NY state tax break is $48k per Amazon HQ job | Hacker News Reader

NY state tax break is $48k per Amazon HQ job

fox5ny.com

346 pointssamfisher83343 comments

1) Incentives are not given up front. They are given proportional to the results Amazon has achieved. Amazon must make a report each year detailing their progress before any award is given.

2) The city-level incentives are available to any business. State-level incentives (I think 300m) are not.

3) Amazon has pledged to invest in the local community as part of the deal. There are plans for an elementary school and tech education center.

4) The NYC tech sector is more diverse than SV. 47% of tech workers in NYC are immigrants [0]. Is there any evidence supporting the claim that Amazon will ship in majority groups to displace minorities or immigrants?

5) There is direct investment in tech education for minority groups in the city [1]. Therefore it is reasonable to assume that they will receive a chunk of these jobs in the future. If you support increased diversity in tech, it is inconsistent in your beliefs to not support 25k more tech jobs in NYC.

6) LIC built almost 2.8k rental units last year. [2] I think they have built 6k this year so far. 28k units were built city-wide last year [3]

Please tell me what about this is bad.

[0] https://comptroller.nyc.gov/reports/our-immigrant-population... [1] https://codenation.org/ [2]https://licpost.com/long-island-city-had-more-housing-units-... [3] https://www.wsj.com/articles/amenities-war-breaks-out-in-lon...

Thank you, this is a good list of clear benefits. I have yet to see such a document that states in an objective manner the negative impact, it's all assumptions.

To be fair, predicting unquantifiable future growing pains will always be presented as an assumption. Also, whether something is a negative impact or not is rarely objective. So asking for contrarian debate on negative impact to be objective is unfair. But yes, there are clear, quantifiable benefits to economic growth.

Ahem: https://www.mercurynews.com/2018/01/17/h-1b-foreign-citizens...

"About 71 percent of tech employees in the Valley are foreign born, compared to around 50 percent in the San Francisco-Oakland-Hayward region, according to a new report based on 2016 census data."

I think this is probably a net positive for NYC, so I don't see why the dig at silicon valley?

Yeah, the appeal to diversity is strange since if you're into quotas and metrics, it's south and east Asians who are overrepresented in tech, not "majorities".

Implicit in the appeals to diversity is that women and non-Asian minorities are mostly the target as far as increased representation.

What about the externalities and expenses pointed out in a prior thread [0], specifically the ones not helped by federal funds in this post [1]?

Will Amazon help to pay for the transit and housing required by their move? Because they're sure paying less than they would have if not for the incentives.

[0] https://news.ycombinator.com/item?id=18443624

[1] https://news.ycombinator.com/item?id=18445241

Note, that first thread didn't point out any of the positive externalities GP did.

> Will Amazon help to pay for the transit and housing required by their move

In a sense, it will, in the form of the salaries it will pay to the employees using said housing and transit.

One might say that MTA operates at a loss and is subsidized, but this is a known problem of MTA being anything but frugal.

Realty prices in NYC / Brooklyn / Queens are not exactly low, and new construction is incessant everywhere (which is good). Paying renters or even buyers, the new Amazon employees, will finance their part of that.

It’s really cool how Amazon has hundreds of cities up in arms bidding just to give Long Island such a great deal. /s

I have little trust in city officials and corporations to be forthright about the deal. The bidding process is hidden and full details are slow to come out to protect the deal.

Payouts to corporations has been a pattern and it should be fixed at the federal level. Companies don’t make a bidding war to help local communities, it’s for their own bottom line.

> The bidding process is hidden and full details are slow to come out to protect the deal.

This is a great point. Politicians obfuscate the legislative deal-making process and tech companies sneak all sorts of clauses into EULAs and employ dark patterns in their software. Why should we assume this deal, birthed from the intersection of politics and technology, be any better?

It’s not In Long Island. It’s Long Island City, which is in Queens, which is next to Long Island.

Queens is a part of Long Island, in the north western corner of it. So is Brooklyn, which is in the south western corner. Long Island City is indeed a neighborhood within Queens though.

Technically, Queens is part of Long Island.

Tech hasn't been kind to Seattle or SF. Maybe to the people attracted likely to be filling this jobs, but not to the people in the surrounding areas.

LIC was mostly warehouses at one point and you're right a lot of the new units are housing for people moving away from Manhattan. But the concern is not just about LIC; it's about Corona, Astoria, Jackson Heights. These are areas with a lot of immigrant communities, communities that'll start getting pushed out once the Amazonians move in.

Not sure why you would say that tech hasn’t been kind to Seattle — nearly the entire history of Seattle and surrounding areas has been based upon 2 things: resources and technology. Resources like trees and salmon and otherwise don’t actually employ that many people in the modern era.. one person can log huge areas and it takes many years for this trees to grow back so there is an upper limit to how many people can be supported by it. Technology companies like Microsoft and you could also call Boeing a tech company in many ways are basically the reason 90% of the people are in the Seattle area anyway — so amazon and others are part of the latest wave of tech happening in the Seattle area and brings in zillions or dollars from around the world. Many many many people in Seattle area have become very rich from that. If people making money is not what you like to see there are plenty of parts of the country that are full of struggling people who wish they could find a job that pays more than $10 and hour. Maybe people get pushed out in certain areas but often a lot of those people sell their houses at a profit so it’s not horrible for them. Anyway, I just think broadly stating that tech has not been kind to Seattle is a bit of a narrow view for an area that has more to be happy about than many places. By the way, construction workers basically can write their own ticket in Seattle right now.. huge demand and way too few workers. Same thing for trades. Where do they get the work? 95% from people who work for Microsoft, google, amazon, and many of the other tech companies in Seattle / Bellevue area.

Tech might not have been kind to the cities of SF and Seattle sure, but tech built the greater metropolitan regions of both of these areas, where Seattle metro's population has doubled as a result of the tech boom since 1980, and the bay area's population has grown by ~70% in the same time frame, for reference, this isn't that far off from the nominal growth seen in greater Los Angeles during the same period.

Seattle was created to supply the Yukon gold rush miners. Then it was heavily dependent on Weyerhauser (lumber). Then it was Boeing (will the last person who leaves Seattle please turn out the lights.) Now tech.

Seattle's always been a one horse economy.

(Something like 15% of workers in Seattle are Amazonians.)

Can you provide a source on the 15% number? Is that 15% of all employed people or just in a specific sector. If it is a specific sector how is that defined?

This person is wrong unless you define the worker market in some weird way that excludes other large employers like Boeing and uw. This article from 2018 lists other large employers, and Amazon looks smaller than expected https://www.tripsavvy.com/biggest-seattle-area-employers-296...

I think the difference is "Seattle" vs "Seattle area."

Google says that Seattle has a population of ~725k. Let's say that half of them are working. 725k * 50% * 15% ~= 54k.

54k Amazon employees in the city limits sounds at least in the ballpark.

The "Seattle area" includes Bellevue, Tacoma, etc., which about triples the number of people.

I read it in one of the flurry of newspaper articles in the last couple days about Amazon, but don't recall which.

Doing some googling:

Amazon Aug 2017 had 40,000 workers in Seattle:

https://www.seattletimes.com/business/amazon/thanks-to-amazo...

Workers in Seattle are currently 425,827

https://datausa.io/profile/geo/seattle-wa/

So the 15% figure is plausible.

No, NIMBYs haven't been kind to Seattle or SF. You are attributing the unkindness to the symptom, not the problem.

This 1000x. It's fashionable to blame the shortage of SF housing on tech, when the truth is that NIMBYs have created the shortage over decades by not allowing high density housing construction.

The proof of this is what happened elsewhere. the Dallas and Houston metro areas grew more in each of the last two decades the Bay Area has grown total since 1980. But prices haven’t skyrocketed because development has been permitted.

Why Amazon didn't choose Dallas or Houston?

Not enough local talent, most likely.

NY gave them billions of dollars.

>> 1) Incentives are not given up front. They are given proportional to the results Amazon has achieved. Amazon must make a report each year detailing their progress before any award is given.

What is progress? How do you measure progress? Many politicians claim that the past decade was progress. I don't see it.

>> 2) The city-level incentives are available to any business. State-level incentives (I think 300m) are not.

Any business? I bet that the average entrepreneur living in NYC would disagree.

>> 3) Amazon has pledged to invest in the local community as part of the deal. There are plans for an elementary school and tech education center.

Of course, because Amazon is such a generous corporation. Just ask politicians in Washington; they've also witnessed that incredible generosity first hand on many occasions.

>> 4) The NYC tech sector is more diverse than SV. 47% of tech workers in NYC are immigrants [0]. Is there any evidence supporting the claim that Amazon will ship in majority groups to displace minorities or immigrants?

This will affect real estate prices and will displace people who are living there right now who can already barely afford it.

>> 5) There is direct investment in tech education for minority groups in the city [1]. Therefore it is reasonable to assume that they will receive a chunk of these jobs in the future. If you support increased diversity in tech, it is inconsistent in your beliefs to not support 25k more tech jobs in NYC.

I don't buy these benevolent corporation arguments. Even if you assume that Jeff Bezos was a saint, I'm pretty sure that the many layers of selfish or apathetic middle-managers working under him will find a way to divert much of the funds back to themselves somehow.

>> 6) LIC built almost 2.8k rental units last year. [2] I think they have built 6k this year so far. 28k units were built city-wide last year [3]

Great in theory; but in practice, NYC is full of homeless people.

> How do you measure progress? For the past decade, we've severely deteriorated as a society - Yet politicians will call it progress.

Citation? By most metrics we've improved as a society in the last 10 years.

>> Citation?

Donald Trump, Brexit, Facebook, opioids epidemic, cryptocurrencies, increased rents, soul-crushing corporate jobs for all.

How exactly is this different from a broader practical standpoint than Bush, the war on terror, reality tv, heroin and crack epidemics, the dotcom bubble, increased rents along side decaying cities, endless suburban sprawl with no major transportation projects being taken seriously, and as always, soul-crushing corporate jobs where before you also had to wear a tie everyday.

The world moves forward just fine, and there hasn't really been many differences between America today and America in the 80s from a broader political standpoint. Maybe our country was a better place when unions mattered and the wealthy had a legitimate fear of a socialist revolution should concessions to the middle class not be made, but the fall of the soviet union in many ways put that fear to rest.

How hard do you think it would be to compose an equivalent list for any time period in history?

There's no pleasing some people. High unemployment? Terrible. Low unemployment? Oh, it's soul-crushing corporate jobs, it's even worse!

Not all of us see wage stagnation, growing inequity, debt accumulation as an improvement.

Net improvement doesn't require universal improvement. I'm not convinced that the world is better off now than it was a decade ago, but citing things like wage stagnation as proof that things have gotten worse is about as compelling as citing GDP as proof that things have gotten better. We will never see the day when all conceivable metrics have improved for all people.

Crime is mostly down; base wages have stagnated yes, but real total compensation has been steadily increasing. Hundreds of thousands of people rise out of poverty every day. Inequality has grown, though, which is probably bad. Debt accumulation is not necessarily bad.

> How do you measure progress? For the past decade, we've severely deteriorated as a society

If you are unsure how to measure something, surely you shouldn't present a result.

Ameritech/SBC, now AT&T, received, IIRC, circa $750 million in incentives to deploy universal access to high speed Internet throughout Illinois.

The ink was hardly dry when they turned around and lobbied the Illinois legislature to let them out of their side of the deal -- while keeping the incentives.

The current Foxcon deal in Wisconsin is looking more and more like Foxcon won't be coming through on all their rosy prognostications. Meanwhile, the SE corner of Wisconsin is all torn up, being rebuilt to accommodate them. In addition to all the other incentives.

And again, it will end up a struggle as to how much they get and what their ultimate deliverables will be.

And often as not, the public side of the equation is far outgunned in terms of very expensive and specialized lawyers.

I'd prefer my communities not even engage in this. Don't open that door. Focus on the people and businesses you already have, and on not screwing them for the sake of some outsider's "vision" -- especially when that "vision" is making said outside, and the local "development" talent they've recruited, very much richer.

> Ameritech/SBC, now AT&T, received, IIRC, circa $750 million in incentives to deploy universal access to high speed Internet throughout Illinois.

Are you talking about the Ameritech/SBC merger?

It was around that time; I no longer remember what name they were carrying at what points during that process.

They subsequently acquired the remains of AT&T; a few other things, and the name with which they subsequently rebranded themselves.

My point was more the "money for nothing" aspect; I merely don't remember off the cuff what exact name/branding they had at that point in time. Ameritech got bought out by ("merged with") SBC. Then the "merged" SBC bought the remaining piece of AT&T that included the name. A lot of the tech stuff, that had ended up in Lucent, went instead to Alcatel, IIRC (making a hole in the Omaha tech scene, among other things).

P.S. That's how I remember it, now. I wasn't involved -- well, other than being rather thoroughly shafted by then Ameritech/SBC (and now I seem to recall their carrying such a combined name, during the transition) on a home DSL deployment. I ended up learning from their own rather thoroughly demoralized tech support that almost all of that was outsourced: Installations, IT, etc. One actual Ameritech/SBC employee (or was it before the SBC "merger"?... sigh) told me that all they could do was file tickets. Those went to third parties, and they couldn't do a damned thing about following up on them.

Doing a tracert showed over ten hops -- sometimes well over, before your packets even left their "network" to the wider world. And that was the least of the customer's problems...

I ask because I can't find anything about the "money for nothing" aspect. From the contemporaneous news articles, I see there was a lawsuit with Illinois over merger conditions. Governments don't typically give "money for nothing" for a merger in a regulated industry--regulatory bodies basically have veto authority over the merger (they can blow the whole thing up by denying transfer of various licenses) and use that power to extract various concessions.

I mean it could be some other program, of course. I'm just trying to figure out the history.

No, this wasn't with regard to merger approval, as far as I recall. This was a separate negotiation: State level tax breaks and other concessions, in return for the commitment to deploy "universal" high-speed Internet access throughout Illinois via their network, where "universal" was something in excess of 95% of the population with exclusions only for exceptional circumstances, e.g. extreme isolation. I seem to recall a percentage deployment they agreed to reach, over 95%, with discussion if not language about what might constitute the demographics of that bit that they would be allowed to fail to cover. "High-speed" was some not-too-aggressive throughput level commensurate with speeds in those days.

"Money for nothing" was my quip, regarding the company's apparent attitude. The company agreed to it all, then started lobbying to get out of their commitments under the deal -- while not giving up the tax breaks and other concessions they'd gained by making said commitments. The agreement bound them to do these things; they turned around and lobbied the Illinois legislature to "unbind" them, while leaving the rest in place.

Anecdotally, even in Chicagoland, they continued to drag their feet until the cable TV companies starting deploying wholesale. Depending on location, this often was some years later. Then, suddenly. the now-AT&T would get serious about their own deployment. Well, kind of serious: Technically, it often still sucked, by comparison.

This is, in my view, analogous to the failures of big ISP's, in various states, until they face competition, for instance by communities finally just rolling their own municipal and/or cooperative broadband. Then, these big ISP's go to the legislature of whatever state and cry (i.e. lobby), "Unfair competition!"

One has to keep telling these stories, so that maybe voters will pay enough attention to their state politics to vote out their elected officials who participate in these giveaways, that someone at sometime conveniently nicknamed "corporate welfare".

Maybe even vote in and support a state attorney general willing to initiate investigations and, where evidence of corruption can be found, send a few of those officials to jail.

I don't doubt your recollection, but I'm skeptical of these stories in general. There is a lot of historical revisionism about what happened in the 1990s and early 2000s. Broadly speaking, the whole industry was deregulated in 1996 because Congress thought regulation (price caps, profit caps, etc.) was a bad idea and was hurting investment. There were a lot of projections about where that new investment would go, but they weren't a quid-pro-quo for deregulation. Then in the 2000s, mobile exploded, and a lot of the investment that was going to go into fiber to the home went into mobile instead. A lot also went into backbone and business fiber networks. That resulted in a lot of accusations of broken promises. But when you dig into it the "commitments" turn into "projections" and the "money for nothing" or "tax subsidies" turns into "eliminating the special rules we had for telcos."

From a regulatory economics point of view, telecom deregulation was one of the big success stories, along with airlines and trucking. For the most part, Western Europe copied it. But our wireline infrastructure is still better than every big European country, because we have invested massively in it: https://www.akamai.com/fr/fr/multimedia/documents/state-of-t... (see page 12).

One venue of coverage I seem to recall as being arstechnica.com . That would make sense in that they had and still have a strong presence in Chicago.

I'll look later for some old articles, if I don't get too distracted.

I'll consider what you describe and what you linked. From memory and off the cuff, it reminds me of all the fiber investment around that time that seemed to undergo a value implosion and leave substantial "dark fiber" waiting for new projects/investments to pick it up. MCI and Wordcom (?) come to mind. (And the bath that some investors took.)

If I was understanding one of them correctly, a year or two ago, my German friends could get high speed wireless Internet (from T-Mobile) at their newly purchased country home in the middle of the Eifel "Mountains" rural... "farmscape", I'll call it, for I think 40 Euro / month. Fast enough to stream, and no data cap.

Meantime, here I was still reduced to just Comcast, as AT&T had over the course of a decade and a half never upgraded my block's line that was so old and poor quality that it wouldn't even reliably support DSL. And I'm in the middle of suburbia in a fairly dense sub-division. Comcast wanted $95/month for their high-speed Internet (with basic cable TV, the way they price their packages; gotta keep their cable TV demographics up). And that was after arm-twisting one of their reps for a discount. In the meantime, that number's up to about $135/month.

Whatever the state of our technology, it's not translating here to effective competition and prices that compare to what friends are getting in Europe. Not even close. In my limited experience.

P.S. On the other hand, I'd hate to buy an expensive laptop over there.

But objectively, U.S. internet access is faster than German internet access (or U.K., France, Spain, or Italy, which comprises like 70% of the EU population). According to Akamai, 50% of U.S. connections are over 15 mbps, versus 33% of German, and 18% in France. In states that are as dense as Germany, like Maryland or New Jersey, it's 60-65%. According to the OECD, fiber deployment in the U.S. is 12.6% in 2017 versus just 2.3% in Germany. The U.S. is also better positioned than those countries going forward. More of our infrastructure is hybrid fiber-coax, which can be incrementally upgraded by pushing fiber deeper into the network, and is on the path to symmetric gigabit in the next few years. Countries like France are much more reliant on DSL, which is really hitting its limits. (But the DSL can be "good enough" and cheap.)

Which is really remarkable when you think about it. There is no other infrastructure that the U.S. does better than Germany or France. Our trains, subways, and roads are shameful compared to theirs. But our internet access is better. That's a real testament to the success of the 1996 deregulation.

I was interested in this story and did some digging. I managed to find a WSJ article detailing it from 2000, but it was behind a paywall. I found another website duplicates the article

"A Year After Merger With Ameritech, SBC Still Hasn't Met FCC Conditions" https://www.barrons.com/articles/SB971041139934224266

I didn't look much for articles about when, if, or how SBC got out of these FCC requirements.

Re: 3/5.

We already have ways to turn corporate money into community services. They're called taxes. I'd much rather we as as a community take Amazon's money and build our own schools rather than have Amazon build an Amazon Education Facility and thank them for their time.

Yes. I've been trying very hard to figure out what purpose it serves aside from good PR. On the bright side, I suspect Amazon's standard for facilities they're willing to associate with their brand is higher than that of the NY government.

"Please tell me what about this is bad."

A trillion dollar company does not need subsidies.

It does if you want their business. You made a statement, you didn't say why it was bad.

You know, I was going to respond to you by saying that there will always be Amazon business without a new HQ in a place. However, I thought about it and it is certainly possible that they would test new and interesting things in markets around their HQs, potentially providing unforeseen benefits for the residents around them and markets around them. While the whole package deal still seems like a net negative and shady to me, that certainly does fall into a potential (though very not proven) positive category.

Queens becoming a playground for social experiments of a billionaire is guaranteed to be good, right?

You need to be explained why $1.5B in public assistance to a trillion dollar ($700B+ today it seems) company is bad?

I'll try.

It distorts the competition, ESPECIALLY in the case of Amazon which more or less competes with every retailer everywhere.

It sets a bad precedent (yes, yes, water under the bridge) of big corporations expecting these benefits any time they feel like moving around.

NYC has better uses for the money.

It doesn't need the goddamn money, because it's one of the most successful companies in the entire world, ever. It can finance its operations by itself with absolutely no problem whatsoever. It's ridiculous they're even asking for public assistance.

This is a race to the bottom. Sports stadium construction incentives are good examples of this.

"It sets a bad precedent (yes, yes, water under the bridge) of big corporations expecting these benefits any time they feel like moving around."

Absolutely incorrect. It's been like this for decades, is essentially universal, and this is barely egregious in comparison to past incentive packages. NoVA and NYC weren't even the largest incentive packages offered for HQ2.

https://info.siteselectiongroup.com/blog/top-10-economic-inc...

https://info.siteselectiongroup.com/blog/top-25-economic-inc...

https://info.siteselectiongroup.com/blog/top-economic-incent...

https://info.siteselectiongroup.com/blog/largest-economic-in...

They also don't need to locate headquarters in New York. It's a question of negotiated agreement, not need.

3) why is this left to Amazon or am I misunderstanding how this is managed?

They're using a Payment in Lieu of Tax (PILOT) program [0]. I've been trying to understand why these programs exist for corporations but having trouble finding definitive answers. My hunch is that it's a marketing trick to help people stomach the tax breaks and go "oh, well at least they're building a school". Possible that it also allows for legal negotiation of terms like amount and payment schedule that can't be applied directly to property taxes.

[0] https://blog.aboutamazon.com/company-news/amazon-selects-new...

So basically a miniscule one time payment that would easily and continuously be covered by taxation.

> Please tell me what about this is bad.

Opportunity costs?

You list several benefits, but benefits don't tell us where a choice ranks in the list of possible alternatives.

For example, the alternative where we get all those benefits, but where there weren't any incentives at all, seems strictly better. Why not that?

You'd probably protest that it's not realistic. We can't get there in the current system, where powerful companies can play states and municipalities off of each other and require the best incentives before they are willing to make any useful choices.

But a lot of us think that system sucks.

When the powerful have opportunities to rewrite local policies on the fly, it doesn't feel right. Doesn't matter how many benefits there are.

This isn't a new or irrational ideal. Much of the Western canon on governance obsesses about the importance of the rule of law: the idea that the laws should apply to commoners and kings (or powerful companies) equally.

It's a principle a lot of people hold very dearly, and are unwilling to sacrifice for a few temporary benefits that we might have been able to achieve anyway, if we just had a better system in place in advance.

Do you buy things on Amazon?

Who cares?

Amazon is a great company in a lot of ways, not great in some other ways, and none of that has anything to do with my opinions on local governance.

Or as Yogi Berra might have put it, this Amazon story isn't really about Amazon anyway.

Because the reason you buy things on Amazon is because they get you the best deal and they get you the best deal because they get the best deals. They get the best deal by exploiting workers in American warehouses, exploiting workers in Chinese factories or exploiting the citizens of New York. Either way, exploitation gets you that deal. Those guys who aren’t as effective at exploitation as Amazon? Well, you don’t shop with them, do you?

Now if you weren’t a price or convenience-sensitive consumer who didn’t shop on Amazon out of moral conviction, I would at least respect your perspective. But if you shop on Amazon, I’m not sure you get to quote Yogi Berra.

Well, Yogi also said that if the world was perfect, it wouldn't be. So I keep shopping at Amazon.

My issue is not with Amazon.

This is about the game, not the player.

Though now I'm misquoting Ice T too...

I don't see the show stopping conflict around shopping on Amazon and also pushing for an improved political/market environment. Maybe we'll just be spending more per order... still on Amazon? If exploitation is systematically eliminated, the concept of a deal still exists.

Would it be fair to ask coal miners in the early 20th century if they shop at the company store?

Large retail companies are ubiquitous in our society. It takes a certain degree of socioeconomic privilege to be able to choose not to buy things from them.

what a horrible excuse. there are plenty of other options to shop at than amazon, in fact you have to go out of your way and wait for your items to buy from amazon. the assertion that one has to be privileged to not buy from amazon is also silly, how many lower status people do you see shopping at amazon. capitalism fails when people don’t exercise their choices and hiding behind excuses like this is why people run around saying capitalism doesn’t work

> Much of the Western canon on governance obsesses about the importance of the rule of law: the idea that the laws should apply to commoners and kings (or powerful companies) equally.

Does it mean that everybody has the same taxes and the same governmental benefits/incentives? For examples, if somebody buys an electric car (in California), they get government subsidy and the benefit of unrestricted use of a carpool lane. I don't get this if I don't buy that car. Should I protest this? How about if I put my money in 401k/IRA, it doesn't get taxed, but if I invest it in my own brokerage account, it does? Isn't it laws not applying equally to all people?

You can say - well, the government wants to encourage certain behavior and thus different behaviors have different tax consequences, different benefits and so on. Well, what if the government wants to encourage behavior of commercial mega-corporations investing in specific areas?

I personally would gladly give up all encouragement of behaviors in favor of simple, plain and transparent tax system that is not being used as social engineering too. Good luck passing that through the legislature. And if this doesn't happen, targeting specifically Amazon deal makes little sense.

Your analogies are missing the key thing people are actually upset about here: one company got special treatment through private bidding. The class of beneficiaries has only one member.

If carpool lanes were built for the exclusive use of Patrick Stewart, widely loved though he may be, as an inducement to live in California, then yes, we would have the same problem.

> Good luck passing that through the legislature.

Social change is hard, it doesn't mean it's not worth discussing.

There has been periodic political interest in fixing this, and some regions have actually opted out:

https://www.washingtonpost.com/news/wonk/wp/2014/09/15/shoul...

I don't think they've nailed the right formulation yet for a broader fix. Definitely a hard problem. But if economists universally oppose some practice, and it's also widely unpopular, it's not the craziest thing to imagine a potential for change.

> And if this doesn't happen, targeting specifically Amazon deal makes little sense.

I'm not targeting one deal specifically, all of these arrangements bother me. But if that's the incentive that happens to dominate the news it will frame the conversation. If the media blitz was about the breaks Tesla got in Nevada, that would be the backdrop here.

Amazon created this media circus with the competition, it gets to be the poster child for the broken system. It's not that big of a hardship, no one is calling for Amazon to be broken up or fined to fix this broader issue.

> The class of beneficiaries has only one member.

That's not true - a lot of companies get such kind of deals, all the time. Some even mentioned in this thread.

> If carpool lanes were built for the exclusive use of Patrick Stewart, widely loved though he may be, as an inducement to live in California

If Patrick Steward would bring California several billions in income by living there, then maybe giving him private lane would be a good deal.

> Social change is hard, it doesn't mean it's not worth discussing.

It's worth discussing, but nobody would listen to a proposal for reducing government economic meddling. Everybody love to pile on Amazon and such, but when they go to vote, they ask politicians "bring us jobs". How do you think that would look like? It looks like this - politicians hustle so they can say they brought jobs. In the next election the New York mayor - if Amazon thing works out - would say to his opponent "ok, I brought X thousands of jobs and Y billions of income to New York, here's the list of deals I arranged. What did you do for New York?". And the electorate would listen and support that. So how could they not do it?

> But if that's the incentive that happens to dominate the news it will frame the conversation.

That's the problem. The government meddling happens all the time, but we only discuss it in "outrage of the day" format. But in this format it can never be fixed. Even if somehow enough people become outraged that the deal falls through - Amazon has a long line of mayors willing to do the same. And vast majority of people outside of the "outrage of the day" format think that's exactly what the government is supposed to do. So what's the point of being outraged here? Nothing would change, because that's what people want!

Here's one example: https://reason.com/blog/2018/11/20/californians-are-paying-m...

> Please tell me what about this is bad.

A trillion dollar company is getting subsidies, when they should be helping to build and grow the society that created them.

Healthcare in America is disgraceful. Absolutely the worst in the developed world. Tens of millions of people in your country live on food stamps. Tens of millions work multiple jobs and are still considered "in poverty". Higher education is so expensive it's prohibitive or puts people in crushing debt for a very long time. General infrastructure is horrendously bad.

The whole point of a society is that everyone contributes to make it better for everyone. When a trillion dollar company gets to pay less that they're supposed to, it makes society worse, not better.

The goal of the society should be to make life better for everyone living in it NOT to raise the stock price of what is already one of the biggest companies in existence.

Most of your screed about how US sucks has nothing to do with Amazon or why Amazon deal is bad.

> When a trillion dollar company gets to pay less that they're supposed to, it makes society worse, not better.

That's where you went wrong. A trillion dollar company is not supposed to pay anything to New York. The minimum NY was getting is $0. That's the starting point. Amazon is free to locate HQ in any other place and NY gets $0 from it. Now, NY can negotiate and get more than $0 - or not, and get $0. It's not like Amazon has already build headquarters and paid taxes and then NY decided to give them back a lot of money just out of the blue. It's like Amazon said "I can bring this much money to the table, but what you can do for us so that we choose you? Lower taxes? Better regulations? Something else?" and NYC considered how much Amazon brings to the table and how much they can do to make NYC their choice and they negotiated.

Now you may want to say "if lower taxes makes the city or state competitive and improves outcomes, how comes not everybody gets low taxes?" Good question. Probably the same reason not everybody gets paid six-figure salaries. Some companies (or people) have more economic clout than others and can demand better compensation in exchange for good their bring to the table. If the city (or employer) doesn't want the goods, they are free to refuse the deal.

> A trillion dollar company is not supposed to pay anything to New York. The minimum NY was getting is $0. That's the starting point.

Your entire post just described, by definition, a race to the bottom.

Obviously the US is winning that race relative to other developed countries, but I'm staggered you think it's a good thing.

It's absurd to think Amazon is doing NY a favor by bringing more than $0.

That's like if I walk into McDonald's looking for a job and they say to me "Well, you currently earn nothing, so you should be mighty thankful we'll pay you even $1/hr".

There are laws against paying people $1/hr for a very good reason - because if they could corporations would do that to maximize profits. All the employees would suffer. The corporation would make more money.

Which is exactly what's happening with Amazon/NY.

You are right that NY will get more money now that if Amazon had not come, but that's also true that my life would be better getting $1/hr than $0/hr.

But is that a good thing? Do we want people to get paid $1/hr? Does that make for a happy and healthy society? Of course it doesn't, and letting Amazon pay less than they should is exactly the same, and has the same outcomes.

How is Amazons deal in any way equal to your $1 an hour analogy? This is a serious question. Amazon will bring high paying jobs to the area. Those workers will pay taxes. They will also patronize local businesses. Yes, real estate will go nuts and infrastructure will have a tough time scaling, but your $1 an hour analogy is dishonest.

I grew up in Seattle. I know what Amazon will do, but again, your $1 analogy needs a citation. This is beyond hyperbole.

> Your entire post just described, by definition, a race to the bottom.

Every negotiation is "race to the bottom" for the side that is paying - they want to pay as little as possible. However, there is the natural bottom for it - as soon as the deal costs more than it brings in - in fact, as soon as the deal costs more that what it brings in, including reasonable profit - the side that is dissatisfied would refuse to make a deal. What would be the point?

> It's absurd to think Amazon is doing NY a favor by bringing more than $0.

Why is it absurd? If Amazon is doing NY a disfavor, why NY wants it? Do they hate themselves? Are they gluttons for punishment? Were they forced into the deal by a secret Amazon ninja army? No, I don't think so - I think they want the deal because the think the deal is good for them. Of course, you know better, but I think for most people your argument is not exactly obvious. Or correct.

> they say to me "Well, you currently earn nothing, so you should be mighty thankful we'll pay you even $1/hr".

They can. And you can say "go fish, I won't work for $1". And then they'd say "well, how about $10 - would you work for $10?" And you'd say "now you're talking!"

> The corporation would make more money.

No they won't - people wouldn't work for them, and corporation rarely are able to make money when having no employees. That's why only about 2% of the workforce earns minimum wage. One would expect the greedy corporations to pay absolute minimum, right? But they pay way more. You'd have to find a theory that accounts for that. I have one, but looks like you do not.

> Do we want people to get paid $1/hr?

We want people to get paid whatever they can get paid. As we can see, it's in about 98% of cases more than both $1 and minimum wage.

> and letting Amazon pay less than they should is exactly the same, and has the same outcomes.

No it does not. I welcome you to consider why business-to-business transaction is different from person-to-employer relationship (hint: people can go hungry and sick, but corporations rarely die from not being able to locate headquarters in New York). It's a business transaction, one that NY made voluntarily, and one that they expect would be very profitable for them. Of course, as everything in life, they might be wrong - sometimes business transactions go bad - but declaring this transaction is wrong because you could've gotten everything and more for free makes no sense. You couldn't have gotten it for free, and dreaming about it doesn't make current transaction destructive for society, quite the opposite - it brings jobs and investment.

Btw, they’re not a trillion dollar company. Yes their stock value landed them there, but the market is overvalued. Last I checked, Amazons dropped 25% from all time highs, Netflix is in pain. Apple is in bear territory. Your running away with sensationalist news headlines. Even if Amazon hits $1 trillion, it’s numbers on paper. They’re a growth company facing economic headwinds with rising interest rates. If shareholders owning amazon cashed out, they would collapse.

> There are laws against paying people $1/hr for a very good reason - because if they could corporations would do that to maximize profits. All the employees would suffer. The corporation would make more money.

And yet lots of companies pay people more than the minimum wage, for some reason. Doesn't that by itself disprove the "race to the bottom" narrative you are suggesting?

A company can't simply dictate how much it pays you, any more than you can dictate how much it pays you. It's a market - in the best case scenario, both sides have lots of alternatives, and the price you get paid is the best that both of you can do (lowest for them, highest for you).

> [That] post just described, by definition, a race to the bottom.

I agree, though in this context we tend to term that "competition". In this case we are watching competition between states and localities to improve themselves and their tax bases. This strikes at the heart of how interstate commerce works and what the rights of the States are.

Sections of the country competing with one another and taking various approaches to the same problems trying to find better solutions and proving them in practice is kinda fundamental to the American Experiment...

Securing infrastructure investments with large corporations is the kind of thing that States are concerned with, and they are supposed to compete for the affection and attention of businesses. Tax code is one of the few levers they can pull in that pursuit.

> I agree, though in this context we tend to term that "competition".

And I'm really happy when there is competition between Apple and one of their suppliers.

What is really sick about what you're talking about, is that it's competition between trillion-dollar Amazon and regular ordinary tax payers.

When Amazon get the upper hand, they get more money, while the tax payers get crappier schools and government programs.

You are literally talking about a corporation taking ('negotiating') bread from hungry people like it's a good thing.

If NY is losing money on this, then what you're saying is correct. If they're making money, then the taxpayers of NY are coming out positively. The tax break doesn't exist on its own: 10% of $1 versus 1% of $1000, and the latter is obviously the better deal.

As GP stated, the alternative is that NY doesn't get Amazon's HQ, and gets 0% of $0.

>You are literally talking about a corporation taking ('negotiating') bread from hungry people like it's a good thing.

If you're going to make such an argument, you might as well claim that they should pay 99% in tax, because any lower a tax rate would be "taking bread from hungry people". Of course, this would be stupid: you'd make more money in year 1, the business would go under, and you're now making squat, and all the poor folks go hungry once more (plus the additional of everyone who just got fired). The percentage is not what matters here.

You could argue instead that the overall country is worse off, but the US is a one that encourages state-level competition, and thats how it goes (ideally, states should be efficient with their limited funds, and taxes should be as low as possible to support their various infrastructures; state-competition encourages this, in the same fashion as any other part of the US economy).

> You are right that NY will get more money now that if Amazon had not come, but that's also true that my life would be better getting $1/hr than $0/hr.

That's a pretty bad comparison. Why would I take the $1 job? I got way more currently. The only reason I would do it is because I'm trapped and I NEED this $1 to live.

Does NYC is trapped right now? Does they NEED that $1 to live? Not at all, they are perfectly fine, they are the definition of not needing that $1.

So it's more like, you are making 75$/h, Amazon is looking for some part time employee and you do happen to have a few hours left in your week that can fit that. They want to know what you can do for them for theses few hours and you accept after a few rounds of negotiation. It's a 2 ways street, Amazon give to the city and the city give to Amazon. What Amazon offer has a value to the city but what the city offer to Amazon has a value too.

There's no regulation for wage increase, is it? There's only a minimum, because it's when you are at the bottom that it can be abused. Once you are not at the bottom, you can negotiate as much as you want. It's the same here.

The big question is how can we make sure we don't abuse that minimum, but that's a whole other issue.

The best argument I've seen is that it was inevitable AMZ would enter NYC to remain competitive in the multi faceted tech sectors flourishing there (as you point out in #4). There was no need to pay them to do it.

> 3) Amazon has pledged to invest in the local community as part of the deal. There are plans for an elementary school and tech education center.

If you believe this, I hear Amazon also has a bridge they'd like to sell you...

This is such a great deal for NYC

As the article says, they give up $1.5B over 10 years, but then get "Projected incremental tax revenue of more than $10 billion over 20 years."

I dont know where that comes from but the payroll and property taxes paid by 25k employees dwarves the incentives.

The most important part is it cements NYC as the main tech center on the East Coast. That is invaluable.

EDIT: I wonder if NYC with tax incentives, Amazon would still pay more tax than regular tax rates in FL, TX.

That $10 billion likely assumes all new staff. There are going to be many current NYC citizens who simply switch jobs to Amazon. Therefore they won't contribute any incremental tax increase. Only if their previous employer rehires their position will a net new position be created.

Why would their tech sector employer not rehire for their position?

Labour shortage related to big new employer hiring everyone.

Why wouldn't the previous employer rehire though? Unless the employee is someone who was just sitting around and not contributing to the company.

Unemployment is ~3% and Amazon comes in and sweeps up all the available (and non available) tech employees in the area. They may want to hire, but can't.

I find it hard to believe that 25,000 people are moving jobs and their previous employers are saying "we're not replacing them."

Assuming the economy stays on a decent trajectory.

But even then, there's probably some inefficiency in that replacement.

Most will be replaced, and most of the replacements will also be locally sourced.

Company A creates a “new” job. They hire an employee of Company B, who in turn poaches a replacement from Company C, and so on.

It’s fair to assume that some hires will be new arrivals to NYC, and some might come from the pool of unemployed. Most will have simply hopped from one employer to the next, replacing one job opening with another.

I never said 25,000 people would be from neighbouring companies, just that a non-zero percent would be from the area already. So they aren't going to contribute incremental tax increases.

> There are going to be many current NYC citizens who simply switch jobs to Amazon. Therefore they won't contribute any incremental tax increase.

How about for tech workers to get a raise? Or to move to a different part of the city? And besides, this is just conjecture. Do you have any data or polls or even anecdata which supports your claim?

But wouldn’t many of those people have lived there and paid taxes anyway?

Not without tech companies paying them to live there, no. As romantic as living in NYC is, tech workers wouldn't live there without tech jobs.

If they leave other jobs to work for AWS, presumably the jobs they have now will need to be filled by someone else.

"The most important part is it cements NYC as the main tech center on the East Coast."

This has long ago been cemented...

I wouldn't say that at all. NYC is definitely large for tech on the East Coast but so is Boston in tech R&D, DC for government related tech companies, and Research Triangle in NC and Austin TX (if this counts as East Coast) are both hotbeds for tech startups. There really is no Bay Area equivalent on the East Coast.

Sorry to be inflammatory but in what world is Austin, TX considered East Coast?

Anywhere liberal that isn't the west coast is east coast?

No offense taken. I only included it because Amazon had been including it in their discussion of an East Coast HQ2.

Your state should probably border the east coast to fall into the category of "east coast".

Nowhere in Texas counts as "East Coast."

Not really - Boston has been far ahead in terms of tech/VC/innovation on the East Coast

This is such a terrible deal for NYC.

For the last decade Cuomo has been giving subsidy after subsidy, tax break after tax break, to corporations from Long Island to upstate New York. Each one came with projected revenues and gains, and each and every one failed miserably and ended up costing NY taxpayers countless billions - while most of the corporations walked away with a profit.

https://www.niagara-gazette.com/news/local_news/state-of-sub...

https://nypost.com/2018/07/21/cuomo-has-wasted-billions-and-...

Doesn’t NYC have a housing crisis already? I’m not sure they need a worse one coupled with the gentrifying forces of thousands of tech employees moving in.

$1.5 billion in housing or just really anything to help people who already live there is what should happen.

>anything to help people who already live there is what should happen.

People who live here will benefit from this. NYC has a much more diverse candidate pool than SV - 47% of our tech workers are immigrants. Our schools are more diverse; there are more programs to teach underrepresented groups CS skills. They will benefit from this.

>gentrifying forces of a thousands of tech employees.

Can you explain how gentrification will actually play out, and how it's different than 25k jobs being created organically over the next decade?

>$1.5 billion in housing

Just because Amazon has been given an incentive doesn't mean that housing gets short sticked. https://www1.nyc.gov/site/hpd/about/press-releases/2018/07/m...

NYC is expensive and there is a lack of affordable housing. Cheaper than SFO though as there are hundreds of new apartment buildings always being built.

https://www1.nyc.gov/assets/buildings/html/nyc-active-major-... https://www.nynesting.com/new-developments

Yea NY's problem isn't like SF's or Bostons. NYC knows how to build and will build, it's just they need to build even more and faster.

Nothing stays forever in NYC which is kind of why it is such a great city.

> Doesn’t NYC have a housing crisis already?

New York has a problem. San Francisco has a crisis.

I just negotiated a 2% rent cut. Like four luxury buildings opened nearby and sucked out our building's highest-earning renters by offering lots of perks for marginally more rent. I asked my landlord if he wanted another vacancy or to keep a hassle-free tenant--he budged.

And my experience is not that unique. "Manhattan rents dropped 3.8 percent in March [2018] from a year earlier, the most since 2011" [1].

[1] https://www.bloomberg.com/news/articles/2018-04-12/pick-a-ne...

LIC is decades past gentrification.

No, NYC doesn't have a housing crisis. Rents are certainly higher in NYC than the average for the nation, but there are plenty of relatively affordable areas within an hour's commute of downtown, and the only transportation cost you'd pay is $116.50/month for a MetroCard. Subtract out all the substantial costs of paying for an automobile and NYC can even compare favorably in cost of living to some other cities that have less rent but still effectively require car ownership.

Also, NYC doesn't have nearly as much of a NIMBY problem as many other American cities. We continue to build lots of housing here.

NYC has absolutely just as much of a NIMBY problem as other American cities it's just the government at large cares less and people don't worry about traffic in the same way suburban areas being upzoned do. 25% of manhattan has some type of historic designation around it. Additionally, during the same period where the brooklyn and queens waterfront boomed with construction due to targeted rezoning, huge swaths of manhattan were downzoned from hells kitchen to the majority of the east and west village.

Additionally, there are hundreds of thousands of people who are rent burdened in New York, even in those places with so called cheap rent such as within south bronx.

Just a note from someone who moved from NYC to a suburban area a few years ago: a car doesn't cost that much (as I thought anyway). Outside of the fixed costs, insurance is about $70 a month, and gas at $60 a month, so that's about $130 in total a month, just a bit over the $116 in unlimited train rides in NYC. (And yes the fixed costs are much higher, I will admit.)

You're forgetting the actual cost of the car itself, plus maintenance. The average monthly auto payment in the US is sitting aroudn $500. If you buy the car up front with cash, then you need to count the opportunity cost of that money over time, and depreciation.

And then there's also registration, emissions testing, annual inspection, and other miscellaneous fees that vary by jurisdiction, but that can easily cost hundreds per year in total.

I don't know who you are referring to as NYC, but citizens of USA as a whole are worse off. Pitting one USA municipality against another to extract subsidy for what Amazon would do anyways is just another mechanism for wealth transfer from the poor to the rich.

> to extract subsidy for what Amazon would do anyways

I don't think they would. Big infrastructure in New York is expensive, financially and politically. Without Amazon's pressure, there is no way the new campus would have been developed, hooked up and approved as quickly as it has been.

They said they would build somewhere. The only question was which USA city.

No way? Google will have nearly as many employees as Amazon in NYC and as far as I know they didn't get special subsidizes.

It's not just money is it? It's also things like infrastructure they'll provide?

Could that possibly make Amazon more efficient, and so employ more people who spend their salaries and so on, creating a net gain for the whole US?

All of that would be true in any other location. One could argue other locations actually need such infrastructure more. Amazon was not hiding the fact that they would build HQ2 anyways, and in USA. There was absolutely no need to donate them taxpayer money for it. And if you do, then taxpayer should own the infrastructure, with Amazon paying for use.

No I mean that the competition may have motivated cities to create better offers of infrastructure to compete. If they all sat back and said 'well Amazon will have to go somewhere we won't bother making any effort' that may not have happened, and Amazon would be less efficient and the whole country would earn less.

For example some cities were proposing building things like extra train stations, which benefit everyone, and aren't something Amazon could have done privately.

There is a difference between building public infrastructure and giving tax-exemptions..

Public infrastructure is available to all.. why can't the public finance it without Amazon?

> why can't the public finance it without Amazon?

Cities may have been hoping that with Amazon moving into a region they would have extra tax receipts which would enable spending they would not have been able to afford before.

This is a pretty weak point, essentially "Lets give that guy money, he might do good things with it, he's done good things with it in the past." except instead of being a personal investment this concerns tax payer money being funneled to a private corporation.

They'd be much better spending that money on their neglected public transit or their neglected public housing...

> They'd be much better spending that money on their neglected public transit or their neglected public housing...

But some cities were suggesting that! They were going to invest in infrastructure, knowing that the extra income from Amazon in the area would pay for it. It was not a zero-sum game.

The same argument could be made for the USA by individual states having different income and sales taxes.

That's just as bad as Irelands tricks helping to avoid taxes due in the UK and other eu states

Well, it's hard to know the details.. But in the EU these kinds of incentives are generally illegal. As they are anti-competitive.

Which is also why we see the EU go after Ireland and require that they collect taxes from Amazon :) I recall Vestager starting to get the ball rolling a few years ago.

Companies negotiate tax treatments of contemplated activities all the time ahead of time with individual EU member states.

https://www.duijntax.com/en/advance-tax-rulings-negotiations as just one example reference I could quickly find.

> just another mechanism for wealth transfer from the poor to the rich

I'm not sure this type of competition is a great thing for citizens, but is this really a wealth transfer from the poor to the rich? Doesn't most tax revenue in the US come from the rich, meaning they're covering most of the bill? In that case it would be more like wealth transfer from rich people to rich companies with some of that wealth making its way back to a subset of rich people and companies (i.e. investors).

I'm sure there are secondary effects impacting the poor but I'm not sure it's as simple as mean rich people reaching into the pockets of the poor - there's not enough money there for it to be a compelling strategy.

> but is this really a wealth transfer from the poor to the rich? Doesn't most tax revenue in the US come from the rich, meaning they're covering most of the bill?

Doesn't matter where tax money came from, that part we are not changing. What changes is where that money goes. It could pay for schools, Medicaid, homeless shelters. Now there is going to be less of that, as we are building a helipad for Bezos with some of that money instead.

Which is why it's a wealth transfer towards the rich.

> It could pay for schools, Medicaid, homeless shelters

Yes, it could, but that doesn't mean it would in the absence of the incentive for Amazon. I didn't see any indication in the article that this would be paid for by reallocating funds from social programs or education. Has NY indicated how they're funding the incentive elsewhere? If this isn't known, how can you confidently say it's a transfer of wealth from poor to rich?

To be clear, I absolutely think there are probably more socially responsible things to do with the money, but there's a difference between opportunity cost and exploiting NY's poor to build Bezos a helipad.

Just go another level deeper - this was tax money that would otherwise go towards city programs that would disproportionately benefit the poor. The end result is a transfer from the poor to Amazon's shareholders (and possibly may result in a net benefit to NYC)

>this was tax money that would otherwise go towards city programs that would disproportionately benefit the poor

Where did NY indicate that they're reallocating money from those programs?

A better deal would have been not paying 48K per job and still getting Amazon to NYC.

An equally good deal would have been not paying 48K and getting Amazon elsewhere in the US. I mean, not for NYC, but for the US as a whole it would have been equally good.

The race to the bottom is lined with "good deals"...

> A better deal would have been not paying 48K per job and still getting Amazon to NYC.

And an even better one would have been free ponies for all and rainbow shitting dinosaurs. Also wasn’t on the table, however.

The operative word being "projected"

People said the same thing about the Foxcon deal in WI. And they have been drastically scaling back the scope of the plant, the skill and wages of workers required, and the number of them. Yet the state agreed to fund infrastructure improvements, and cash payouts to the company.. (not tax breaks). Basically, the subsidy per employee has more than doubled, and the average wage has dropped by 30%, and they barely started construction.

One of the big issues I have with these deals, is towns/cities don't have experience adding safety clauses to these, that are legally binding..

Are New Yorkers going to see these tax revenues, or are they just going to see housing prices go up?

This implies there is zero cost to NYC from the operation and no opportunity cost from giving up $1.5 billion. It also implies that no tax revenues would have come from the people and businesses that Amazon will inevitably force out.

I beg to differ.

New York City doesn't have a problem attracting jobs. Like not even a little bit. The idea that this is actually incremental revenue for the city is extremely debatable.

New York City is a really big place. Midtown is the largest central business district in the country, and Lower Manhattan is the third largest, after Chicago. There are 1,700,000 jobs in Manhattan alone and 3,900,000 in New York City. We're supposed to all bow down before a sixth of a percent change, spread out over 5-10 years? Really?

There are single buildings in New York City that employ as many as 25,000 people. Back when the twin towers were around they contained 55,000 employees between them.

JP Morgan Chase is putting about 15,000 employees in their new HQ building, without a breathless 13 months of coverage. This shit happens all the time. You could pick any number of random single city blocks in Manhattan with way over 25,000 jobs.

Amazon needs New York way more than New York needs Amazon. It's the global center of media, fashion, advertising, finance, and many other categories of Amazon's business.

This giveaway is a goddamm travesty. How about instead, Cuomo gives me and any other startup founder who's been in Brooklyn or Queens for decades $48,000 for every job we've created, and we tell Amazon to go fuck themselves.

Seriously. Google owns the fourth largest building in NYC: https://en.wikipedia.org/wiki/111_Eighth_Avenue

>> This giveaway is a goddamm travesty. How about instead, Cuomo gives me and any other startup founder who's been in Brooklyn or Queens for decades $48,000 for every job we've created and we tell Amazon to go fuck themselves.

So true. The rent in NYC is already very high. What kind of lifestyle can a blue collar worker afford in NYC? Obviously the only winners here are corrupt politicians and greedy Amazon execs. They should all be jailed.

> Obviously the only winners here are corrupt politicians and greedy Amazon execs. They should all be jailed.

You can dislike tax incentives if you want to, but the hyperbole is so over the top it becomes radical, divisive, noise.

We need less of this in these discussions.

The division is real and worsening. It's not an imaginary concept that we can choose not to discuss.

Discussing can be productive.

Calling for a blanket incarceration of legislators and Amazon executives is not.

My god, you're bitter for a startup founder! As a veteran founder myself, I'd be excited: this brings talent to fuel my startup, this brings interactive infrastructure, etc.

Amazon and Google are not regular employers: your startup pays outlets in taxes and mooches off infrastructure. The big companies find that with real profits.

Finally, $48k/employee is peanuts to a big city startup, and typically that kind of money is available from accelerator/etc programs.

> " this brings talent to fuel my startup,"

Yes it brings talent. But that doesn't mean such people are startup talent.

It's also going to drive up demand for housing (read: the cost of housing). So for those __not__ employed by one of these, the question becomes: how much __startup-centric__ talent are they driving __out__ of your area?

Long to short, the market is being manipulated, and it's being manipulated by the government. The gov created the house bubble and the student loan bubble. If there are examples of the gov manipulating the market and that ending well for taxpayers, I'd like to read about it.

We're literally giving New York tax money to the richest man in the world, who lives somewhere else, instead of spending it on the subway, or parks, or schools, or literally anything. If you're not outraged you're not paying attention.

As it happens I don't have a Silicon Valley venture backed profitless startup, I have a company that gets paid money to do work and makes a healthy profit. I've paid very considerable taxes in NYC for 20 years.

Now, literally, they are handing them to Jeff Bezos in exchange for nothing. That area of LIC would just be something else instead. We don't need these guys to bring "talent" this is literally New York City, a giant magnet that has drawn the most talented people on the planet for at least a hundred years.

Cuomo is an obvious crook and has been since conception, and this deal sucks. I see no reason not to point that out.

Richard Wolff in https://www.youtube.com/watch?v=LTth4Rb25H4 does a good job of concisely making the points on just how bad a deal this is for New York and Virginia (which are together funding over half of the costs of this project -- $5.5B versus Amazon's $5B according to the New York Times) -- and all for an estimated 2,500 jobs in New York. Here's what he said:

This is a shocking display. What they are calling a government-private partnership is nothing of the sort. It's a public subsidy to Amazon. The New York Times reported $5 billion in this project will be invested by Amazon. $5.5 billion dollars will be invested by New York and Virginia. That is a subsidy of over 50% of the cost of this project. We the taxpayers will be either paying higher taxes to fund this private company, among the richest in the world, or, if we don't get our taxes raised, the government will deliver fewer services to us because it has given this enormous subsidy to a company. $5 billion from Virginia and New York where Mr. Bezos, the owner of Amazon, is himself the owner of $160 billion. He didn't need it, the company doesn't need it. We are being asked to subsidize. All of the profits will go to the private companies and their shareholders. We, the public, will be funding more than half of this project. Shame is what Mr. DeBlasio ought to feel rather than posing in the PR as if he has delivered something. [...]

The projected number of jobs in the New York area from this is 2,500. That's a very small number and will have no effect on the unemployment problem of this city [New York City] it's just too small and that's not a surprise [...] because the kind of work Amazon does is highly automated; it uses machines for 90% of what it does. And half of the people it's likely to have working in New York will be brought in from other parts of the Amazon empire.

Fascinating link. In it, Amazon lists the FAA first in its list of access to key stakeholders.

They must be really serious about drone delivery...

Isn’t the projected number of jobs 25,000?

It's tough for me to say because I've read multiple estimates and they vary by a factor of 10. Amazon's promises https://blog.aboutamazon.com/company-news/amazon-selects-new... are one thing, what actually happens as the deal is approved and implemented is another.

I don't take Amazon's numbers seriously until they show that they will live up to their own hype. If Wisconsin's Scott Walker was elected on making 250,000 new jobs in 2010 he has fallen far short of that. One of his job-creating deals was Foxconn, something he used to tout heavily but tried to shy away from when he last ran. Foxconn's 13,000 (I'm assuming human) job figure for Wisconsin hasn't been met. I'll believe it when I see it but I still don't see how New York is getting a fair deal in this; it seems like they have no problem attracting businesses to their city and don't need to give nearly as much as they are.

Here's another interview with Wolff:

Transcript should arrive here eventually: https://therealnews.com/stories/amazon-gets-3-billion-in-ny-...

Video: https://www.youtube.com/watch?v=KlECXGQfVyY

Some of the highlights of the jobs points that makes it clear the exact figure of the promised number of jobs is virtually irrelevant precisely because so little is asked of Amazon here:

- Ben Norton says that in 2017 NYC gained over 72,000 new jobs. Therefore the money NYC is giving Amazon with virtually no strings attached effectively buys them about 4 months of job growth. That's a remarkably low number of jobs for such a large amount of money.

- It's not even clear if the 25,000 jobs are new jobs or if Amazon will shift workers from one location to HQ2. This means New Yorkers are subsidizing job movement for extant employees.

- There are no performance guarantees for Amazon in this -- if Amazon doesn't add the promised number of jobs, or if those jobs turn out to be significantly less attractive (perhaps near minimum-wage jobs, it takes Amazon a decade to add these jobs, or the jobs are done remotely thus pitting New Yorkers against the rest of the world) there's no penalty for Amazon to pay. No Amazon profit-sharing to NYC.

Cuomo's just looking for new innovative ways to take money out of the MTA budget. The fact that there will be more people trying to ride the 7 train just puts icing on the cake.

NYC needs more diversity outside of finance.

This potentially puts NYC on top for retail again. I think incentives and payments for this purpose is a meh idea, it if you’re going to do it, bet on a winner.

Imagine giving $48,000 to 25,000 small business owners over 10 years instead.

They already do this, the excelsior tax break among other community development incentives are available to any employer that wants to locate in long island city. Small employers are probably less effective at leveraging these things, but nothing amazon is getting isn't totally open to the public.

You can to some extent. The compliance requirements are daunting for many businesses.

retail of what?

> NYC needs more diversity outside of finance.

The beauty of NYC is that it is not singularly focused like SF is. Media, Fashion, Finance, Tech all call NYC their home.

> How about instead, Cuomo gives me and any other startup founder who's been in Brooklyn or Queens for decades $48,000 for every job we've created, and we tell Amazon to go fuck themselves.

Why don't you use your leverage as a job creator to go to a town and get similar benefits since clearly you will bring the same level of benefits to that town? Or do you recognize your lack of mobility and limited investment in your town may result in a less favorable negotiating position. It's like wondering why a used car dealer gave a better deal to someone w/ a better trade in.

So if the numbers are so small, why does it matter that this tax deal exists then.

I think most of the hate is fueled by emotional anger at the rich due to increasing inequality in the USA, even though this investment in NYC is a positive for it when you look at it rationally.

> why does it matter that this tax deal exists then.

He's saying the tax breaks provide create no gain for the city, but he's not disputing they're valuable to Amazon.

They're also not valuable to taxpayers, who are being forced to subsidize one company without the opportunity to voice their opinion a priori.

Finally, there's the incremental point that countless other entrepreneurs are not enjoying these same benefits. Not the biggest issue with it, but an important one nonetheless.

How does it help anybody outside NYC?

To what extent should that be a major concern of NY legislators?

The city wants to develop a new business district in LIC.

That's right but may be NYC is trying to avoid becoming another Chicago?

This is why HQ2 is in Long Island City though, because that's how economic development programs work. Cities give incentives to minimize the risks involved in locating in a less desirable location.

It absolutely would've been smarter for amazon to remain in midtown like they currently are since it would be much easier to recruit from the suburbs many existing tech workers live in, but they would've lost over a billion of the incentive dollars they got in the process.

This is not a travesty. This is cementing NYC as the place to go on the east coast if you want to work in tech, and helping to diversify the NYC economy away from being so heavily dependent on finance.

Wouldn't it be nice if your options for working in tech didn't consist of a handful of large banks and hedge funds?

What you describe is already the status quo in NYC. Every large tech company is already here and has been.

>I dont know where that comes from but

That's key then isn't it. Where it's going to come from needs to be clear, or else there's a very real risk it's not a good deal.

Sales pitches stack the deck on expected benefits ALL the time. Diligence is essential here, and the devil is always in the details. 'Potential benefit' rapidly morphs to 'definite benefit' when stuff percolates up into articles etc.

Yes, if you get 25k fresh new employees into NY. Chances are a good amount of these employees are already living in NY and paying payroll and property taxes.

Also, I hope those averages are skewed downward by non-engineering jobs, because if Amazon thinks they’re going to be able to hire their usual caliber of engineer for $150k/year in NYC, they’re in for a nasty surprise.

Apart from having to compete with NYC’s already bustling tech presence, they’ll be competing to hire the same engineers that investment banks, hedge funds, and HFT groups are after. The comp packages in fintech are impressive, and generally all cash (as opposed to a mix of cash and stock).

Hmmm. This strikes me as a way to move slaves. If Amazon has their workers get taxed by NYC, Amazon gets to save money. Kind of nasty when it's thought of this way. :/

Perhaps the citizens should object, I hear one of their congress critters is shitposting on twitter to that end. If the locals don't want their lives upended by gentrification, Berlin has shown a good example of how to block uninvited expansion by tech giants: https://www.bbc.com/news/world-europe-45971538

They elected the people that made that decision. If they don't like it, they can vote them out.

Citing an example of some Berliner NIMBYs is not really helping your argument.

Conflating leftist anti-gentrification activists with property owners worried about their property value all under the label "NIMBY"...it's unhelpful in understanding the world.

NIMBY = Not In My BackYard. I'd say it's a pretty accurate description of both groups.

> They elected the people that made that decision. If they don't like it, they can vote them out.

It seems you didn't read my prior comment, some of their elected officials are opposed to Amazon moving in.

> Citing an example of some Berliner NIMBYs is not really helping your argument.

It shows how a community can fight back. Much of the change mega-corps bring to the neighborhoods and cities they set up shop in is not good, current locals definitely have a right to reject.

> some of their elected officials are opposed to Amazon moving in

The opposition to an almost-done deal is almost always louder than the support. Supporters want to keep the status quo, i.e. the deal closing. Opposers want to stop it.

I think this is a good deal. I prefer having Amazon in New York, and I prefer the billions of extra tax dollars they're going to pay New York City and Albany versus potentially losing those dollars to another city, state or country. I'm not making a lot of noise because I think the Mayor and Governor have it handled.

TL; DR I don't think one can assume popular opposition to this deal.

Probably the best way to gauge the support/opposition was to put this deal into a city-wide referendum to begin with.

How'd that work out in the case of Brexit? Direct democracy is not really the best way to govern.

The distance of separation between a New Yorker and the city government is magnitudes closer than between a Briton and the EU agencies.

>They elected the people that made that decision. If they don't like it, they can vote them out

News of this deal conveniently came out right after Cuomo was reelected

> Perhaps the citizens should object

Perhaps they like the idea?

Don't presume consent or support based on lack of vocal opposition. Queens isn't as high income as Seattle or the part of Virginia that Amazon is in, and the people who live there may just be making ends meet, not paying attention to how gentrification of their neighborhood may eject them from it.

> Don't presume consent or support based on lack of vocal opposition.

Seems better than presuming lack of consent and lack of support based on lack of vocal opposition?

Typical Rent in LIC is around $3200 for a 1-bedroom. It's an extremely high-income neighborhood in Queens. Go a little farther down the 7 and you start to see some of the middle class, but they're not really in LIC.

Isn't freedom great? Berlin can decide it doesn't want tech expansion, and New York can decide it does.

It's not clear yet if the go elsewhere in Berlin. The last location I've read about was the former Stasi Headquarter (seriously) ;)

Hah, that would be fitting! Optimizing the data mines from within the same building where data was used to expedite the killing of so many.

To summarize the article: The government is using taxpayer money to pay a corporation to help enslave taxpayers and that's a good thing apparently.

Long Island City was already rezoned, luxury housing built and gentrified. 20k workers in a city of 8.5m isn't upending a small, vulnerable community. And we're not the commuter suburbs, an office in Long Island City is not very much different from an office building in Manhattan.

Gentrification concerns are thus overblown, and our local pols are known for dramatizations like these for political gain (at least on camera/Twitter, less so when it comes to campaign support and backroom lobbying deals).

The controversy is in the tax incentives primarily.

I'm not sure what they're complaining about - they keep electing representatives who promise high taxes. Now they're getting high taxes, they should be happy?

Willingess to pay higher taxes doesn't translate to "supportive of any conveivable use of the tax revenue".

I'm happy to pay my taxes for certain uses but am still entitled to complain if my elected officials use tax revenue to fill a room with gold coins and swim around in it like Scrooge McDuck.

[disclosure - I work at Amazon, but have no internal information whatsoever.]

This is over 10 years, so ~$5k/job/yr. For reference, economic development incentives for corporate relocations are commonly $20k-75k per job, and often for jobs paying much less than Amazon is expected to pay HQ2.5 employees. Also, I believe that Amazon will receive tax rebates based on the number of jobs created over time, which is better than many packages that don't have any accountability, limits, or clawbacks.

I don't think economic development incentives are a wise use of funds, but this one is notably only for the scale and publicity. People are so mad because this the first time most people have heard of the practice.

For more information (and many much worse examples), see the book "The Great American Jobs Scam" - https://www.amazon.com/Great-American-Jobs-Scam-Corporate/dp...

Let's be clear, the free market this is not.

It's yet another perfect example of government gone wild. It's one thing for to use taxpayer monies to create jobs and job opportunity (i.e., education). That's a reasonable expectation within the scope of gov's governing.

However, it's another thing for gov to buy jobs - and thus votes - by effectively subsidizing some mega-corporation. If Amazon needs money, that's what Wall Street is for. If Wall Street isn't willing to give Amazon et al money then that's a red flag and taxpayers should naturally stand clear.

Some might say, "But without such things Amazon would have to raise prices, and that's not good for consumers." But it's the consumers that paid the __higher__ taxes to supply the subsidy. The difference is, with the latter method the gov gets to skim some off the top.

Bottom line: The taxpayer / consumer loses. Politicians and Big Inc win.

Literally the opposite. The tax gains out number the tax breaks 3 to 1. Each one of these $150k jobs will net NY state $13.8k of income tax per year and (at least) $2500 of sales tax. The tax break per job is $4800 per year (the $48k figure you may have seen is over ten years).

Plus the construction spend + attracting tech people et al

Still not free market though.

How is not free market for polities to compete for attractive employers?

Because only one company is benefiting from these tax breaks.

Yup. You can't tilt the board and say it was "fair".

If a given community put out a RFP / RFQ that said, "Here are our assets. Here are something things we might be able and willing to offer...Which of you are interested in coming here?"

Perhaps not free market, but certainly closer to fair and less corrupt.

I think you might be viewing it backwards. In this case, Amazon is the only one selling but lots of places were buying.

Application of tax policy does not seem like a "market" that local governments should "compete" in.

I understand this does happen internationally, between nations. Not that it is a good thing, but seems very difficult to stop. However, at first glance, it seems absurd to me to allow this to occur within a single nation, between the different sub-localities. How does this benefit the US as a whole?

That's fair, but how much of that will go towards compensating people who will be driven out of north/west Queens and north Brooklyn as a result of rising rents?

Just let people build more housing so rents don't rise.

Housing is going up like crazy in New York, it's just not affordable.

That's because the city doesn't let people build enough new supply. THAT'S REALLY BAD. And it's the fault of city government, not Amazon or any other company.

Actually, my understanding is there is a fairly significant amount of housing (pretty much everywhere?) that for one reason or another is kept off the market. (Likely due to some other gov policy? Maybe?)

That is, there is capacity but supply is being held back.

Your understanding is wrong. Residential vacancy rates are tiny in most big cities.

In the few exceptions (like Seattle for example) where they aren't tiny due to new supply: surprise! rents are dropping.

Link please.

But yes, of the housing available in the market, tiny. But there's plenty of housing held off the market.

Why should they be compensated for this? Why are those individuals living in that place a status quo that ought to be maintained?

Because making people worse off to enrich yourself is called "greed". Greed is something I and many other people frown on.

In this scenario, who is making whom worse off to enrich themselves? I don't follow this argument.

Obviously it's the poor people, who are making even poorer people unable to live in Queens. Oh wait...

Are these software jobs? I don't know if they'll be attracting more people in such a tight labor market, or just bumping up rates for those who already here.

There's plenty of unfulfilled demand for software engineers in NY, what does Amazon offer to add to supply?

> There's plenty of unfulfilled demand for software engineers in NY, what does Amazon offer to add to supply?

You wouldn't know that from the pickiness of some companies around here.

I think GP meant good software engineers.

The definition of "good" is where the pickiness comes in.

I recently spent half an interview being asked about embedded systems and C for a frontend JavaScript position.

If the question is "do companies, in general, know what software engineer they need for a position?" my answer is almost universally no.

Gains? From more road repair? Higher housing costs (read: more welfare state). Other services? Etc. Etc. Etc. You're making it sound like there's only upside.

Regardless, the gov should not be in the job buying biz. My gawd, they struggle to govern, and that's their job. Pockets are being lined - once again - at the expense of the tax payers.

"Each one of these $150k jobs..." Pardon me, I know this type of reply is frowned upon on HN, but...wanna buy a bridge?

> Regardless, the gov should not be in the job buying biz

Says you. I think they do a better job buying that biz than many of the other biz's they buy with public funds. If you want to see pockets being lined, look to things that don't have returns on investment or are poorly managed in real corrupt ways (ala many public pension plans). Not comparing dollar spent to dollar spent of tax money compared to benefits makes it clear some are just anti-private-sector.

> "Each one of these $150k jobs..." Pardon me, I know this type of reply is frowned upon on HN, but...wanna buy a bridge?

Are you implying that the average salary to get the incentives isn't going to be 150k/yr as stated their agreement?

The gov's job is to govern. Period. How about we let it get that right before it starts branching off into things it's has little or no expertise in.

Again. The gov created the housing bubble __and__ the student loan bubble. I don't say they should be in the job buying biz. __The Gov__ has said that. Whether you're listening or not is up to you.

> The gov created the housing bubble __and__ the student loan bubble. I don't say they should be in the job buying biz.

More specifically, you should believe based on your examples that they shouldn't be in the money management business. Because they are really bad at it. I can definitely sympathize with those applauding them for taking less as a way to promote growth.

> "More specifically, you should believe based on your examples that they shouldn't be in the money management business. Because they are really bad at it."

How so? One is within a reasonable scope of governing. That is, most citizens want and expect a reasonable amount of economic stability. The others are outside of scope and simple a tool that politicians use to buy votes. And if that's going to be the case, then the least we can do is be honest about it. Denial doesn't make it any better.

Just because something has persisted doesn't make it right.

The fact is, Amazon (and others) played __our__ elected officials/ representatives against each other __at our collective expense (read: to Amazon's benefit).__

Not only that, __we__ paid to help Amazon find a new HQ location. So now imagine all the communities that did __not__ win.

Finally, imagine is that time and money was not put into a roll of the dice?

This was a __big__ win for Amazon. This was a big win for politicians. As for the taxpayers all across the country and going forward, the true benefits should be questioned. If we dare.

Neoliberalism, Milton Friedman and the free market crowd have been demonizing government for decades now and successfully lobbied for the removal of regulations since the 80s leading to the housing bubble, education loans and exploding tuition costs, buybacks and rampant financialization.

This banking crisis, fraud, education loan bubble is the direct result of 30 years of neoliberal free market policies. Yet instead of owning up to their mistakes in an act of brazen revisionism and fraud they are blaming the government for listening to them, and this is taken seriously. This is ideology.

A govt hijacked to promote special interests is not a government, its a plutocracy.

What if I told you that any government under capitalism will ultimately always end up as a plutocracy, a government by the rich for the rich is fundamentally different than one by the working class for the working class, although the later has been proven difficult to maintain under democratic systems at large.

"...housing bubble, education loans..."

Um. Wasn't it the gov that committed to policy of more home ownership? It was the leader here. It helped to craft and define the direction once it opened up the dereg gates.

It's important to note: "Dereg" !== free market. Dereg is a nice word politicians like to toss around, but ultimately, that typically translates into some other set of rules, typically favoring some entity over another.

The gov is VERY fond of taking sides, gaming markets, etc. It might be presented otherwise, but it's still trying to exert unnatural influence.

</sidebar>

And didn't it do the same for making cheap student loans available to more students? Students who weren't really "college material"? Wasn't BHO still championing higher edu __for all__ - because it plays well in the polls - all the while knowing the monster that had been created and still wasn't properly fixed? Yes, such antics are great for buying votes but it ultimately drives up the price.

If the gov (read: votes) is involved - as it was with this Amazon deal - then the market __is__ being manipulated. Anything beyond that is lip stick on the proverbial pig.

Just because there are other and potentially better/easier ways to graft and siphon money out of the system (such as those you listed) doesn't mean that this person isn't allowed to think this 'lesser' one is just as morally bankrupt and from a business standpoint a foolish decision.

Agree and I usually try to stay on point and not whataboutist, but I had to address general comments about use of funds and role of government in parent and ggp.

Totally understood. Just wanted to make it obvious that if something is bad, a bigger bad doesn't make the other less bad. I think we're on the same page here.

Appreciate your clarification.

Except NY state won't gain any income tax from people who fill these jobs but live out of state (NJ or CT). If you've ever worked in NYC, you know that this will be a non-trivial proportion of people. Factoring that into account, it's not clear at all that NY state will see a positive return on this.

It's still a race to the bottom. Attracting businesses with tax-exempts is a zero-sum game.

In the EU we have rules against things like this. As it's considered anti-competitive behavior.

> Attracting businesses with tax-exempts is a zero-sum game.

That's not a foregone conclusion.

I believe you mean to say prisoner's dilemma, rather than a zero sum game.

Ireland gets away with it fine

The tax gains would always outnumber the tax cost for any business, which is why the city government is favoring corporate over small business, that employ way more people for a lot less monopoly rents.

Maybe not:

https://www.citylab.com/equity/2018/11/property-tax-dark-sto...

Disagree. The freedom for a community to spend funds in ways they want is much more free than the opposite. Also disagree with your bottom line. In many cases (e.g. ones where abatements were given in my community) it lowered the tax rate over time.

> "The freedom for a community..."

If this was a community decision why is there pushback in LIC? Because, it wasn't a community decision. It was the gov using taxpayer money to subsidize one of the largest most successful companies in the world.

Fact: The Gov created the housing bubble.

Fact: The Gov created the student loan bubble.

Fact: The abatements in __your__ community came out of someone else's pocket. That money had to come from somewhere.

Ignoring the other facts as guff, this is a common misunderstanding:

> The abatements in __your__ community came out of someone else's pocket. That money had to come from somewhere.

Abatements are not gifts, they are reductions. The money that was not taken did not have to come from anywhere. The reductions did not amount to a negative total (not even close in my case), and therefore the abatements essentially amount to a sale price, not below cost. In other cases, such as sports teams, the benefits of the trade-offs are not as easily recognized because they are not purely financial. But here, it is simpler to understand the bulk discounts in exchange for economic growth.

> "Abatements are not gifts, they are reductions."

Yes. But you make it sounds like the gov services being provided was also reduced. Is that the case? If not, then that means the services being provided still have to be paid for. So if it's not your community, then where do you think that money is coming from?

> But you make it sounds like the gov services being provided was also reduced

No. I stated, "The reductions did not amount to a negative total" which includes public services. I am saying the new tax income more than covers the services needed. Cost per resident is not linear. Again, these are sales prices, not below-cost prices. Governments are reducing tax rates to significantly increase tax totals, a reasonable investment.

> where do you think that money is coming from?

The same place it otherwise would, just at a reduced bulk rate.

It's yet another perfect example of government gone wild.

I like how you tacitly acknowledge the large corporate entity shares a little responsibility in there at the end. Yes, this is a government failure but it is also the logic of capitalism at work, which says that money should come before all other considerations. Government is rather corrupt, but it is business that has corrupted it.

> Yes, this is a government failure but it is also the logic of capitalism at work, which says that money should come before all other considerations.

It does? I'm pretty sure it's just a system of allocating resources.

Wisconsin spends 4 billion in tax breaks to attract a Taiwanese manufacturer ( FoxConn ) and nobody bats an eye...

Oh, believe me, eyes were batted there too. You might notice that state went blue.

Eyes were batted.

Let's also note that FoxConn is not Amazon. Also, NYC doesn't really have a problem attracting employers - especially not one who is likely to crush their local economy one same day deliver at a time.

Your point is valid. But the scale and precedent of this latest "deal" is more questionable.

In 96', when Apatosaurus still roamed the earth and "Atari" was a thing, Israel granted Intel 600MM$ to build FAB18 in the desert. Over a decade later, an official government report concluded that the country lost some 400MM$ on the move. Bottom line, big-corps can extort states or cities and bid for ridiculous tax incentives that never pay off. I feel sorry for the residents of NY and the bad deal imposed on them.

Trying to understand your position... do you think Israel, a democracy, shouldn't have been able to decide to make that deal?

Who was Israel harming by making that decision?

Is a deal made freely and with complete information between two parties always "extortion", if it turns out with the benefit of hindsight not to have turned out to be in the best interests of one of the parties?

They never said they shouldn't have been able to decide to make that deal - but rather that they shouldn't have made it. Presumably who was harmed was Israelis who could have benefitted from a government with more money to spend elsewhere.

Was the information truly complete? Extortion is probably not the best label, "rip-off" might be more accurate.

I must be really bad at phrasing thoughts. Isreal was "harming" itself and its taxpayers (normal people like me), same way NY taxpayers would undoubtedly IMO be "harmed" (in the sense of their hard-won money being ill-invested). Is it extortion? I guess not literally, only in spirit. It is just bad investment with negative long-term ROI. NY could have supported thousands of SMBs instead, and that builds more resilient, diverse and sustainable economy long-term.

I don't know anything about the Israel-Intel deal and have not decided personally how I feel about HQ2 in NYC. But I upvoted your comment because it emphasizes looking at other historical deals, and not just the projections and analysis on the current deal, and would love to read more of that in this discussion. This is a very large project over long horizons (10yrs) and it's hard to imagine being anything but extremely uncertain about projections; you have to look at history.

I'm also a sports fan, and I've read about the dismal returns to taxpayer-subsidized new stadiums despite rosy promises of economic development, and tend to look askance at this kind of thing.

Stadiums and convention centers are pretty classic examples.

We should never accept standalone numbers. They are incredibly deceptive and don't tell the whole story.

1. What is the return that NY is going to get from increased tax revenue?

2. What is the time period that $48,000 is going to be "paid out" over?

3. How many jobs does this bring to NY? What's the average salary of those jobs?

Context is king, but doesn't make for sensational headlines.

No opinion on the actual policy, but it infuriates me when the weasel words "paid for" are used in contexts like this. Giving a company or a person a tax write-off is not a "cost" to taxpayers, unless you assume a) the alternative reality was 100% likely and these exemptions had no effect on the final outcome, which is obviously a positive net revenue expectation, and b) saying tax reductions are a "cost" to tax payers implies the taxman by default has a claim on all income and only by the graciousness of politicians do we earn the right to keep any of it.

Race to the bottom between states (and governments) to attract big businesses. Tragedy of the commons.

It's also unfair for the smaller players, they never get the same kind of treatment.

It implies only negative, doesn't it also has a lot of positive to it, like economic growth?

Well, each NYC resident pays 48000 one time to get back 30000 per year for 10 years is not something that HN would upvote into the front page.

$48,000 is the cost per job, not the cost per resident.

It's not a cost though it's tax break over 10 years and there would be no tax revenue if NYC didn't get the office in the first place.

This is true, nobody in NYC pays taxes currently and nobody there has a job already.

At present there is N tax revenue With HQ2 there will be N+Y a portion of Y will be returned back to Amazon how is this exactly a cost for the city?

How do you know other companies wouldn't move in?

Did I ever claim others would not move in?

"and there would be no tax revenue if NYC didn't get the office in the first place."

> each NYC resident pays 48000 one time

Please cite a source which states this claim. Nobody here is forking over 48k "one-time".

I totally agree with this position, as it will lead to job in the surrounding area. The overall tax revenue the local government receives will dwarf the incentives. But all I've seen online is short-sighted criticism.

Economic growth for whom?

It seems to me like this is kind of like advertising: it’s a local benefit, but a net loss. Someone, somewhere, is giving a huge amount of money to Amazon. Considering Amazons wealth and power, is this what we should be doing as a society?

In particular, we don’t need to do this. If everyone said “no deal,” Amazon would be forced to behave as anyone else: consider each area based on its true merits, and make a decision accordingly.

In other words, the growth occurs regardless. No gifts needed.

Exactly. It's the economics version of the Prisoner dilemma. First city to give up the tax breaks gets the jobs, but to truly win, everyone has to say "build here if it's right for you. You're not getting any incentives from us."

It's unclear to me from the article is this a one time cost? Is it yearly? Monthly?

edit: On reading a bit closer it's over $48,000 per job over 10 years.

One time cost paid over 10 years, IIRC

This doesn't necessarily sound terrible? If most of the jobs are going to be 6-figures, their tax rates will be reasonably high + they'll be contributing to the local economy in terms of buying goods and services. Am I missing something?

I'm inclined to agree. I'm against it in principle (why should taxpayers be subsidizing large corporations at all?) but it isn't robbery.

I guess it get fuzzier when you factor in in harder to quantify costs like further increasing the cost of living.

That doesn't sound too terrible then. Even if the average job there paid $48,000, we're talking about 10% of the salary as a tax reduction. And the employees themselves will be paying money into the local economy, paying sales tax, and so on. It may not be a fantastic deal, but it doesn't sound like a net negative for NYC.

I feel like each Amazon employee will pay way more than that in taxes over 10 years, so this is just basic investment. Pay $48,000 over 10 years to get $30,000 a year forever. Seems smart.

It's not a payment it's a tax break. If HQ2 was not in NYC they would not get the tax revenue anyway.

In comparison, over the next 10 years, the MTA is projected to spend 6 billion extending the 2nd avenue subway a mere 1.5 miles to 125th st.

I don't know that I approve of the incentives to bring Amazon to NYC, but I suspect New Yorkers will see a better rate of return on that investment than on other government excesses.

It is over 10 years per job. That will ideally by tax by an amazon employee over 5 years. Doesn't reflect the passive economic growth and indirect jobs that gets created over the time.

Also, Amazon and the new Google's expansion will invoke chain reaction in terms of tech activity and new start-up's.

Do you really believe that there isn't a tech sector in NYC aside from FAANG? Google, Facebook, and Twitter have been here for years (to name a few), along with tons of other startups.

Going to New York is a political move. They could have set up in the midwest, paid everyone 75% as much as the going rate in NY or silicon valley, and the employees would have 50% more expendable income than they are used to. This wasn't for the employees.

You say that as if spoiled tech workers are just going to line up to move to Columbus, Ohio where the only company operating at that scale is Amazon.

That is, you are going to be locked into working for Amazon to maintain your income level.

Not everyone is that mercenary about optimizing their income.

Amazon's hiring pool would be limited to midwestern Universities (e.g. Ohio State) + people looking to reduce their cost of living while working for Amazon + some people that prefer the scenery. Less people are optimizing purely based on compensation - CoL than you think.

To me, that's why these locales were never really in the running. I'm a native midwesterner and I feel bad for anyone trying to recruit a national audience for a midwestern role. You have to have really good sales skills.

> They could have set up in the midwest, paid everyone 75% as much as the going rate in NY or silicon valley, and the employees would have 50% more expendable income than they are used to. This wasn't for the employees.

SDE's in Detroit, Madison, and Twin Cities are paid exactly the same as the SDEs in Seattle.

That is hardly true except for a small select few. Where are you getting your numbers?

I'm an Amazon new grad. We only have 2 standard salary bands in the US - one for premium regions and one for everywhere else. I know this only because I explicitly asked recruiting and they brought it up in the midpoint intern brown-bag.

They will match Facebook/Microsoft/Amazon/Google's 110k salary + bonus + stock that you can get in Seattle (As a college grad)?

Even smaller firms are giving away jobs for 150k salary for just a couple years of experience.

I'm talking specifically about Amazon, which has a presence in all 3 of the cities I mentioned. Also yes, $145.5k total compensation at Amazon with a Bachelors (I'm not sure if this is competitive though)

The article is very disingenuous about this being a "cost" to tax payers. It's a tax break, it's not extra money that's going to be added to NY's tax bill, it's taxes that Amazon theoretically would have had to pay if they decided to build their offices there and didn't have the tax break. There are some other real costs to tax payers in the form of subsidies, but they're much smaller than the 1.5 billion figure quoted here. If you consider the fact that Amazon is going to probably pay much more in taxes over the lifetime of their offices in NY then it seems like a reasonable deal for their government to make.

Ok, we replaced "taxpayers to pay" with "state tax break" above.

in economics it’s considered the same thing. either way it adds to less net income for then govt.

$48k per Amazon HQ job is about the the annual federal income tax of a software engineer at Amazon, and it's 4-5 years of New York state income tax. This assumes an annual total compensation somewhere around $200k.

Some people will tell you that such a compensation is not realistic, but at Amazon it is common for mid- to senior-level engineers to make at least that much.

Altogether it is not a total sellout on the part of New York, at least not after 5 years. Ideally some of those Amazon engineers will leave Amazon to join other companies or start their own, which will be good for New York.

the gentrification angle is predictable. people want a generous government sector but don't want the local economic growth thats necessary to keep it afloat.

for Amazon its seemingly a PR nightmare versus just quietly leasing some large amount of office space in satellite locations. Hope the incentives are worth it.

the interesting thing to me about HQ2 is its also a wealth transfer from future workers to Amazon the company which is facilitated/financed by the local government via taxes. They're selling future worker income/sales tax to the government.

Maybe some context would be appropriate. New York has been trying to diversify beyond finance for a long time. The cost per employee is amortized, as stated by others, but it’s almost moot — as if it were a hedge.

Amazon has a rep for not retaining many of its engies beyond a year or two. Perhaps the hope is that those folks will go on and bootstrap a real startup economy. NY already has a Google and FB office. Two is interesting but three and you start to have a pattern.

If you ask me, it’s worth the bet. $1-2B is cheap change on this level of macroeconomics.

These posts seem to always miss the big picture... like what do they get back in payroll taxes and other perks? How many other companies is this going to bring into the local eco-system over the next 20 years. What does this do to the local real estate and the increase in property taxes?

If you were running a business and you had a client that had 25,000 seats, would you give them a discount to become a marquee client that could take your business to the next level? Why are cities any different?

Is the end goal of the city to have a higher GDP and better services for the people living in it, or something else? In the USA it seems like the only conversation happening in politics is GDP.

It’s $4800 per hire per year over ten years. Average salary will be $150k. That’s $13.8k of NY state income tax per year and $2500 (at least) of sales tax per year. Seems like a great deal for the NY welfare state.

Let us hope that the residents of the Queensbridge Houses housing projects get some employment opportunity out of their new neighbor AMAZON HQ2.... As one of the residents put it in the NYT:

“Not everyone here has a Ph.D., but anyone eager to work should be able to get job,” he said. “It can’t be nothing but a plus.”

https://www.nytimes.com/2018/11/12/nyregion/amazon-queens-qu...

I think people are, if anything, underestimating how good this is for the tech scene in NYC and for New York in general, at least from a fiscal perspective.

LIC is increasingly well-developed but mostly as a residential area. It's not Manhattan and doesn't really have top-tier employers. The tech scene in NYC is almost entirely concentrated in Manhattan, with the exception of maybe a tiny tech scene in parts of Brooklyn, which Queens (which Long Island City is part of) is not generally hip enough to have. This adds a top-tier employer with lots of high-paying jobs in a new location without displacing any of the existing tenants occupying prime office space in Manhattan. It also doesn't worsen the rent situation substantially where it's the worst. Rent is high everywhere but Queens has more supply, way more potential supply and is overall better positioned to deal with the additional demand than Manhattan or Brooklyn. Also, this isn't obvious to people who aren't familiar with NY but while LIC is easy to get to from most parts of NYC, it's just far enough that you probably wouldn't want to live in New Jersey, while that isn't as true of many parts of Manhattan. This definitely makes the location more attractive from the perspective of New York State, who doesn't capture the state tax from those that commute from New Jersey.

Also, you can't usually hire that many people by poaching people from other companies and they need a balance of junior and senior hires so lots of them will have to come from outside, at least on a net basis. This will include highly-compensated senior transfers from their other offices (to maintain the corporate culture, etc), will include new graduates (many of them would have gone elsewhere) and new immigrants who would've gone anywhere for the job. This also creates additional economic demand which will boost overall spending, creates an upward pressure on tech salaries which will add to the tax base. Also because Amazon does churn through people, this has the potential to bring many more people than 25K that come to NYC for Amazon and stay around to do other things. Ex-Amazonians as a group are also probably a good group to have around for any tech scene.

There's been a need for an alternative to Silicon Valley and this actually moves the needle in a significant way to positioning NYC that way. Combined with Google's plan for expansion, recent arrival of several SV tech companies and the natural advantage of being already the world's capital of finance, media, fashion, etc, at a time when tech is increasingly central not to its own industry but to every industry, this squarely puts NYC in contention.

so now our govt is paying amazon to create jobs from h1bs and displace natives?

This is a much better deal than Wisconsin gets with Foxconn. They are paying between $219.000 and $587.000 per job.

https://www.politifact.com/wisconsin/statements/2017/aug/11/...

It's a good deal for NY. Can't build a bridge for 1.5B.. and this will have perpetual return on investment + auxiliary businesses will flourish.

The title here is curiously different from the source:

NY state tax break is $48k per Amazon HQ job

NY taxpayers to pay $48,000 per Amazon HQ job

I don't think those are equivalent statements.

The only way you could say it costs NJ $48,000 per job is if you assumed that Amazon would have chosen them for HQ2 anyways, which is obviously not the case.

Saying it costs $48,000 per job is no different than when production companies claim piracy costs $1B+ per year (or some other ridiculous figure). That assumes all the people that would have pirated the movie would have paid full price otherwise.

For those believing that subsidizing Amazon is net gain:

"After the Retail Apocalypse, Prepare for the Property Tax Meltdown"

https://www.citylab.com/equity/2018/11/property-tax-dark-sto...

1.2 billion over the next 10 years to receive 10 billion in tax revenue in the same time frame.

I wonder what would make people happy. Amazon should have opened their HQ2 in Bangalore. They wouldn't face this much criticism there and people would welcome it.

As a born and long time NYC resident... I am so unhappy about this, I cannot even tell you. Why can't we put $2B in the MTA's pocket? Or schools? Or healthcare? Or affordable housing? Or almost anything other than Bezos's pocket?

I did vote against Cuomo even as I helped flip our one NYC Republican district to Democrat, so I did everything I could as a voter.

We need a law/constitutional amendment preventing this sort of thing. Companies are abusing governments with these tactics and deals. I was also against our government's subsidies of the two NYC stadiums (Yankees and Mets) and arena (Nets).

They are not putting $2bn into Bezos's pocket. Rather they are receiving several times that in new tax revenue and maybe out of that they will put some into the MTA or similar.

I do not necessarily have a problem with the government shelling out taxpayer funds to attract employers, but this is highway robbery.

I was so sure Amazon was going to move to Hudson Yards in Manhattan, but Long Island City seems like a smarter decision. More trains.

Amazon could have chosen anywhere, somewhere where they could make a difference, create jobs, kick-start the economy. Serious bummer.

Why can't they create jobs and make a difference in NYC? Plenty of underrepresented developers and future developers in NYC who will benefit from these new jobs.

Amazon has created a lot of jobs and caused mind-boggling amounts of economic growth in Seattle, but it is very, very unpopular there.

It turns out things are a bit more complicated than "a rising tide lifts all boats". A smaller city than NYC might not have been able to absorb the impact.

This type of tax incentives should be illegal. A lot of people argue that NYC still benefits from this deal, but we should not be thinking at a city level. But a country level, does the country benefits from this? No.

Has these type of incentives been illegal, Amazon would have to pick a city from the US and the overall US economy would be 1.5 billion richer.

The problem with incentives is that presents a "prisoner dilemma" to cities. And overall drives taxes down.

Sorry for my English.

Next time someone defending Amazon tells you that the internet is a level playing field... Point to this.

Thanks for the advice patrickg_zill! It happens to me all the time!

Seems way more effective for NY to just give these people the money directly.

It's time the Federal government passed a law treating these inducements as taxable income.

If communities had to throw money at Washington, DC every time they threw money at Amazon/Foxconn/Apple et cetera, they'd be more redicent about doing it.

This is such a disingenuous, low-insight, clickbait headline.

They say the average is $150k - do they mention the median?

Or call it an investment as there is a future payoff.

If this isn't welfare, what is?

It's not so much that it's a "bad deal" for NYC but rather that this practice needs to be better regulated if legally possible.

It's a policy that both the Libertarians on the right and the Social Democrats on the left can mainly agree on here and could work together to solve which is limiting corporate welfare that pits cities against each other.

still beats the Foxconn deal - $300K per $50K/year job :)

The worst part is that people read headlines like this and think that this is what capitalism is.

(Hint: this is not capitalism, this is crony capitalism and corporatism).

Worse yet is people making up their minds about a subject only by reading a headline. I don't know if you did this, but it appears so.

crony capitalism at it's "finest". What a joke, of course - it's ok when New York elites do it but it's evvvvvvvviiiiiiiiiiiil when Donald Trump wants to give tax breaks to all Americans.

Literally nobody has claimed giving tax breaks to the 90% of Americans is evil. Your comment appears sololy meant to be inflammatory and promote low quality conversation.

Wrong. Chuck Schumer called it a "one-two gut punch to the middle class". Nanci Pelosi called it "simply theft — monumental, brazen theft — from the American middle-class and from every person who aspires to reach it". And that is only if the tax cuts are not renewed in 2027 - which the democrats voted against making them permanent.

Compare that to SF's roughly equivalent payment per homeless person

https://www.sfchronicle.com/bayarea/article/S-F-spends-recor...

The representation of this is a bit extreme here, but this is NY we're talking about. If this is the first thing that you're upset about paying for in NY, you probably have not been looking at the budget.

Have you ever worked with a former employee of Google or Amazon? Evidently, they don't relocate every time they change jobs. The entire economy gains as new talent arrives and stays.

This is like House of Cards levels of evil. So good at playing this evil game that I can't help but respect this move of skullduggery.

How? I mean, you can argue against tax incentives for corporations, but you can also argue for them. For example, you could say (as others in this thread have) that $48k per job over 10 years is a good investment, and will likely generate much more than that in economic activity. How is it evil?

To me it is evil in the sense that this is taking advantage of the public interest.

For the community on a pure economic sense this might be seen as a good investment, but these kinds of tax incentives just further set apart the position of smaller companies and large corporates.

Imagine a mom&pop bakery with a 20year history receiving a comparable pile of money per job created, soon enough they wouldn't be small anymore.

To me the ability these deals have to further push for monopolys is simply unethical, but I'm german and have different sensibilities I guess.

You'd likely need to look at the local tax laws to state that they aren't getting similar incentives. I'm not in NYC, but I can speak to where I live and many of the laws, obligations and even taxes that apply to an Amazon-size corporation, do not apply to a mom & pop. For example, food labeling/testing is required (not cheap) for larger corporations. Healthcare options and covered sick days is tied to size of your corporation (again, not cheap). There are also numerous loans and incentives for smaller corporations that the bigger companies aren't eligible for.

I'm not trying to paint this as being equal, but to call it evil is a gross mischaracterization of what is happening here.

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