count the lies! The only purpose of any business has always been to maximize investor profit. The situation you describe never existed. Never. There is public control over corporations- the stock holders. The stockholders own Amazon, GM, Anheuser-Busch, etc.
6
I decided to NOT relocate in retirement to Southeast Wisconsin because of the Foxconn announcement when I was searching the Midwest for my new nest nearly 2 years ago.
I have relatives there.
Beware of Trojan Horse and fake promises.
5
Here in Austin, many of us were relieved that it "lost" the HQ2 auction. Adding 25k Amazon jobs would have blown up pricing on our housing market, further stressed our infrastructure and brought in thousands more people we simply don't need. Our city is enjoying rapid growth as is - why would we want to accelerate that while giving massive tax breaks to a huge corporation which plays zero income tax? Amazon's record in Seattle shows it is a poor corporate partner, as well; instead of embracing its role as major hometown corp leader, it recently threatened to stop additional growth there if it's taxes went up to help address the cost of living crisis it very much helped create. Let it go ruin the character of some other locale happy to pay for the privilege. NYC did the right thing.
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Mr. Leonhardt should do a a follow-up column in five years that compares/contrasts the economic fortunes of the Queens area with that of the metro area finally selected by Amazon. Of course corporate welfare is repulsive but it is a game being played all across the country and no federal government will stop it. So while many in New York are rejoicing today, let's see how they feel in 2024.
11
Yes but, NYC doesn’t need the growth like other cities do. Honestly looking at it in the perspective of what’s best for America, probably a selection of a smaller city in the middle of America would have been better.
@Tom Qi not very funny
The opposition to Amazon, a loud but admittedly small movement was a voice against government becoming the handmaiden of corporations, not people.
The preamble to our constitution says that we formed this "more perfect union" to "promote the general welfare," not the corporate welfare. Yet this pronouncement is largely ignored.
Over the last thirty years we have seen an onslaught of privatization, all in the name of efficiency and cost savings. What we haven't seen is any real evidence that those goals were ever really met.
Despite that, billions have been transferred from the public sector into private hands. But eighty-five percent of the stock in those 'private companies' is owned by 1% of the population. And even that's not enough.
As corporate power has increased our political officials have literally 'followed the money' knowing that fat campaign checks would emerge from each privatization deal.
While the Amazon deal wasn't privatization in a formal sense, it was corporate power being exercised on steroids.
Amazon didn't pull out because of thin skin. They abandoned this project because even though in the long run they would have prevailed, in the process they would have also been exposed.
And thankfully, among many, there is an awakening that reclaiming the 'general welfare' role of government is the next struggle for the very soul of what remains of our democracy.
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@Drspock the general welfare is served by kicking 25,000 jobs out of NYC?
1
100% correct. The playing field is way off. There needs to be laws protecting the tax payers money from these ruthless greedy corporations. But the short term gain of the republicans win out every time. No doubt due to corporate lobbyist. Vote out the republicans and maybe just maybe decency and fairness will return.
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The arguments against Amazon don't add up. The $3 billion in tax credits were non-cash items, whereas the nearly $4 billion payroll Amazon would have paid would generate $4-$500 million in income and sales taxes, real cash for the purported goals of the opposition, to support housing, education and transit. And there is an immeasurable loss of not attracting the kinds of people who go on to create startups, the way such cultures have built up in San Francisco and Seattle. How many jobs and how much energy have we lost by losing them? And all those people in turn create economic activity for others. A terrible loss for the City, shortsighted and deeply harmful.
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@Robert
The $3B is a real loss. If Amazon got the deal they would pay $3B less than their competitors, given them an unfair advantage. It makes it even harder for those startups to compete when Amazon is paying less to do similar business.
@Robert
This is not a response to the column. Do you have anything to say about its arguments?
Sorry, Mr. Leonhardt. Although broad legislation may do something to address this problem, New York City’s rejection of Amazon will have approximately zero impact. Left to their own devices, there will be plenty of other cities willing to play this game. The argument is similar to environmental regulations: The decision of one moderate sized chemical company to impose on themselves strict regulations at a competitive disadvantage will do essentially nothing to improve the environment, although it may cause that company to eventually perish. Well-considered federal regulations that affect all businesses evenhandedly, on the other hand, can have a major positive impact. A more challenging issue in this case is what rights the federal government maintains to regulate agreements of the sort.
4
This was Amazon's loss. Without the infrastructure, labor pool, skills and attractiveness of our largest city they will be hamstrung and at a disadvantage for a future competitor wgich is great for consumers and workers. They may think they can transform and reasonably sized city into their tech utopia to maintain their commercial dominance but they're wrong and over-confident. Thank you, NYC, for the win against this future virtual monopoly.
5
So you say, but Amazon decided nonetheless. Who studied the numbers, you or them? If the incentives didn’t matter, they wouldn’t be on offer.
From Amazon’s perspective, many locations are roughly equal. They could be in Boston or Pittsburgh or Atlanta or Minneapolis or Piscataway. IBM learned years ago that being a big fish in a small pond has its advantages. Amazon might be smart to open their office in Stamford or Armonk.
Whether the Amazon deal was corporate welfare is an interesting academic debate. But the fact is, NYC just lost 25,000 jobs for their citizens and a boat-load of new revenue from income and business taxes---along with the multiplying effect to local business activities. Memories are short. In the 70's and 80's NYC had the same indifference to economic development. Places like Virginia and other Sunbelt states got rich while NYC was left in near bankruptcy. The South learned that jobs are real and tangible for the local economy and better lives for individuals. For NYC it seems like back to the future.
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@Phil
So you think there's nothing "real and tangible" about the race to the bottom and galloping inequality that the author discusses?
The South beggared its Northern neighbors, and now how many of those companies, after wringing profits from low cost nonunionized workers, left for Asia for even cheaper labor?
And let us not forget the way that Amazon conducted the beauty contest by demanding complete and full access to all planning data from the 200 competing metros to add to their database in order to gain a competitive advantage over their rivals. The fact is, Amazon was only seriously considering a few areas for its second headquarters and the far-reaching data requests around the country were nothing more than a modern-day big data grab in an era when information is king.
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Mr. Leonhardt is right that corporate welfare is not good public policy. We also might agree that the market should prevail on questions like this. Amazon is prevailing in the product selection/review, buying,and delivery markets, which is beyond notable. It's a huge success.
Amazon'a decision on NYC is its own decision, as big as Amazon is at present. That is a good thing in a freee country, though I do not share the politics of Mr. Bezos. Meanwhile, commercial competitors can take Amazon down if they hhave better plans. Maybe even someone from Queens. But, right now, Amazon is the winner, and Queens is the loser.
1
This is right and the current dispensation favors the large rich cities. They have much more to give. Also there are downsides. All these people have or likely will have children and this puts demand on health and especially education resources.
Lastly, Amazon is a monopolist, earns economic rents and uses such to leverage its interests against "The Commons" and The Government. This is not free market capitalism and we need a major rethink of our anti trust laws and its current post Bork interpretation.
6
Amazon started in a garage selling cheap books and now generates more jobs and cheaper consumer goods than ever imagined.
It's actually perfect capitalism and anyone with a 401K, an IRA, personally directed savings --- is an owner. So, sell your holdings.
2
Although the principle might be right - that communities (cities / States ) should not provide special benefits to multi-national, multi-billion companies as a lure to incentivize those companies to set up shop, the use of financial incentives is not an example of the Tragedy of the Commons, the Amazon deal wasn't an example of "short-term" thinking, and if anything it just brings the competition in to the open, allowing voters to hold their representatives accountable if they do not like the deals handed out.
The fact is, communities compete for business all the time. They invest in infrastructure (presumably providing broad benefits to the community at large), adjust business, property and income taxes, make changes to local regulations.
And while it is easy for someone with a job to dismiss the economic impact of 25,000 high-paying jobs in an economy as large as New York's (although I doubt the local merchants would be as dismissive), would it be as easy to dismiss the economic impact if the offer had been made and accepted by a community less vibrant economy -- where more jobs have left than been created or where the housing market has struggled?
I wonder if the better analogy is baseball -- a sport in which all the best players end up on one of 4 or 5 teams. Just to sure if that is what the tax incentives for businesses prevent or create.
1
As much as I supported Amazon coming into NYC, and my borough, DL is 100% correct. Let megacorps pay their own way. That said, unless it’s across-the-board, coast-to-coast, some other place in America will offer obscene subsidies and land the big fish.
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Thanks for your article!!! Proud of New City for standing up to Amazon!
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When a minority of the population rules over the wishes of the majority of the population, it is not a good thing. See recent Presidential elections. Tax abatements are bad policy, but a fact of life, and not illegal. New York doesn't need them as much because they own the geographic prime real estate. But don't be so smug, you have infrastructure problems that would have benefited from an extraordinarily well organized business with a large stake in successful their upgrades. If they are not implemented you could eventually repeat the stagnation of the 70s. Tactically, if you want to nitpick, wait until the big fish is in the boat. Maybe they should be unionized, but that won't happen if they are not residents. On this one New York lost, the rest of the country gained.
5
@Tom Cinoman The Minority of the population as you put it did not rule over anyone or anything. Amazon walked out on negotiations with the city - not the people. If they were willing to give up so easily, do you really think that they would have been a benefit to New Yorkers? Amazon doesn't even pay taxes. Google came to NYC without asking for any handouts, why couldn't Amazon do the same?
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@Rescue2
The elected officials made a deal the majority supported. Not saying it was perfect. Google so far is going for a smaller footprint and lower profile. You will still get some Amazon. Your perfect is the enemy of the good.
1
Missing in almost all of these discussions is that the 25,000 jobs brought to NY are not created jobs, they are redistributed jobs.
Amazon is taking jobs from brick and mortar businesses, and seems to be reducing the net number of retail jobs in the country in the process.
And they are able to do so, in part, by skirting taxes. First by skirting ordinary state and local retail taxes; second by playing cities off each other to get tax breaks on their "headquarters" that no small retailer could ever negotiate.
New Yorkers should realize this. Ask yourselves: Do you want to be party to another move where the result is that net income from the retail pie goes mostly to a small percentage of people at the top, while the net benefits for people on the bottom are in fact worse?
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That is just plain wrong --- it's a company that has been growing by leaps and bounds. Where did those numbers come from?
1
As Boston has seen with GE, what is promised by Corporations most times do not pan out. GE just reduced the size of their work force from the projected thousands to 250 people, reduced the size of their building to just enough to house 250 workers, not the grand development that was proposed, hence the tax incentives. However, the State of Massachusetts and the City of Boston did put in a saving grace clause, meaning that GE will no longer be incentivized by Corporate Giveaways from the City and State.
Amazon did what Corporations often do, change their minds.
For once, politicians did the right thing. Maybe other major Corporations will stop expecting huge tax incentives will realize that maybe eating at the trough of the taxpayers is going the way of the dodo bird. Extinct.
If all States hung together and refused tax incentives to Corporations, then the Corporate Welfare would end.
This would not stop companies from expanding. If they need to expand they will. The need to expand does not go away, if the market demands it.
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Yes! You have spoken well. Thank you for your support. In our time too many people who run powerful companies can undo the spirit of America. How rich is enough? Is there ever enough? How many poor people will we need to see in our streets. How many is too many? How many dollars? How many people?
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@Willy P. You are never going to have anything now but economic decline. There are too many municipalities in the US that understand business and companies will go elsewhere. Companies have shareholders who invest to make a profit, not to fund Socialist programs in areas with high taxes. No tax breaks in NY means you can't compete and will just fade away.
2
Let's see -- Amazon started a shade over 20 years ago and has over 600,000 employees with numerous cottage industries attached --- small businesses that can now more easily sell goods.
Lower prices for everyone too, which translates to lower inflation and lower interest rates given their size.
Seems like an envious model
4
Mr. Leonhardt, I understand your "Thank you".
When news that Amazon was looking for candidate cities to build their facility and I heard Boston was on the list, a town I grew up in, and two of my children reside I cringed.
My concern had nothing to do with hurting local retailers because e-commerce entered the picture a long time ago. The attraction is the acquisition of jobs but, you never 'get something for nothing.'
Such an influx of people that include spouses and children directly affect housing costs, traffic, infrastructure, and they all use city resources like public schools. All of which would need significantly more funding.
New York should be doing a victory dance.
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How about a 1 week nation-wide boycott of Amazon just to show ourselves we can do it and just to see what would happen. Who or how could be set-up such a luscious idea?
3
@Philip Currier I think I’ll double my Amazon purchases
Has France ever developed a company such as Apple, Microsoft, Amazon, Genentech etc etc --- has any other country ?
No
apparently the SALT federal deduction for state and local taxes is the one subsidy NY’ers love
5
How much do those Amazon jobs pay? I would think to live modestly in the "Big Apple" one would need upwards of $100,000 per year. That's what it cost here in Oklahoma to have a house, a nice house, two cars, two kids, 2 holidays, and a vacation.
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@dbl06 The average would have been $150,000.
@Sean Scully Then this wasn't a distribution center? Packing and shipping wouldn't pay that much would it?
This is one of the most important opinion pieces this paper has ever run. The last generation has experienced a devastating lack of respect for government, which includes the notion that government should give away the store to keep a store. I have always wondered why such corporate welfare isn’t directly tied to jobs. Why don’t they give these companies an incentive by offering to pay some of their payroll tax, or directly provide infrastructure? Blanket handouts are very bad policy.
At the same time, we shouldn’t be criticizing government as much as we do. It has led us to having a President who has no respect or even understanding for public policy-making. One of our political parties is constantly trying to make government better. The other one criticizes it, and, when elected, makes the notion that it doesn’t work a reality.
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@K. Corbin
With all due respect, I suggest you are misinformed. This was not a "blanket handout." It was a proposed relief from future real estate and other taxes. Therefore, inasmuch as the real estate they were going to build, and the income taxes they were going to pay to the city, just ain't there now, the city and state were giving away no cash out of pocket. But we did lose some $27B in future taxes, thousands of jobs, huge increases in unionized construction, etc. This is a city where the subways are crumbling and taxes are climbing. One can argue that this was a sacrifice for principle, but I think a poor decision by those who opposed the deal.
5
@martyL. There should be a direct connection between these subsidies and jobs. It’s not enough to give real estate tax credits.
"They do nothing to lift the country’s economic growth — to create more cupcakes, as it were." If that were true, why would places like Tennessee value the relocation of Japanese car companies to their states? Or the reverse: when companies leave an area as is no evident in places like Buffalo, Memphis, Detroit, and Gary, Indiana which look like ghost towns compared to their former wealth. You're saying that Detroit hasn't been turned into a shell by the gradual disappearance of its once thriving car industry? You're saying if, say, Toyota were to build a new factory in Detroit employing 50, 000 that it would make no difference to that community's economic health? It should be rejected because they want tax incentives or infrastructure investment from the state government? This sounds like voodoo economics to me. The principals you speak of are the principals of unemployment and decay widely practiced by dying cities that drove out industry. It's the same principal that turned Venezuela into a mere shadow of its once thriving self, a once wealthy, vibrant country stripped of businesses and replaced by starving masses desperate for unavailable medical aid and food. We can do that, too, and you might put your name forward as that utopia's economic advisor.
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@David
You're making the author's point: that these are beggar-thy-neighbor policies. He's saying they do nothing to promote aggregate economic growth.
@David
Detroit played the game, the gave tax breaks and incentives to the big 3 at the cost of educating citizens, building infrastructure and encouraging other businesses. The auto companies left anyway. Tax money should be spent on people and creating a level welcoming playing field for all business.
Cities, like individuals, do what they feel is in their best interest in a fair market - that is the principle upon which we all prosper. It is not just "Amazon's big share holders" that would have benefited - it would be the small shareholders as well....and the people in Queens. Why all the resentment for the wealthy distributing their wealth in a fair market rather than by governmental force? The latter only leaves less wealth and opportunity for the working poor.
6
@Chris
Read almost any classical or neo-classical source on what a "fair" (or free, for that matter) market entails and you'll find that it is crucial that government agencies not play favorites. That's what these policies do. Economists have been warning about this kind of mixing of public and private policy since Adam Smith.
@John Thank you for that reminder John. You are right. Government agencies colluding with large businesses often prohibit entry-level opportunity for the little guy. They typically do this through regulation and employee hurdles only the wealthy companies can afford. The rest of us go out of business or never start. Big influential government is the well-spring of corruption and a huge source of an increasing wealth disparity as it makes it harder and harder for everyday people to break in to the market.
Difficult issue with salient arguments on both sides, and a cogent argument in regard to principle made here by Leonhardt. I'm afraid the auctions will continue. Those who argue that the 25,000 jobs are more important than principled concerns aren't totally gone mad. I have two questions, and maybe Leonhardt can compile the research and follow up with a discussion. How many jobs has Amazon cost NY and the country with the elimination of so many retail concerns? And are cities actually reaping the tax revenues as estimated?
3
New York gives 600 million PER YEAR to movie studios in tax breaks. Over the years, the amount offered to Amazon is trivial in comparison.
I find it offensive when people with jobs themselves, who will never themselves provide other people with jobs, call this a victory for "principles."
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@Dan
"New York gives 600 million PER YEAR to movie studios..."
"Studios"? You're thinking of California. A lot of New York productions are low-budget, or what passes for low budget today, and even independent.
Also, the film business is very different from Amazon's: It is a specific industry. NYC has a pool of skilled movie people that it needs to keep employed at decent rates of pay. (I was one of them for many years.) It also needs a concentration of resources like equipment rental houses and caterers.
It makes a lot more sense to decide to support a whole industry that requires a concentration of resources and that will pay back in taxes from workers and associated businesses than it does to support Amazon.
@Tokyo Tea
Here is the evidence supporting my assertion about how much money New York spends on movies and films:
Do a Google search of The Village Voice, 2017 New York throwing money at film shoots.
Amazon would create 25000 jobs, and those people (and their families) would support a lot of other peoples' jobs. All of that would create tax revenue.
Your justification for the movie industry falls flat.
.....and actually I don't care except that the same mentality that drove out Amazon, ignoring the benefits to ordinary workers in New York, is being used in the upcoming elections. And will be just as destructive.
So, it's great that you had a job in the movie industry for "many years." And that job was subsidized by tax incentives to movie studios. But when it comes to other people who might benefit from Amazon in the same way that you did?
Then, and only then, when it doesn't cost you anything, you are opposed "in principle."
Well, sir, the only principle I see here is unadulterated selfishness.
But I think it was the other way around - Amazon stood up to New York.
13
There is more to this story. Amazon is as hard nose company as they come. They know how to bulldoze politicians.
It's either the new tax laws that make high tax states unattractive or the unions playing hardball (see Philadelphia).
When trying to fill 25k jobs, the new taxes plus the cost of living is an issue.
Either way NY needs some introspection on how this failed, or the politicians will need to learn to code.
3
Exactly! In history, we’ll look back on this and be proud of NYC for being the first city to change the course.
5
@Keiko Sono
Well...no. Amazon will simply move elsewhere. They will have learned no lesson except NYC is a bad place for business.