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Comment by weiming | Hacker News Reader

Too many debates I read online today assume that the city was going to hand Amazon a $3b check. Some sort of misunderstanding of how taxes/tax subsidies work.

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So, what you’re saying is that there’s not currently $3 billion saved that can now be invested in the schools, subways, etc.

Not sure why you are being downvoted. That is exactly correct.

I didn't downvote OP but assumed that OP's comment was meant to be a sarcastic response to something that AOC wrote about the matter. Sarcasm is rarely a constructive contribution.

I wasn’t trying to be sarcastic, I was trying to be explicit by restating.

There’s not an extra $3 billion lying around to invest in New York City for other purposes because Amazon canceled the deal.

As it turns out, there really was an AOC-ism of that nature.

https://twitter.com/akarl_smith/status/1096123735935987712?s...

Over some years, Amazon was to pay some $X in taxes. But they were given a break to pay $3b less assuming some goals are met. The city receives $X - $3b.

Now the city receives $0.

You're assuming $X was larger than $3 billion, which isn't a given. Look at sports stadium deals, hosting the Olympics, or Wisconsin's giveaway to Foxconn. The city/state budget is usually the loser in these deals.

Sports stadiums and the Olympics generate temporary jobs and generally do not have the same economic impact of 25k jobs paying 150k over ten years. Amazon's tax breaks were tied to headcount so it's hard to see how the city would be a loser in this case.

Do you believe Amazon's extortion would have stopped at the first $3 billion and they would have happily paid taxes in full after that?

http://fortune.com/2019/02/14/amazon-doesnt-pay-federal-taxe...

Who is Amazon extorting in either of these cases? If you have a problem with Amazon following the federal tax code that's existed longer than they have, perhaps you should take it up with your congressional reps.

The point isn’t whether Amazon should or shouldn’t be paying a Federal taxes, it’s whether—given this prior behavior—we would expect them to pay state or city taxes, instead of finding or creating a loophole to get out of them.

There are a lot of large businesses headquartered in New York. They all seem to be pretty smart. If there are widespread tax loopholes out there, others surely have taken advantage of them by now. If they had, you would see outrage articles on that as well.

Most of those large businesses didn't preface the building of their headquarters with a very public dog and pony show of shopping for tax subsidies.

Lots of shady tax related shenanigans happen in NYC, particularly in real estate development. Sometimes they get called out, and sometimes they go unnoticed for years/decades until new information draws the public eye to them.

> If there are widespread tax loopholes out there, others surely have taken advantage of them by now. If they had, you would see outrage articles on that as well.

Given the response to Amazon doing so is "how dare you complain about Amazon using these loopholes, it's their fiduciary duty to bilk the government out of all the money it can", I don't think there would be widespread publicity to other companies using loopholes.

Instead we'd have people like you trying to shut up anyone talking about them.

I'm not trying to shut anyone up. Please don't be rude. I'm wondering why all the blame is directed at Amazon when they sought to take advantage of (mostly) pre-existing programs. If the problem people have is with tax subsidies in general then isn't the government the real issue here?

> I'm wondering why all the blame is directed at Amazon

The first step is recognizing that there's a problem.

> If the problem people have is with tax subsidies in general then isn't the government the real issue here?

Maybe the problem people have isn't with tax subsidies. Maybe their problem is who the subsidies are being given to? People are realizing that Amazon isn't a good corporate citizen, and I don't think anybody thinks Amazon needs these subsidies.

It's inevitable that tax subsidies, if available, will go to companies that can negotiate the best for them. Large enterprises have more lobbying power, and more ability to play cities against each other. So I think there's little hope of city officials finding the best corporate citizens to subsidize.

How do you design a subsidy program that actually benefits everyone if one of the criteria is likability? The more grey areas you introduce into a program like this, the more cronyism and corruption kicks in which more than likely results in an inefficient use of taxpayer money.

Cap the subsidies by revenue. A trillion dollar company doesn't need handouts, if they can't make profits on that scale of revenues they are inefficient and that capital should be re-routed elsewhere.

> 25k jobs paying 150k

I've seen a few people make this remark, on the assumption that every single job was going to be a high paying job. I believe this is an assumption as I don't recall seeing anything from Amazon stating that they were intending to do this either.

A citation would be helpful for this position.

You've seen a few people reference this because it was in a widely circulated press release by the company itself.

https://press.aboutamazon.com/news-releases/news-release-det...

Third bullet under Amazon in Long Island City in New York City:

Amazon will receive performance-based direct incentives of $1.525 billion based on the company creating 25,000 jobs in Long Island City. This includes a refundable tax credit through New York State’s Excelsior Program of up to $1.2 billion calculated as a percentage of the salaries Amazon expects to pay employees over the next 10 years, which equates to $48,000 per job for 25,000 jobs with an average wage of over $150,000; and a cash grant from Empire State Development of $325 million based on the square footage of buildings occupied in the next 10 years. Amazon will receive these incentives over the next decade based on the incremental jobs it creates each year and as it reaches building occupancy targets. The company will separately apply for as-of-right incentives including New York City’s Industrial & Commercial Abatement Program (ICAP) and New York City’s Relocation and Employment Assistance Program (REAP).

Thank you!

But don't forget that they also need to invest $0 into additional infrastructure necessary to accomodate Amazon and deal with various other problems their presence would have created.

And NY can allocate that 505 million dollars they were going to give to Amazon in the form of a capital grant for something that will benefit the public like infrastructure.

>"Now the city receives $0."

No, now the city receives zero from Amazon. Or another way to look at it is Now Amazon will get zero access to NYC's talent pool. Meanwhile Google is quietly adding 12K new jobs at a new building in Manhattan and doing so without asking for subsidies or incentives. These will be tax revenues that NYC and NY state didn't have to pay to get. NYC will be just fine.

[1] https://www.wsj.com/articles/google-plans-large-new-york-cit...

Well, not $0. NYC is a desirable place for many companies, and others will move in to the place Amazon intended to occupy. It might take longer and the companies may be smaller, but it's not like there is now a giant black hole in Queens that can never be filled.

I think many businesses will think twice about attempting a move to this particular part of NYC, who knows if your company falls into the 'acceptable' category of the government and it's representatives new ideology?

I don't think they will. Unless you are a company the size of Amazon (and literally only a couple are) you are not going to have the same problems.

The fallout will be interesting to see: NY State govt is your regular Blue Democrat government, some of NYC, parts which were against this HQ2 deal, are very progressive. The progressives undermined the traditional Democrats. I bet we get to see echoes of this skirmish during the next cycle.

I think it's the opposite, this is an echo of the latest election cycle. Since Hillary was humilliated by Trump the centrist Democrats are losing most political battles, gradually.

Hillary didn’t lose because she was a centrist (Would Biden have lost?). She lost because she’s a bad candidate. She lost to Obama. She is a war hawk. Also lacked Bill's charisma.

People in the middle want the government to give them a fair shake, they don’t want handouts. They’re tired of being sold out by government and industry to overseas cheap labor.

Yes, but the whole thing has a Karmic feel to it. Amazon used a very public HQ process which turned the process into a public game show. Since they used public pressure on local politicians as a bargaining chip to get a deal done, it feels fitting that it backfired this way.

It's not 'high stakes' if it doesn't have a real chance of blowing up!

A little ironic in the other direction too, I think. New Yorkers saw the deal as corrupt favouritism and wanted to stop it from happening. Now New York has even more of a reputation for corruption by making it clear they won't uphold the terms of deals they make. Really, Amazon are lucky the subsidies disappeared before they made significant capital investments, otherwise it would practically have been extortion.

> they won't uphold the terms of deals they make

Who the fuck is “they” I didn’t agree to shit.

That was done by some guy who lives in Albany.

>"Now New York has even more of a reputation for corruption by making it clear they won't uphold the terms of deals they make."

First of all New York didn't rescind the terms of any agreement. Amazon made the decision not to go forward.

Second Governor Cuomo pursued the deal as a "General Project Plan", this is a state process that circumvents a local approval process that would involve the city council and any community input. If there's any "corruption" here it was in the way this thing was pursued from the outset.

So no, not "ironic" at all.

> New York didn't rescind the terms of any agreement. Amazon made the decision not to go forward.

The State Senate put Michael Gianiaris in a position to veto it. Gianiaris called the deal "unacceptable." He said "If their view is we want your $3 billion or we're leaving, maybe they should leave." He said he wanted to renegotiate the deal from scratch.

Maybe that was just his opening position, and maybe he would have softened up once in a meeting room, but if I were in Amazon's shoes I wouldn't expect to get what I'd been offered, and I'd be pretty worried about getting mugged after setting up shop too.

None of which is at all the same as what you stated - that New York "was making it clear they won't uphold the terms of deals they make."

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