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A "tax break" is just a reduction in taxes that otherwise wouldn't be paid at all. It still means a profit for the city. It's not like NYC is paying Amazon to

A "tax break" is just a reduction in taxes that otherwise wouldn't be paid at all. It still means a profit for the city. It's not like NYC is paying Amazon to come to NYC. NYC would still make huge tax revenues from additional sales, real estate, income taxes, and corporate taxes. Now they're turning that all away. It's such an irrational decision that if I were Amazon, it would raise a big red flag for me as well. No need to open in a community that doesn't want your money.

lenzm 8y ago
It certainly means revenue for the city but we don't know that it means profit. All of those people are going to generate trash, take the subway and consume city services. Why shouldn't Amazon pay like everyone else?
- eanzenberg 8y ago
  That's literally paid by those employee taxes? Unless you'd rather more homeless and drug addicts move in, which it seems is what NYC local politicians wanted.
  - hopler 8y ago
    NYC has a giant statue inviting homeless and drug addicts in. And good for them.
- NathanKP 8y ago
  Let me explain it in terms that any New Yorker should be able to understand: If you are a New Yorker you are no doubt familiar with the concept of "one month free rent". Most buildings in NYC will give you one month free when you sign your lease. If a building doesn't give you that offer its probably not as tempting as another nearby building that does. Yet the "one month free" isn't a losing money proposition for the building because they continue to make rent money from you for a long time after the free month. NYC was basically offering the same thing to Amazon: "hey come live in our city, we will give you a temporary tax reduction, in exchange for a TON of money over the next X years". Overall the city wouldn't have lost money, it would have gained many billions of dollars of additional money in the future in exchange for an initial 2 billion reduction.
  - hopler 8y ago
    That's the narrative, but too often the promised backside never arrives.
    - NathanKP 8y ago
      The solution to that is to make the incentives performance based. And that's exactly what was proposed: if Amazon hadn't delivered the promised results the tax breaks wouldn't have taken effect.
      - JohnFen 8y ago
        That's not really a solution all by itself. Making the incentives performance based merely opens the possibility of being able to sue, nothing more. And when you're talking about companies with the size, power, and lack of scruples as Amazon, suing can be a losing proposition regardless of how correct your position is.
    - AlexandrB 8y ago
      Exactly. I'm not that old, but I've seen this dog and pony show so many times already that it's no longer surprising. The latest example being the Foxconn plant in Wisconsin. The increased tax revenue from that plant may never[1] recoup the investment Wisconsin made to bring it to the state. [1] https://www.duluthnewstribune.com/business/technology/4309534-estimate-wisconsin-would-recoup-foxconn-investment-25-years https://www.duluthnewstribune.com/business/technology/430953... (The estimated recoup time is 25 years, which means the plant will be obsolete before the state sees a dime of net revenue.)
  - andosteinmetz 8y ago
    What New York City do you live in? I have never been offered, nor do I know anybody who's been offered a month's free rent on signing a lease. Places that do this are overcharging and driving up rents. Your comment may just be emphasizing the fact that there are multiple "New Yorks." And I suspect the New York that Amazon HQ2 would benefit would be the New York that pays too much to live in a glass tower and gets offered a month's free rent.
trhway 8y ago
>taxes that otherwise wouldn't be paid at all. That is fallacy of excluded other possibilities. Especially for a place like NYC. I generally like AMZN, nevertheless I'm happy just on sheer principle that the bullying behavior by the 800lb gorilla didnt succeed this time.
- MockObject 8y ago
  That's not a fallacy, it's the well known concept of opportunity cost, which rational decision-makers always consider.
  - Terr_ 8y ago
    The flaw is an implicit assumption that no alternative opportunities exist. Or in other words, the well-known concept of pricing. It is exactly like a pushy customer demanding a discount on their groceries, saying: "Well, if I don't buy them you won't get any money at all!" If you are confident you can sell enough groceries at the regular price, the economically correct decision is say "I don't need YOUR money" and laugh in their face.
- skookumchuck 8y ago
  It isn't any more "bullying" than you shopping various car dealerships to get the best deal on a new car.
  - trhway 8y ago
    more closer would be a Saudi prince agreeing to become a US citizen in exchange for a personally reduced income tax rate. Would you support it?
    - skookumchuck 8y ago
      Would you call that "bullying" by the Saudi prince?
      - 8y ago
lkrubner 8y ago
This is incorrect: "that otherwise wouldn't be paid at all" The opposite is true, 100% of those taxes will be paid by some other business. Maybe you could make your argument about the New York City of the 1970s, but you sure as heck can not make that argument about the New York City of 2019. New York City is not starving for investment, rather, its biggest challenge nowadays is managing its fast growth. Other businesses will move into those buildings, and hire those workers, and they will pay normal taxes, which is a lot more than what Amazon offered.
- jfnixon 8y ago
  So why did NYC bother to compete for HQ2?
  - ben509 8y ago
    Amazon being there would mean growth; whether it's greater growth than local businesses is hard to say. But mostly, it's obvious growth that looks good for politicians who can say, "look, I brought jobs!" People notice it when a high profile company arrives whereas if your local chain expands, that's not even a news story. Much of the political aspect of economics is due to the relative visibility of various events in the media.
    - anth_anm 8y ago
      It's because then politicians can run on "I BROUGHT AMAZON HERE! JOBS! GREAT JOBS!".
  - Anarcissie 8y ago
    The main driver of politics in NYC is real estate. Long Island City has already been undergoing a gentrification blitzkrieg, but adding Amazon HQ2 to the mix would yield fantastic profits to those of the rich who were in on it -- that is, those who had gotten the memo several years ago and taken up a good real estate position in the area. Plus, the irony of taking the proles' money in taxes to drive them out of their neighborhood homes and businesses must have offered an icing of sadistic pleasure to the mighty cake of profit. What I am wondering is how the deal was stopped. Usually, big real estate projects steamroll all resistance. There's money to be made! (Not by you.)
threatofrain 8y ago
Taxes collected increases revenue for NYC; to speak of "profit" we'd have to account for the cost to collect that revenue from Amazon.
TheOperator 8y ago
Sure but the fact is when your mom and pop business is going to pay a higher effective tax rate than Amazon you're effectively subsidizing one of the largest and most powerful companies in the world. You're not attracting amazon by slashing taxes across the board you're giving one company a sweetheart deal. Which is simultaniously at odds ideologically with both libertarian and progressive thought. From a Libertarian perspective you can see the state as shaking down all of Amazons competitors to pay for building Amazon's infrastructure, training Amazons employees, and enforcement of Amazon's monopolies on IP. This is perverse. The US and NYC specifically is approaching historic levels of inequality. If you want to reverse that you have to say no to giving one of the most powerful companies in the world a sweetheart tax deal. If NYC doesn't say no then who will? The scuttling of this plan doesn't reflect a lack of rationality. It reflects different priorities than you have. The more powerful Amazon gets thanks to these sweetheart deals the more leverage they will have and that can mean negative consequences for the populace.
whynyc 8y ago
Now they're turning that all away. It's such an irrational decision that if I were Amazon, it would raise a big red flag for me as well. Why even pick NYC in first place ? That place, and other 1st tier cities, are red tape hell. Amazon should have known this.
anth_anm 8y ago
It's not irrational. What's irrational is not following up by banning every single deal of this type. Every single one.
tytso 8y ago
Google is expanding to create 25,000 GOOD JOBS! But since it didn't extort $$$ out of politicians, the politicians can't as easily take advantage of it. If you can get high-tech companies who are willing massively expand to create lots of GOOD JOBS without have to short $3 billion from the state budget, that might mean that the $3 billion dollars was a total waste and boondoogle....
- vonmoltke 8y ago
  > Google is expanding to create 25,000 GOOD JOBS! No they aren't. They're expanding by about 7000.

lenzm 8y ago

It certainly means revenue for the city but we don't know that it means profit. All of those people are going to generate trash, take the subway and consume city services. Why shouldn't Amazon pay like everyone else?

eanzenberg 8y ago
That's literally paid by those employee taxes? Unless you'd rather more homeless and drug addicts move in, which it seems is what NYC local politicians wanted.
- hopler 8y ago
  NYC has a giant statue inviting homeless and drug addicts in. And good for them.
NathanKP 8y ago
Let me explain it in terms that any New Yorker should be able to understand: If you are a New Yorker you are no doubt familiar with the concept of "one month free rent". Most buildings in NYC will give you one month free when you sign your lease. If a building doesn't give you that offer its probably not as tempting as another nearby building that does. Yet the "one month free" isn't a losing money proposition for the building because they continue to make rent money from you for a long time after the free month. NYC was basically offering the same thing to Amazon: "hey come live in our city, we will give you a temporary tax reduction, in exchange for a TON of money over the next X years". Overall the city wouldn't have lost money, it would have gained many billions of dollars of additional money in the future in exchange for an initial 2 billion reduction.
- hopler 8y ago
  That's the narrative, but too often the promised backside never arrives.
  - NathanKP 8y ago
    The solution to that is to make the incentives performance based. And that's exactly what was proposed: if Amazon hadn't delivered the promised results the tax breaks wouldn't have taken effect.
    - JohnFen 8y ago
      That's not really a solution all by itself. Making the incentives performance based merely opens the possibility of being able to sue, nothing more. And when you're talking about companies with the size, power, and lack of scruples as Amazon, suing can be a losing proposition regardless of how correct your position is.
  - AlexandrB 8y ago
    Exactly. I'm not that old, but I've seen this dog and pony show so many times already that it's no longer surprising. The latest example being the Foxconn plant in Wisconsin. The increased tax revenue from that plant may never[1] recoup the investment Wisconsin made to bring it to the state. [1] https://www.duluthnewstribune.com/business/technology/4309534-estimate-wisconsin-would-recoup-foxconn-investment-25-years https://www.duluthnewstribune.com/business/technology/430953... (The estimated recoup time is 25 years, which means the plant will be obsolete before the state sees a dime of net revenue.)
- andosteinmetz 8y ago
  What New York City do you live in? I have never been offered, nor do I know anybody who's been offered a month's free rent on signing a lease. Places that do this are overcharging and driving up rents. Your comment may just be emphasizing the fact that there are multiple "New Yorks." And I suspect the New York that Amazon HQ2 would benefit would be the New York that pays too much to live in a glass tower and gets offered a month's free rent.

trhway 8y ago

>taxes that otherwise wouldn't be paid at all. That is fallacy of excluded other possibilities. Especially for a place like NYC. I generally like AMZN, nevertheless I'm happy just on sheer principle that the bullying behavior by the 800lb gorilla didnt succeed this time.

MockObject 8y ago
That's not a fallacy, it's the well known concept of opportunity cost, which rational decision-makers always consider.
- Terr_ 8y ago
  The flaw is an implicit assumption that no alternative opportunities exist. Or in other words, the well-known concept of pricing. It is exactly like a pushy customer demanding a discount on their groceries, saying: "Well, if I don't buy them you won't get any money at all!" If you are confident you can sell enough groceries at the regular price, the economically correct decision is say "I don't need YOUR money" and laugh in their face.
skookumchuck 8y ago
It isn't any more "bullying" than you shopping various car dealerships to get the best deal on a new car.
- trhway 8y ago
  more closer would be a Saudi prince agreeing to become a US citizen in exchange for a personally reduced income tax rate. Would you support it?
  - skookumchuck 8y ago
    Would you call that "bullying" by the Saudi prince?
    - 8y ago

lkrubner 8y ago

This is incorrect: "that otherwise wouldn't be paid at all" The opposite is true, 100% of those taxes will be paid by some other business. Maybe you could make your argument about the New York City of the 1970s, but you sure as heck can not make that argument about the New York City of 2019. New York City is not starving for investment, rather, its biggest challenge nowadays is managing its fast growth. Other businesses will move into those buildings, and hire those workers, and they will pay normal taxes, which is a lot more than what Amazon offered.

jfnixon 8y ago
So why did NYC bother to compete for HQ2?
- ben509 8y ago
  Amazon being there would mean growth; whether it's greater growth than local businesses is hard to say. But mostly, it's obvious growth that looks good for politicians who can say, "look, I brought jobs!" People notice it when a high profile company arrives whereas if your local chain expands, that's not even a news story. Much of the political aspect of economics is due to the relative visibility of various events in the media.
  - anth_anm 8y ago
    It's because then politicians can run on "I BROUGHT AMAZON HERE! JOBS! GREAT JOBS!".
- Anarcissie 8y ago
  The main driver of politics in NYC is real estate. Long Island City has already been undergoing a gentrification blitzkrieg, but adding Amazon HQ2 to the mix would yield fantastic profits to those of the rich who were in on it -- that is, those who had gotten the memo several years ago and taken up a good real estate position in the area. Plus, the irony of taking the proles' money in taxes to drive them out of their neighborhood homes and businesses must have offered an icing of sadistic pleasure to the mighty cake of profit. What I am wondering is how the deal was stopped. Usually, big real estate projects steamroll all resistance. There's money to be made! (Not by you.)

threatofrain 8y ago

Taxes collected increases revenue for NYC; to speak of "profit" we'd have to account for the cost to collect that revenue from Amazon.

TheOperator 8y ago

Sure but the fact is when your mom and pop business is going to pay a higher effective tax rate than Amazon you're effectively subsidizing one of the largest and most powerful companies in the world. You're not attracting amazon by slashing taxes across the board you're giving one company a sweetheart deal. Which is simultaniously at odds ideologically with both libertarian and progressive thought. From a Libertarian perspective you can see the state as shaking down all of Amazons competitors to pay for building Amazon's infrastructure, training Amazons employees, and enforcement of Amazon's monopolies on IP. This is perverse. The US and NYC specifically is approaching historic levels of inequality. If you want to reverse that you have to say no to giving one of the most powerful companies in the world a sweetheart tax deal. If NYC doesn't say no then who will? The scuttling of this plan doesn't reflect a lack of rationality. It reflects different priorities than you have. The more powerful Amazon gets thanks to these sweetheart deals the more leverage they will have and that can mean negative consequences for the populace.

whynyc 8y ago

Now they're turning that all away. It's such an irrational decision that if I were Amazon, it would raise a big red flag for me as well. Why even pick NYC in first place ? That place, and other 1st tier cities, are red tape hell. Amazon should have known this.

anth_anm 8y ago

It's not irrational. What's irrational is not following up by banning every single deal of this type. Every single one.

tytso 8y ago

Google is expanding to create 25,000 GOOD JOBS! But since it didn't extort $$$ out of politicians, the politicians can't as easily take advantage of it. If you can get high-tech companies who are willing massively expand to create lots of GOOD JOBS without have to short $3 billion from the state budget, that might mean that the $3 billion dollars was a total waste and boondoogle....

vonmoltke 8y ago
> Google is expanding to create 25,000 GOOD JOBS! No they aren't. They're expanding by about 7000.