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I think it's sad that the vocal minority was able to alter this decision. As the letter mentions, the project would have brought $27b in revenue to the state.

I think it's sad that the vocal minority was able to alter this decision. As the letter mentions, the project would have brought $27b in revenue to the state. This magnitude of revenue is material considering the fact that the state only collected $76b in taxes in the last reported fiscal year. I think there's reason to debate whether large corps should be able to hold an auction like this, but given the place we find ourselves in today, there's no question this would have been a huge win for NY.

votepaunchy 8y ago
The $27B is a present value sum of future cash flows, not an annual revenue.
- smallgovt 8y ago
  Thanks, corrected. Even so, still a ton of revenue.
  - alexis_fr 8y ago
    Not a ton of revenue if you are have expenditures for required new infrastructure, such as road and public transport, to accommodate offices.
- Eridrus 8y ago
  The 3b wasn't an annual figure either.
deogeo 8y ago
> there's no question this would have been a huge win for NY. But a loss for the US as a whole, assuming the HQ still gets built, but without special tax exemptions.
- sokoloff 8y ago
  The overwhelming majority of the tax deals were/are available to other employers in the state as well. IIRC, only the land/building deal was specific and a version of that is likely to be available to whomever decides to build on the site.
  - mobilefriendly 8y ago
    Empire State Development was to award Amazon a cash grant of $325 million from taxpayers. This is corporate welfare and a kind of corruption. Congress should ban all government subsidies that are one-off and negotiated in secret with individual companies. There's an equal protection under the law issue.
    - otterley 8y ago
      As an attorney, I’m curious as to how you think a constitutional equal protection issue is at stake here. I’m unaware of any case law that would suggest so.
      - berberous 8y ago
        Here's an article by a graduate of GW law arguing it could be an equal protection issue: https://taxprof.typepad.com/files/65st0033.pdf https://taxprof.typepad.com/files/65st0033.pdf I didn't actually read it, so I'm not sure how sound his argument is. Even if plausible, it's obviously just an article by a recent law grad and not actually the clear controlling law today.
      - bpp 8y ago
        I'm curious why Congress has chosen not to regulate (or ban) the grant of tax incentives to companies as enticements for development; this seems to easily fall under the interstate commerce clause. All states lose out when they compete against each other in this way.
        berberous 8y ago
        There was actually a case where the court of appeals held these types of tax breaks to violate the commerce clause, but in 2006, the Supreme Court dismissed the case on a procedural issue (that the taxpayers did not have standing). See the below article for more. https://www.citylab.com/life/2018/01/the-case-for-the-case-against-economic-incentives/549632/ https://www.citylab.com/life/2018/01/the-case-for-the-case-a...
- paxys 8y ago
  They will just get the exemptions from the next highest bidder in the list.
- morpheuskafka 8y ago
  How so? It's all state and local tax credits, not federal. How the state of NY runs its finances has no bearing on the US as a whole. It will of course be a benefit to wherever those jobs end up, but that's it.
  - deleted 8y ago
    [deleted]
- inoop 8y ago
  Actually no, because other locations would have given tax incentives, too. In fact, LIC wasn't even one of the highest ones by that metric. For example, Newark was offering $7bn: https://www.seattlebusinessmag.com/business-operations/new-jersey-offers-7-billion-tax-break-amazons-hq2-0 https://www.seattlebusinessmag.com/business-operations/new-j... It's also important to realize that the majority of that $3bn would have come from pre-existing programs open to any company moving to LIC.
spamizbad 8y ago
I'm glad they dropped it. There are some grounded concerns: * Amazon is one of the most successful enterprises in human history and should not require support from taxpayers beyond their voluntary patronage of Amazon itself. * Most of these "deals" were put together secretly without input from the public. Millions (or in NY's case, billion+) of dollars were packaged and presented without community input or oversight * While amazon is talking about bringing middle and upper-income jobs to these communities, overall amazon has a documented history of paying poverty wages despite its tremendous financial success * State and local governments probably shouldn't be diverting billions of their citizen's tax revenue to lure corporations who will only impact a tiny subset of their citizenry. Does the taxpayer in Buffalo New York benefit if their tax money goes to fund some HQ in Queens, if the bulk of the state's tax capture is just "handed" right back to Amazon? With that said, there's nothing wrong with large organizations asking state and local governments to expedite things like site identification, planning, zoning, permitting, licensing, environmental studies, etc since you're talking about a MASSIVE undertaking during a short window of time. But beyond that, governments should avoid a race to the bottom with this stuff.
- noahA 8y ago
  Would the bulk of the taxes paid by Amazon be paid back? The article said that Amazon would get $3 billion in existing credits (i.e. not deal specific, just business tax credits) and would be paying ~$27 billion. Seems like a steal for NY.
  - spamizbad 8y ago
    Look at this beyond the scope of Amazon. If the basic premise here is that any company should get a tax break if they are capable of hiring enough workers whose tax payments would exceed their employer's tax payments, all you're doing is just shifting the tax burden onto the workers in the form of regressive income, sales, and property taxes.
    - johncolanduoni 8y ago
      For there to be an actual increase in tax revenue for the state via income tax, those workers would have to be receiving higher salaries than they would have otherwise, would they not? Or emigrating from somewhere else, which they would be unlikely to do if they are not receiving an increase in compensation.
inoop 8y ago
> I think there's reason to debate whether large corps should be able to hold an auction like this It wasn't an auction. As the letter points out, each location put in a single, sealed bid, invisible to everybody else. There were no multiple rounds of bidding, as is typical for an auction.
- paulgb 8y ago
  You've literally described a silent auction. https://en.m.wikipedia.org/wiki/First-price_sealed-bid_auction https://en.m.wikipedia.org/wiki/First-price_sealed-bid_aucti...
  - inoop 8y ago
    Ah, I stand corrected, thanks!
  - ec109685 8y ago
    No, you mean a blind auction.
- spenczar5 8y ago
  Eh, a sealed first-price auction is still an auction. It’s fair to call it that.
ec109685 8y ago
$27B over 25 years. So the loss of revenue is a little more than one billion a year. And even that seems high. From the proposal, “Amazon will have an annual payroll of $3.75 billion. …There’s been nothing like it in history,” Payroll tax for amazon is about ten percent: https://www.payroll-taxes.com/state-tax/new-york https://www.payroll-taxes.com/state-tax/new-york So, wouldn’t that mean the revenue loss is just 300M a year. And given they are forgiving 3B of that, the revenue over 25 years ends up being 4.5B over 25 years, which is even less. Here are the assumptions built into that $27B number, which was generated by proponents of the deal: https://www.democratandchronicle.com/story/news/politics/albany/2018/11/15/new-york-amazon-revenue-estimate/2003646002/ https://www.democratandchronicle.com/story/news/politics/alb... Finally, there are 20M people in New York. So 1.2B of amazon revenue per year (high end) equates to $60 a person at the end of the day.

votepaunchy 8y ago

The $27B is a present value sum of future cash flows, not an annual revenue.

smallgovt 8y ago
Thanks, corrected. Even so, still a ton of revenue.
- alexis_fr 8y ago
  Not a ton of revenue if you are have expenditures for required new infrastructure, such as road and public transport, to accommodate offices.
Eridrus 8y ago
The 3b wasn't an annual figure either.

deogeo 8y ago

> there's no question this would have been a huge win for NY. But a loss for the US as a whole, assuming the HQ still gets built, but without special tax exemptions.

sokoloff 8y ago
The overwhelming majority of the tax deals were/are available to other employers in the state as well. IIRC, only the land/building deal was specific and a version of that is likely to be available to whomever decides to build on the site.
- mobilefriendly 8y ago
  Empire State Development was to award Amazon a cash grant of $325 million from taxpayers. This is corporate welfare and a kind of corruption. Congress should ban all government subsidies that are one-off and negotiated in secret with individual companies. There's an equal protection under the law issue.
  - otterley 8y ago
    As an attorney, I’m curious as to how you think a constitutional equal protection issue is at stake here. I’m unaware of any case law that would suggest so.
    - berberous 8y ago
      Here's an article by a graduate of GW law arguing it could be an equal protection issue: https://taxprof.typepad.com/files/65st0033.pdf https://taxprof.typepad.com/files/65st0033.pdf I didn't actually read it, so I'm not sure how sound his argument is. Even if plausible, it's obviously just an article by a recent law grad and not actually the clear controlling law today.
    - bpp 8y ago
      I'm curious why Congress has chosen not to regulate (or ban) the grant of tax incentives to companies as enticements for development; this seems to easily fall under the interstate commerce clause. All states lose out when they compete against each other in this way.
      - berberous 8y ago
        There was actually a case where the court of appeals held these types of tax breaks to violate the commerce clause, but in 2006, the Supreme Court dismissed the case on a procedural issue (that the taxpayers did not have standing). See the below article for more. https://www.citylab.com/life/2018/01/the-case-for-the-case-against-economic-incentives/549632/ https://www.citylab.com/life/2018/01/the-case-for-the-case-a...
paxys 8y ago
They will just get the exemptions from the next highest bidder in the list.
morpheuskafka 8y ago
How so? It's all state and local tax credits, not federal. How the state of NY runs its finances has no bearing on the US as a whole. It will of course be a benefit to wherever those jobs end up, but that's it.
- deleted 8y ago
  [deleted]
inoop 8y ago
Actually no, because other locations would have given tax incentives, too. In fact, LIC wasn't even one of the highest ones by that metric. For example, Newark was offering $7bn: https://www.seattlebusinessmag.com/business-operations/new-jersey-offers-7-billion-tax-break-amazons-hq2-0 https://www.seattlebusinessmag.com/business-operations/new-j... It's also important to realize that the majority of that $3bn would have come from pre-existing programs open to any company moving to LIC.

spamizbad 8y ago

I'm glad they dropped it. There are some grounded concerns: * Amazon is one of the most successful enterprises in human history and should not require support from taxpayers beyond their voluntary patronage of Amazon itself. * Most of these "deals" were put together secretly without input from the public. Millions (or in NY's case, billion+) of dollars were packaged and presented without community input or oversight * While amazon is talking about bringing middle and upper-income jobs to these communities, overall amazon has a documented history of paying poverty wages despite its tremendous financial success * State and local governments probably shouldn't be diverting billions of their citizen's tax revenue to lure corporations who will only impact a tiny subset of their citizenry. Does the taxpayer in Buffalo New York benefit if their tax money goes to fund some HQ in Queens, if the bulk of the state's tax capture is just "handed" right back to Amazon? With that said, there's nothing wrong with large organizations asking state and local governments to expedite things like site identification, planning, zoning, permitting, licensing, environmental studies, etc since you're talking about a MASSIVE undertaking during a short window of time. But beyond that, governments should avoid a race to the bottom with this stuff.

noahA 8y ago
Would the bulk of the taxes paid by Amazon be paid back? The article said that Amazon would get $3 billion in existing credits (i.e. not deal specific, just business tax credits) and would be paying ~$27 billion. Seems like a steal for NY.
- spamizbad 8y ago
  Look at this beyond the scope of Amazon. If the basic premise here is that any company should get a tax break if they are capable of hiring enough workers whose tax payments would exceed their employer's tax payments, all you're doing is just shifting the tax burden onto the workers in the form of regressive income, sales, and property taxes.
  - johncolanduoni 8y ago
    For there to be an actual increase in tax revenue for the state via income tax, those workers would have to be receiving higher salaries than they would have otherwise, would they not? Or emigrating from somewhere else, which they would be unlikely to do if they are not receiving an increase in compensation.

inoop 8y ago

> I think there's reason to debate whether large corps should be able to hold an auction like this It wasn't an auction. As the letter points out, each location put in a single, sealed bid, invisible to everybody else. There were no multiple rounds of bidding, as is typical for an auction.

paulgb 8y ago
You've literally described a silent auction. https://en.m.wikipedia.org/wiki/First-price_sealed-bid_auction https://en.m.wikipedia.org/wiki/First-price_sealed-bid_aucti...
- inoop 8y ago
  Ah, I stand corrected, thanks!
- ec109685 8y ago
  No, you mean a blind auction.
spenczar5 8y ago
Eh, a sealed first-price auction is still an auction. It’s fair to call it that.

ec109685 8y ago

$27B over 25 years. So the loss of revenue is a little more than one billion a year. And even that seems high. From the proposal, “Amazon will have an annual payroll of $3.75 billion. …There’s been nothing like it in history,” Payroll tax for amazon is about ten percent: https://www.payroll-taxes.com/state-tax/new-york https://www.payroll-taxes.com/state-tax/new-york So, wouldn’t that mean the revenue loss is just 300M a year. And given they are forgiving 3B of that, the revenue over 25 years ends up being 4.5B over 25 years, which is even less. Here are the assumptions built into that $27B number, which was generated by proponents of the deal: https://www.democratandchronicle.com/story/news/politics/albany/2018/11/15/new-york-amazon-revenue-estimate/2003646002/ https://www.democratandchronicle.com/story/news/politics/alb... Finally, there are 20M people in New York. So 1.2B of amazon revenue per year (high end) equates to $60 a person at the end of the day.