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Yes. But the rhetoric around this is wrong. Opposing people's rationale is: "wow, the local government is cutting down a check of 3 billion to a large corporati

Yes. But the rhetoric around this is wrong. Opposing people's rationale is: "wow, the local government is cutting down a check of 3 billion to a large corporation, fuck them! They should invest in schools and public transportation, etc". But that's not what a tax incentive is. The incentive is: bring your business here, create jobs, add economic fluidity with your workforce and you don't have to pay 3 billion dollars in taxes. See how different is that? If Amazon decides to pull out, they just don't bring those jobs and don't get those tax incentives...but there's no extra 3 billion to spend in your community. There's literally 0 dollars more. You're not saving 3 billion in state and municipal funds. Those 3 billion in taxes (whether you exempt someone from paying them or not) only happen if Amazon (or any company) exists in that region. The worst part is that some elected state officials are getting behind this rhetoric and that's kind of hard to understand. Either they are doing it for populism which is terrible, or they are doing it because they are ignorant which is even worse.

matthewowen 8y ago
This is only true if the company's behavior is changed by the incentive, and the parent's comment was about the view that it isn't. Moreover, in the global sense we have been deprived of revenue. Amazon was going to open somewhere. This competition means that they overall pay less tax than without it, because they extracted concessions. If we care about protecting the public purse in the general sense, it's reasonable to object to these tactics.
cbanek 8y ago
> But that's not what a tax incentive is. The incentive is: bring your business here, create jobs, add economic fluidity with your workforce and you don't have to pay 3 billion dollars in taxes. It's true, but it's not like your employees also get a tax break. It seems again like the workers are shouldering the burden. The only reason why this works is because it's a race to the bottom where big companies get huge benefits to their taxes because they can shop around (just like Amazon did with the whole HQ2 thing), and then pick who treats them best. Most businesses don't have that kind of leverage. If no state offered any tax incentives like this, then companies would just end up paying more taxes, right? We could get into moving your company to another country, but for Amazon this would mean a lot of things, like increased shipping times, customs, etc. From https://theweek.com/articles/754007/are-corporate-tax-incentives-worth https://theweek.com/articles/754007/are-corporate-tax-incent... "Economists say that most of the time, the incentives are counterproductive — a zero-sum game in which jobs created in one community come at the expense of jobs lost somewhere else. The real winners are companies, which are able to play municipalities against one another so as to be freed of paying taxes other businesses (and homeowners) do. The result is a "race to the bottom," leaving cities with less to spend on infrastructure improvements and public education. At the same time, companies increase expenses for communities by drawing on public resources, including sewer systems, roads, power lines, and schooling for workers' children. Last year, Wisconsin pledged $3 billion in incentives to electronics manufacturer Foxconn to build a plant in Racine County that the company says will eventually employ 13,000 workers. But according to Wisconsin's own estimates, the cost to taxpayers per job created is $230,700, and the state won't recoup its investment until 2043." And now more recently, Foxconn has been saying they won't even have as many jobs as they thought! https://www.chicagotribune.com/business/ct-biz-foxconn-plant-hiring-target-20190205-story.html https://www.chicagotribune.com/business/ct-biz-foxconn-plant...
count 8y ago
You are guaranteed to not earn that 3 billion from that area (usually property tax based) if you offer that incentive to Amazon. You will get something from that area if you don't. Amazon isn't the only game in town - it's not like NYC is starving for new business...
- throwawaysea 8y ago
  The Excelsior program, which is most of Amazon's state subsidy in this HQ2 deal, has existed long before HQ2 was first mentioned. Its goal is to create more jobs, and so clearly there is pre-existing motivation to drum up new business via subsidies. It's also a tax credit on things like prior job creation, and so it does not carry the same risk as a capital investment that the city may not recoup: https://esd.ny.gov/excelsior-jobs-program https://esd.ny.gov/excelsior-jobs-program
rmrfrmrf 8y ago
The money is absolutely real, and the point is that NYC has what Amazon wants, Amazon does not need corporate subsidies, and that NYC should be leveraging its talent pool and thriving economy in order to generate more revenue for the city. Cuomo's incompetence left $3bn in revenue on the table. Furthermore, representing your constituents is not "populism". Local residents are intimately familiar with how gentrification displaces entire communities considering it happens all the time there. Big business Democrats like Cuomo and DiBlasio are just having a tantrum because they're so seduced by revenue charts that they've completely dissociated from the impact of these decisions on real people.
geofft 8y ago
Your logic would also conclude that all taxes are a mistake, and a rational municipality would offer a 100% tax break to everyone as an incentive. That seems like too strong a conclusion.
save_ferris 8y ago
Your explanation might be correct, but that's not what many cities offered Amazon. Most offered comprehensive packages that offered to subsidize wages and construction, improve infrastructure, etc. on top of the basic tax credit you refer to. The city would likely be out any of the money it put up for infrastructure upgrades if Amazon had bailed on them. Montgomery County, Maryland offered an $8.5B incentive, which included $2B in infrastructure & transportation improvements around the HQ site. If Amazon had pulled out, $2B went towards optimizing an area that's no longer a job center. Philadelphia's incentive included $1.1B for essentially the same function. Atlanta offered $2.2B in infrastructure investment.[0] [0]: https://slate.com/technology/2018/11/amazon-hq2-incredible-incentives-losing-cities-offered.html https://slate.com/technology/2018/11/amazon-hq2-incredible-i...
TheSpiceIsLife 8y ago
> See how different is that? It’s unclear what the difference is without seeing the projections for how long it will take the city to recuperate the $3B. If the city believes having Amazon HQ2 will generate an additional $3B in revenue over the next 5 years then perhaps it’s a reasonable deal. If it’s going to take 50 years, then possibly less so.

matthewowen 8y ago

This is only true if the company's behavior is changed by the incentive, and the parent's comment was about the view that it isn't. Moreover, in the global sense we have been deprived of revenue. Amazon was going to open somewhere. This competition means that they overall pay less tax than without it, because they extracted concessions. If we care about protecting the public purse in the general sense, it's reasonable to object to these tactics.

cbanek 8y ago

> But that's not what a tax incentive is. The incentive is: bring your business here, create jobs, add economic fluidity with your workforce and you don't have to pay 3 billion dollars in taxes. It's true, but it's not like your employees also get a tax break. It seems again like the workers are shouldering the burden. The only reason why this works is because it's a race to the bottom where big companies get huge benefits to their taxes because they can shop around (just like Amazon did with the whole HQ2 thing), and then pick who treats them best. Most businesses don't have that kind of leverage. If no state offered any tax incentives like this, then companies would just end up paying more taxes, right? We could get into moving your company to another country, but for Amazon this would mean a lot of things, like increased shipping times, customs, etc. From https://theweek.com/articles/754007/are-corporate-tax-incentives-worth https://theweek.com/articles/754007/are-corporate-tax-incent... "Economists say that most of the time, the incentives are counterproductive — a zero-sum game in which jobs created in one community come at the expense of jobs lost somewhere else. The real winners are companies, which are able to play municipalities against one another so as to be freed of paying taxes other businesses (and homeowners) do. The result is a "race to the bottom," leaving cities with less to spend on infrastructure improvements and public education. At the same time, companies increase expenses for communities by drawing on public resources, including sewer systems, roads, power lines, and schooling for workers' children. Last year, Wisconsin pledged $3 billion in incentives to electronics manufacturer Foxconn to build a plant in Racine County that the company says will eventually employ 13,000 workers. But according to Wisconsin's own estimates, the cost to taxpayers per job created is $230,700, and the state won't recoup its investment until 2043." And now more recently, Foxconn has been saying they won't even have as many jobs as they thought! https://www.chicagotribune.com/business/ct-biz-foxconn-plant-hiring-target-20190205-story.html https://www.chicagotribune.com/business/ct-biz-foxconn-plant...

count 8y ago

You are guaranteed to not earn that 3 billion from that area (usually property tax based) if you offer that incentive to Amazon. You will get something from that area if you don't. Amazon isn't the only game in town - it's not like NYC is starving for new business...

throwawaysea 8y ago
The Excelsior program, which is most of Amazon's state subsidy in this HQ2 deal, has existed long before HQ2 was first mentioned. Its goal is to create more jobs, and so clearly there is pre-existing motivation to drum up new business via subsidies. It's also a tax credit on things like prior job creation, and so it does not carry the same risk as a capital investment that the city may not recoup: https://esd.ny.gov/excelsior-jobs-program https://esd.ny.gov/excelsior-jobs-program

rmrfrmrf 8y ago

The money is absolutely real, and the point is that NYC has what Amazon wants, Amazon does not need corporate subsidies, and that NYC should be leveraging its talent pool and thriving economy in order to generate more revenue for the city. Cuomo's incompetence left $3bn in revenue on the table. Furthermore, representing your constituents is not "populism". Local residents are intimately familiar with how gentrification displaces entire communities considering it happens all the time there. Big business Democrats like Cuomo and DiBlasio are just having a tantrum because they're so seduced by revenue charts that they've completely dissociated from the impact of these decisions on real people.

geofft 8y ago

Your logic would also conclude that all taxes are a mistake, and a rational municipality would offer a 100% tax break to everyone as an incentive. That seems like too strong a conclusion.

save_ferris 8y ago

Your explanation might be correct, but that's not what many cities offered Amazon. Most offered comprehensive packages that offered to subsidize wages and construction, improve infrastructure, etc. on top of the basic tax credit you refer to. The city would likely be out any of the money it put up for infrastructure upgrades if Amazon had bailed on them. Montgomery County, Maryland offered an $8.5B incentive, which included $2B in infrastructure & transportation improvements around the HQ site. If Amazon had pulled out, $2B went towards optimizing an area that's no longer a job center. Philadelphia's incentive included $1.1B for essentially the same function. Atlanta offered $2.2B in infrastructure investment.[0] [0]: https://slate.com/technology/2018/11/amazon-hq2-incredible-incentives-losing-cities-offered.html https://slate.com/technology/2018/11/amazon-hq2-incredible-i...

TheSpiceIsLife 8y ago

> See how different is that? It’s unclear what the difference is without seeing the projections for how long it will take the city to recuperate the $3B. If the city believes having Amazon HQ2 will generate an additional $3B in revenue over the next 5 years then perhaps it’s a reasonable deal. If it’s going to take 50 years, then possibly less so.