8 ms·

Thank you, Fred. The amount of misinformation around this issue has been remarkable. 1) No you can't just say "let's spend that $3B on fixing the subway". Thi

by temuze 8y ago

Thank you, Fred. The amount of misinformation around this issue has been remarkable. 1) No you can't just say "let's spend that $3B on fixing the subway". This money comes from tax rebates. It means that you only get this $3B to give away when you get more tax revenue. 2) This wasn't some "backroom deal". The NDAs were a stipulation in Amazon's competition meant to prevent bidding wars. If cities could react to other cities, it would have created an escalating race to the bottom. Ironically, Amazon probably did this to avoid bad press. Go figure. 3) This wouldn't have put more strain on the subway. During rush hour, trains to Manhattan are packed, but trains to the outer boroughs are empty. This would have allowed NYC to step away from the high-maintenance hub and spoke model which strains the MTA. Source: the New York State Budget Director's statement https://www.governor.ny.gov/news/open-letter-new-york-state-budget-director-robert-mujica-regarding-amazon https://www.governor.ny.gov/news/open-letter-new-york-state-... --- Let's do some back of the envelope math. What's 25k (minimum number of jobs) * 150k (the average salary) * 11% (income tax for NY state + NYC)? 412M. That means that $3B would be paid off from new income taxes alone over ~7 years. That's not even considering: - State / city corporate tax - The new taxable income that would go to local businesses - The effect it would have on increasing taxable income for other tech workers in the city So yes - this was still a really good deal.

badfrog 8y ago
The amount of people loudly misunderstanding #1 really frustrates me.
- jhauris 8y ago
  I think calling tax incentives subsidies is really confusing and leads to that misunderstanding. Maybe that's the purpose of using that language?
  - badfrog 8y ago
    Good point. Was it the media who started using the word subsidies for this?
    - vonmoltke 8y ago
      "Subsidy" generally implies a third party transferring cash or cash equivalents to reduce or offset an expenditure. "Discount" or "break" generally implies that the party issuing the bill is voluntarily reducing the charge. The boundary between these is fuzzy, but I don't think it's right to call both "subsidies" and I do think there is a tendency for people to refer to discounts they don't like as "subsidies".
      - TheOperator 8y ago
        I think it's more coming from the perspective that taxation is the cost of doing business in an area. It pays for the training, infrastructure, security, etc that businesses rely on. Schools, roads, and police aren't free. Its coming from the perspective that governments pay the bill for companies operational expenses, and a company which is not pitching enough in to pay for these costs is getting subsidized by those that are. I don't think "subsidy" is precise language but talking about "tax breaks" doesn't really communicate what a truly cushy deal Amazon is getting at the expense of others.
- anth_anm 8y ago
  The amount of people who think #1 at all excuses this sort of deal really frustrates me.
  - temuze 8y ago
    Why? Tax rebates are incredibly common. $2.5B of that $3B was going to come from existing programs, like NY State's Excelsior program.
- pmart123 8y ago
  True. But it also annoys me that people assume it’s 25k jobs no matter what. I don’t doubt Amazon could double it’s executive workforce in the next 10 years, revenues, etc. It still is not a certainty though given we have already had a 10 year bull market run.
ciamac 8y ago
1) $500M of the deal is cash. That can be spent on other things. Many other companies are investing large sums in NYC without cash or tax incentives. Why give amazon special treatment? 2) It was a back room deal in the sense that it was negotiated in private without input from stakeholders such as city residents. With respect to your math, the goal of government is not to maximize tax revenue, but to provide benefits for residents. Moreover, even if it was, the proper comparison is to alternative development plans and not to zero. If the goal is to redevelop LIC, why not have a competitive bidding process to redevelop that area? Many companies and developers would be interested and would bid against each other. When you negotiate with one party in secret you lose all your leverage. I don't understand why any deal is necessary. Google, Facebook, etc. all seem to be doing fine in NYC without special treatment. This is not about being against Amazon or tech, it is about being again crony capitalism. --NYC Resident
- temuze 8y ago
  1) The $505M is conditional if they bring 40k jobs. If it's only 25k jobs, that turns into $325M. This money is meant for construction costs. [1] 2) Who cares? Do we need a popular referendum for every business moving to New York? That's insane. There's a reason why we're a republic and not a direct democracy. > With respect to your math, the goal of government is not to maximize tax revenue, but to provide benefits for residents. That remaining tax money would improve infrastructure around LIC. Also, as someone who used to live in LIC, who gives a shit? It's mostly yuppies and luxury housing until you get to Court Square. Sure, you have Queensbridge up north, but if public housing can survive in Manhattan, it'll survive in LIC. This is as low impact as you can get. - Also a NYC resident [1] http://gothamist.com/2018/11/13/amazon_queens_nyc_subsidies.php http://gothamist.com/2018/11/13/amazon_queens_nyc_subsidies....
  - ciamac 8y ago
    Well, we can agree to disagree, but I think there are many reasonable arguments against this deal that have nothing to do with the RWDSU and everything to do with a lack of transparency and special treatment for a large powerful corporation. Wouldn't it be better to have a competitive process with multiple bidders to redevelop LIC? Let's see what the market clearing price would be. I'd bet it would not involve subsidies.
anth_anm 8y ago
> 2) This wasn't some "backroom deal". The NDAs were a stipulation in Amazon's competition meant to prevent bidding wars. If cities could react to other cities, it would have created an escalating race to the bottom. Ironically, Amazon probably did this to avoid bad press. Go figure. The entire thing was a race to the bottom. > So yes - this was still a really good deal. It wasn't. No giveaways to Amazon.
- temuze 8y ago
  > It wasn't. No giveaways to Amazon. The mental gymnastics of this are exhausting. Just because it's a big company, doesn't mean this is a bad deal. We give tax rebates for new businesses all the time. And as my math just showed, you pay this off in very little time.
zelon88 8y ago
But if you, as the city, didn't play ball and you knew for certain that the next town over wasn't going to play ball either; some city WOULD get the contract regardless. That tax revenue is gonna get collected and someone will get to spend it, whether you give Amazon $3bn or not. I'm tired of giving money to multi-billion dollar companies, even if it does make fiscal sense. We have a poverty problem, and a shrinking middle class problem. Adding 25k jobs at $150/year would only make the housing crisis in NYC worse. So why bend over backwards? All towns should band together and just stop coming to the table. Companies have to locate themselves somewhere. I don't want my state or city to try to attract more businesses that will raise my taxes if they're not going to do anything to fix my infrastructure and my tax rate.
- manfredo 8y ago
  > I'm tired of giving money to multi-billion dollar companies, even if it does make fiscal sense. We have a poverty problem, and a shrinking middle class problem. Adding 25k jobs at $150/year would only make the housing crisis in NYC worse. I'm not sure I follow. How does rejecting business development and turning away thousands of high paying (and thus, paying high taxes) jobs help reduce poverty? How is rejecting well paying job opportunities supposed to help grow the middle class? Housing crises have everything to do with supply. San Francisco has a fraction the population of NYC but also has a housing crisis. You seem to be operating under the notion that the presence of wealth somehow causes poverty. This is just plain wrong. How are we supposed to help the impoverished and build the middle class if we destroy job opportunities? Your post comes off as putting more emphasis on "wealthy people stay out" rather than trying to come up with ways to help the poor
  - Analemma_ 8y ago
    > I'm not sure I follow. How does rejecting business development and turning away thousands of high paying (and thus, paying high taxes) jobs help reduce poverty? Because allowing this kind of behavior creates a race to the bottom, where the end state is that no company ever pays any tax. The only way to avoid this situation, if you don't have a higher-level government entity banning it entirely, is to grow a backbone and say no. And it isn't as if NYC is hurting for jobs. > How are we supposed to help the impoverished and build the middle class if we destroy job opportunities? I can just as easily flip this question on its head: how are we supposed to help the impoverished if we allow companies to play hostage-taker with jobs and ultimately drive their tax rate to 0?
philwelch 8y ago
It was a good deal. Unfortunately for New York, it was also a touchpoint for exactly the same type of local populism that Amazon was trying to hedge against in the first place.
bogomipz 8y ago
>"This wasn't some "backroom deal"." From NYC's perspective this was exactly a backroom deal, done out of sight up in Albany. It's important to note that in order to build the LIC Amazon campus the state employed a somewhat controversial land use procedure known as a GPP - General Project Plan. This was used as a way of circumventing the city's rezoning process which would have required greater city council input. Using a GPP ensured that the Empire State Development Corporation had final say. And locally it was seen as an end around on Queen's LIC Councilman Jimmy Van Bramer and his district. It's striking just how mismanaged the local perceptions and local politics of this whole deal were from the beginning. LIC and Queens in general is one of the most diverse places in the world. The overwhelming majority of which are people who have never heard of Hackernews or even work in tech. Further this comes amid a time when New Yorker's have watched the fabric of the city change in rather concerning ways. The city has been blighted by a mix of both empty store fronts and endless retail bank branches on every block. Up above them a hyper construction machine builds endless glass tower "luxury condos" that are little more than safety deposit boxes for people who will not live there the majority of the year. All of this is a backdrop of great anxiety for many people. Our local governments have far more responsibilities than just generating tax revenue. These purely financial and technocrat armchair analyses never bother to take any of this into account.
bhl 8y ago
You can’t have an economic model that just focuses on all the positive aspects of a deal — that’s just intellectual dishonesty. What about the negative externalities? The strain on public services, transportation, housing, etc? To be clear, I don’t think either side, for and against Amazon in New York City, know clearly how an economic development like this will affect the region.
- exolymph 8y ago
  Know clearly, or know for sure?
- otterley 8y ago
  How would such strain be any different than if a different business or collection of businesses that employed the same number of people were launched in the same neighborhood? (Disclaimer: I work for Amazon, but have no knowledge of or role in this process. Opinions are my own and not of the company.)

by temuze 8y ago

badfrog 8y ago

The amount of people loudly misunderstanding #1 really frustrates me.

jhauris 8y ago
I think calling tax incentives subsidies is really confusing and leads to that misunderstanding. Maybe that's the purpose of using that language?
- badfrog 8y ago
  Good point. Was it the media who started using the word subsidies for this?
  - vonmoltke 8y ago
    "Subsidy" generally implies a third party transferring cash or cash equivalents to reduce or offset an expenditure. "Discount" or "break" generally implies that the party issuing the bill is voluntarily reducing the charge. The boundary between these is fuzzy, but I don't think it's right to call both "subsidies" and I do think there is a tendency for people to refer to discounts they don't like as "subsidies".
    - TheOperator 8y ago
      I think it's more coming from the perspective that taxation is the cost of doing business in an area. It pays for the training, infrastructure, security, etc that businesses rely on. Schools, roads, and police aren't free. Its coming from the perspective that governments pay the bill for companies operational expenses, and a company which is not pitching enough in to pay for these costs is getting subsidized by those that are. I don't think "subsidy" is precise language but talking about "tax breaks" doesn't really communicate what a truly cushy deal Amazon is getting at the expense of others.
anth_anm 8y ago
The amount of people who think #1 at all excuses this sort of deal really frustrates me.
- temuze 8y ago
  Why? Tax rebates are incredibly common. $2.5B of that $3B was going to come from existing programs, like NY State's Excelsior program.
pmart123 8y ago
True. But it also annoys me that people assume it’s 25k jobs no matter what. I don’t doubt Amazon could double it’s executive workforce in the next 10 years, revenues, etc. It still is not a certainty though given we have already had a 10 year bull market run.

ciamac 8y ago

1) $500M of the deal is cash. That can be spent on other things. Many other companies are investing large sums in NYC without cash or tax incentives. Why give amazon special treatment? 2) It was a back room deal in the sense that it was negotiated in private without input from stakeholders such as city residents. With respect to your math, the goal of government is not to maximize tax revenue, but to provide benefits for residents. Moreover, even if it was, the proper comparison is to alternative development plans and not to zero. If the goal is to redevelop LIC, why not have a competitive bidding process to redevelop that area? Many companies and developers would be interested and would bid against each other. When you negotiate with one party in secret you lose all your leverage. I don't understand why any deal is necessary. Google, Facebook, etc. all seem to be doing fine in NYC without special treatment. This is not about being against Amazon or tech, it is about being again crony capitalism. --NYC Resident

temuze 8y ago
1) The $505M is conditional if they bring 40k jobs. If it's only 25k jobs, that turns into $325M. This money is meant for construction costs. [1] 2) Who cares? Do we need a popular referendum for every business moving to New York? That's insane. There's a reason why we're a republic and not a direct democracy. > With respect to your math, the goal of government is not to maximize tax revenue, but to provide benefits for residents. That remaining tax money would improve infrastructure around LIC. Also, as someone who used to live in LIC, who gives a shit? It's mostly yuppies and luxury housing until you get to Court Square. Sure, you have Queensbridge up north, but if public housing can survive in Manhattan, it'll survive in LIC. This is as low impact as you can get. - Also a NYC resident [1] http://gothamist.com/2018/11/13/amazon_queens_nyc_subsidies.php http://gothamist.com/2018/11/13/amazon_queens_nyc_subsidies....
- ciamac 8y ago
  Well, we can agree to disagree, but I think there are many reasonable arguments against this deal that have nothing to do with the RWDSU and everything to do with a lack of transparency and special treatment for a large powerful corporation. Wouldn't it be better to have a competitive process with multiple bidders to redevelop LIC? Let's see what the market clearing price would be. I'd bet it would not involve subsidies.

anth_anm 8y ago

> 2) This wasn't some "backroom deal". The NDAs were a stipulation in Amazon's competition meant to prevent bidding wars. If cities could react to other cities, it would have created an escalating race to the bottom. Ironically, Amazon probably did this to avoid bad press. Go figure. The entire thing was a race to the bottom. > So yes - this was still a really good deal. It wasn't. No giveaways to Amazon.

temuze 8y ago
> It wasn't. No giveaways to Amazon. The mental gymnastics of this are exhausting. Just because it's a big company, doesn't mean this is a bad deal. We give tax rebates for new businesses all the time. And as my math just showed, you pay this off in very little time.

zelon88 8y ago

But if you, as the city, didn't play ball and you knew for certain that the next town over wasn't going to play ball either; some city WOULD get the contract regardless. That tax revenue is gonna get collected and someone will get to spend it, whether you give Amazon $3bn or not. I'm tired of giving money to multi-billion dollar companies, even if it does make fiscal sense. We have a poverty problem, and a shrinking middle class problem. Adding 25k jobs at $150/year would only make the housing crisis in NYC worse. So why bend over backwards? All towns should band together and just stop coming to the table. Companies have to locate themselves somewhere. I don't want my state or city to try to attract more businesses that will raise my taxes if they're not going to do anything to fix my infrastructure and my tax rate.

manfredo 8y ago
> I'm tired of giving money to multi-billion dollar companies, even if it does make fiscal sense. We have a poverty problem, and a shrinking middle class problem. Adding 25k jobs at $150/year would only make the housing crisis in NYC worse. I'm not sure I follow. How does rejecting business development and turning away thousands of high paying (and thus, paying high taxes) jobs help reduce poverty? How is rejecting well paying job opportunities supposed to help grow the middle class? Housing crises have everything to do with supply. San Francisco has a fraction the population of NYC but also has a housing crisis. You seem to be operating under the notion that the presence of wealth somehow causes poverty. This is just plain wrong. How are we supposed to help the impoverished and build the middle class if we destroy job opportunities? Your post comes off as putting more emphasis on "wealthy people stay out" rather than trying to come up with ways to help the poor
- Analemma_ 8y ago
  > I'm not sure I follow. How does rejecting business development and turning away thousands of high paying (and thus, paying high taxes) jobs help reduce poverty? Because allowing this kind of behavior creates a race to the bottom, where the end state is that no company ever pays any tax. The only way to avoid this situation, if you don't have a higher-level government entity banning it entirely, is to grow a backbone and say no. And it isn't as if NYC is hurting for jobs. > How are we supposed to help the impoverished and build the middle class if we destroy job opportunities? I can just as easily flip this question on its head: how are we supposed to help the impoverished if we allow companies to play hostage-taker with jobs and ultimately drive their tax rate to 0?

philwelch 8y ago

It was a good deal. Unfortunately for New York, it was also a touchpoint for exactly the same type of local populism that Amazon was trying to hedge against in the first place.

bogomipz 8y ago

>"This wasn't some "backroom deal"." From NYC's perspective this was exactly a backroom deal, done out of sight up in Albany. It's important to note that in order to build the LIC Amazon campus the state employed a somewhat controversial land use procedure known as a GPP - General Project Plan. This was used as a way of circumventing the city's rezoning process which would have required greater city council input. Using a GPP ensured that the Empire State Development Corporation had final say. And locally it was seen as an end around on Queen's LIC Councilman Jimmy Van Bramer and his district. It's striking just how mismanaged the local perceptions and local politics of this whole deal were from the beginning. LIC and Queens in general is one of the most diverse places in the world. The overwhelming majority of which are people who have never heard of Hackernews or even work in tech. Further this comes amid a time when New Yorker's have watched the fabric of the city change in rather concerning ways. The city has been blighted by a mix of both empty store fronts and endless retail bank branches on every block. Up above them a hyper construction machine builds endless glass tower "luxury condos" that are little more than safety deposit boxes for people who will not live there the majority of the year. All of this is a backdrop of great anxiety for many people. Our local governments have far more responsibilities than just generating tax revenue. These purely financial and technocrat armchair analyses never bother to take any of this into account.

bhl 8y ago

You can’t have an economic model that just focuses on all the positive aspects of a deal — that’s just intellectual dishonesty. What about the negative externalities? The strain on public services, transportation, housing, etc? To be clear, I don’t think either side, for and against Amazon in New York City, know clearly how an economic development like this will affect the region.

exolymph 8y ago
Know clearly, or know for sure?
otterley 8y ago
How would such strain be any different than if a different business or collection of businesses that employed the same number of people were launched in the same neighborhood? (Disclaimer: I work for Amazon, but have no knowledge of or role in this process. Opinions are my own and not of the company.)