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My understanding is that these tax breaks were never intended to be subsidies, but rather mechanisms to entice Amazon to set up shop in said area. Say you're a

My understanding is that these tax breaks were never intended to be subsidies, but rather mechanisms to entice Amazon to set up shop in said area. Say you're a landlord, and you can't find a tenant for a unit. In response, you offer lower the rent. Is that a subsidy? Say you're at a car dealership, and you can't find a buyer for a given type of car. So you offer something like preferable financing, or extended warranty. Is that subsidizing the car buyer? I'd say no, they're offering incentives, not subsidies. Sure, this may sound like spitting hairs but I do think calling the tax deals given to Amazon a subsidy is deceptive. In my mind, a subsidy is giving to support someone or something in need, that usually wouldn't be profitable otherwise. Like green energy, electric vehicles, or growing certain types of crops. The delals given to Amazon were tax incentives. Something Amazon doesn't need, but the city offers in order to entice Amazon into setting up shop there.

bassman9000 8y ago
Comparing a landlord, which only represents the owners' interests, to the state, which represents all taxpayers', doesn't make sense.
- deleted 8y ago
  [deleted]
- manfredo 8y ago
  In a sense, the state is the landlord of all the residents of the state. The state provides services to the people, and in return the people pay rent (taxes) to the state. This is not directly related to the point I'm making though: the point of these tax deals is not to help Amazon's business (though that is likely a side effect). The point of these deals were to entice Amazon to set up shop in that location. Thus, it is better to call these deals incentives rather than subsidies.
  - rosser 8y ago
    > Thus, it is better to call these deals incentives rather than subsidies. Note the added emphases: "A subsidy or government incentive is a form of financial aid or support extended to an economic sector (or institution, business, or individual) generally with the aim of promoting economic and social policy." [0] "a grant by a government to a private person or company to assist an enterprise deemed advantageous to the public" [1] "A subsidy is a benefit given to an individual, business or institution, usually by the government. It is usually in the form of a cash payment or a tax reduction." [2] I don't think there's nearly as bright a line between "subsidy" and "incentive" as you're trying to paint here. [0] https://en.wikipedia.org/wiki/Subsidy https://en.wikipedia.org/wiki/Subsidy [1] https://www.merriam-webster.com/dictionary/subsidy https://www.merriam-webster.com/dictionary/subsidy [2] https://www.investopedia.com/terms/s/subsidy.asp https://www.investopedia.com/terms/s/subsidy.asp
    - manfredo 8y ago
      This isn't financial aid since Amazon isn't short on cash. It also isn't promoting any economic or social policy (unless people see e-commerce and cloud computing as a social policy, which seems far fetched). So it at least fails the first definition. Perhaps a better way to put my underlying idea into words is that these cities are still acting in their own self interest. Much like a dealer offering a few grand off sticker price, these cities are making a concession to Amazon but are still acting in their own self interest because they would be making even less money if Amazon decided to set up shop somewhere else. "Subsidy" often as the connotation of being something charitable to advance some social policy. These cities aren't being charitable to Amazon. They're acting in their own self interest by making themselves economically competitive. Much like the dealer accepting a lower price, they're accepting a lesser payment but the alternative is not making a sale at all. Sure, an argument could be made that Amazon would have chosen NY or DC with a smaller incentive - but that's more of a hypothetical criticism of the government's negotiations rather than the act of offering incentives in and of itself. This is distinct from something like offering a subsidy to buy electric cars. This is a scenario where the government is making a sacrifice in order to promote an environmental benefit.
      - 8y ago
  - bassman9000 8y ago
    All those taxes not paid by Amazon will have to be paid by someone else, because the services, from roads to hospitals, will surely be used. As per the argument > the Amazon employees will increase tax revenue Will they? When every and each of their meals is subsidized? Where their transportation, their gym membership, even their kids' school is paid for? And Amazon pays almost nothing in taxes itself [0] So, yeah, it's a subsidy, maybe not in cash, but in free city services. [0] https://itep.org/amazon-inc-paid-zero-in-federal-taxes-in-2017-gets-789-million-windfall-from-new-tax-law/ https://itep.org/amazon-inc-paid-zero-in-federal-taxes-in-20...
    - manfredo 8y ago
      Softeware development isn't exactly heavy industry. It's not known for incurring significant burden on government services. Not to mention, the demographics that disproportionately make up tech companies (younger wealthier people, with higher rates of childlessness) tend to contribute a lot more in taxes than they consume. Remember, even if Amazon itself is paying less corporate taxes, their employees are still paying state and local taxes.
jbob2000 8y ago
Your metaphor is wrong. Say you're a car dealer. Hundreds of poor people show up who need a car just to get by. You offer them nothing but the sticker price. Sorry, we gotta make money too. A rich guy shows up, who could probably purchase the dealership, and you offer him 90% off the sticker price of whatever cars he wants. You won't make any money off of him, but maybe he'll tell his friends and they will come to you for a car.
- c3534l 8y ago
  That metaphor doesn't work because we're both the one selling the car and the hundreds of poor people. The rich guy shows up and he demands that all the poor people chip in to buy him a new car or he won't even buy a car to begin with, he'll go to the next dealership and demand the poor people chip in there. Everyone would be better off if the poor people of every call dealership got together and agreed that rich people should pay the same price as poor people, not less.
- manfredo 8y ago
  Were there any businesses looking into setting up shop in NYC or Crystal City that were poised to bring anywhere near the amount of wealth as Amazon? I think a more accurate metaphor is that you're a car dealer, and you're regularly selling Kias and Toyotas at sticker price, but you're having trouble selling a Mercedes S Class. A wealthy person - who can clearly afford sticker price - offers 90% of the sticker price and points out that all the dealerships in the area want to sell these cars and plenty are willing to knock double digits off MSRP. Is it wrong to sell the car at a discount?
thephyber 8y ago
> but I do think calling the tax deals given to Amazon a subsidy is deceptive I haven't read up on Amazon HQ2, but the FoxConn deal in Wisconsin contains actual subsidies. The company promised to invest in factories and the state/municipalities both cut taxes and threw direct subsidies at the project (I think most of it is in utilities like electrical/freeway expansions). I assume that HQ2 would need some similar improvements if they are to bring in 25k+ new jobs, so I'm assuming there is a reduced-tax component and a "we will build out the city/utility infrastructure" component as well.

bassman9000 8y ago

Comparing a landlord, which only represents the owners' interests, to the state, which represents all taxpayers', doesn't make sense.

deleted 8y ago
[deleted]
manfredo 8y ago
In a sense, the state is the landlord of all the residents of the state. The state provides services to the people, and in return the people pay rent (taxes) to the state. This is not directly related to the point I'm making though: the point of these tax deals is not to help Amazon's business (though that is likely a side effect). The point of these deals were to entice Amazon to set up shop in that location. Thus, it is better to call these deals incentives rather than subsidies.
- rosser 8y ago
  > Thus, it is better to call these deals incentives rather than subsidies. Note the added emphases: "A subsidy or government incentive is a form of financial aid or support extended to an economic sector (or institution, business, or individual) generally with the aim of promoting economic and social policy." [0] "a grant by a government to a private person or company to assist an enterprise deemed advantageous to the public" [1] "A subsidy is a benefit given to an individual, business or institution, usually by the government. It is usually in the form of a cash payment or a tax reduction." [2] I don't think there's nearly as bright a line between "subsidy" and "incentive" as you're trying to paint here. [0] https://en.wikipedia.org/wiki/Subsidy https://en.wikipedia.org/wiki/Subsidy [1] https://www.merriam-webster.com/dictionary/subsidy https://www.merriam-webster.com/dictionary/subsidy [2] https://www.investopedia.com/terms/s/subsidy.asp https://www.investopedia.com/terms/s/subsidy.asp
  - manfredo 8y ago
    This isn't financial aid since Amazon isn't short on cash. It also isn't promoting any economic or social policy (unless people see e-commerce and cloud computing as a social policy, which seems far fetched). So it at least fails the first definition. Perhaps a better way to put my underlying idea into words is that these cities are still acting in their own self interest. Much like a dealer offering a few grand off sticker price, these cities are making a concession to Amazon but are still acting in their own self interest because they would be making even less money if Amazon decided to set up shop somewhere else. "Subsidy" often as the connotation of being something charitable to advance some social policy. These cities aren't being charitable to Amazon. They're acting in their own self interest by making themselves economically competitive. Much like the dealer accepting a lower price, they're accepting a lesser payment but the alternative is not making a sale at all. Sure, an argument could be made that Amazon would have chosen NY or DC with a smaller incentive - but that's more of a hypothetical criticism of the government's negotiations rather than the act of offering incentives in and of itself. This is distinct from something like offering a subsidy to buy electric cars. This is a scenario where the government is making a sacrifice in order to promote an environmental benefit.
    - 8y ago
- bassman9000 8y ago
  All those taxes not paid by Amazon will have to be paid by someone else, because the services, from roads to hospitals, will surely be used. As per the argument > the Amazon employees will increase tax revenue Will they? When every and each of their meals is subsidized? Where their transportation, their gym membership, even their kids' school is paid for? And Amazon pays almost nothing in taxes itself [0] So, yeah, it's a subsidy, maybe not in cash, but in free city services. [0] https://itep.org/amazon-inc-paid-zero-in-federal-taxes-in-2017-gets-789-million-windfall-from-new-tax-law/ https://itep.org/amazon-inc-paid-zero-in-federal-taxes-in-20...
  - manfredo 8y ago
    Softeware development isn't exactly heavy industry. It's not known for incurring significant burden on government services. Not to mention, the demographics that disproportionately make up tech companies (younger wealthier people, with higher rates of childlessness) tend to contribute a lot more in taxes than they consume. Remember, even if Amazon itself is paying less corporate taxes, their employees are still paying state and local taxes.

jbob2000 8y ago

Your metaphor is wrong. Say you're a car dealer. Hundreds of poor people show up who need a car just to get by. You offer them nothing but the sticker price. Sorry, we gotta make money too. A rich guy shows up, who could probably purchase the dealership, and you offer him 90% off the sticker price of whatever cars he wants. You won't make any money off of him, but maybe he'll tell his friends and they will come to you for a car.

c3534l 8y ago
That metaphor doesn't work because we're both the one selling the car and the hundreds of poor people. The rich guy shows up and he demands that all the poor people chip in to buy him a new car or he won't even buy a car to begin with, he'll go to the next dealership and demand the poor people chip in there. Everyone would be better off if the poor people of every call dealership got together and agreed that rich people should pay the same price as poor people, not less.
manfredo 8y ago
Were there any businesses looking into setting up shop in NYC or Crystal City that were poised to bring anywhere near the amount of wealth as Amazon? I think a more accurate metaphor is that you're a car dealer, and you're regularly selling Kias and Toyotas at sticker price, but you're having trouble selling a Mercedes S Class. A wealthy person - who can clearly afford sticker price - offers 90% of the sticker price and points out that all the dealerships in the area want to sell these cars and plenty are willing to knock double digits off MSRP. Is it wrong to sell the car at a discount?

thephyber 8y ago

> but I do think calling the tax deals given to Amazon a subsidy is deceptive I haven't read up on Amazon HQ2, but the FoxConn deal in Wisconsin contains actual subsidies. The company promised to invest in factories and the state/municipalities both cut taxes and threw direct subsidies at the project (I think most of it is in utilities like electrical/freeway expansions). I assume that HQ2 would need some similar improvements if they are to bring in 25k+ new jobs, so I'm assuming there is a reduced-tax component and a "we will build out the city/utility infrastructure" component as well.