[ddebernardy]

I suspect I'll never get why the notion of giving a tax handout to a company that's one of the most valuable in the world shouldn't be a non-starter.

> Incredibly, I have heard city and state elected officials who were opponents of the project claim that Amazon was getting $3 billion in government subsidies that could have been better spent on housing or transportation. This is either a blatant untruth or fundamental ignorance of basic math by a group of elected officials. The city and state 'gave' Amazon nothing. Amazon was to build their headquarters with union jobs and pay the city and state $27 billion in revenues. The city, through existing as-of-right tax credits, and the state through Excelsior Tax credits - a program approved by the same legislators railing against it - would provide up to $3 billion in tax relief, IF Amazon created the 25,000-40,000 jobs and thus generated $27 billion in revenue. You don't need to be the State's Budget Director to know that a nine to one return on your investment is a winner.

Actually, you do. Amazon already created jobs in NYC, without any handouts needed. Google recently announced they'd create more jobs, and they didn't expect a handout to do so. By the above logic, a 9:1 return for Amazon jobs is a good deal. What about the Google jobs? Do those count as infinite return?

If so, more infinite returns, and less 9:1 returns, please.

Or is there something else at work here?

[asabjorn]

You are addressing the quote:

> You don't need to be the State's Budget Director to know that a nine to one return on your investment is a winner.

I think you are here making a moral argument of sorts. Why is it morally better to get 100% of nothing than to participate in a project with incentives that give you 9 times return plus create 24-40k jobs? I simply don't see a viable argument that this was morally right, and wonder what argument you have that the facts we know support this proposition.

So far the opponents have not provided a "morally better" alternative to provide Queens with 25-40k jobs, unionized secure jobs for vast amounts of families, and a tax base necessary to invest in Queens that has received very little investment in decades. They have "hopes and dreams", but destroy the only path we had to get there.

Due to this we can't improve the offerings of progressive government services for the people living in Queens. Real kids, families, elderly and youth seeking opportunity is affected by this. These facts seems to show conclusively that this what the activists achieved was morally wrong.

[icelancer]

> Why is it morally better to get 100% of nothing than to participate in a project with incentives that give you 9 times return plus create 24-40k jobs?

Because people who rail against deals like this take zero responsibility for any of the consequences. It's all of the fun moral policing and none of the downside. It's great to be an activist.

[bilbo0s]

In fairness, the real reason, at least in NYC...

is that they never end up in a situation where they get 100% of nothing. Google and Amazon have thousands of jobs in NYC, and they will move thousand more there in the future. For these people in NYC, they don't know the consequences of not having loads of places to work. For them, it really is a situation of "Heads we win! Tails we win slightly less!".

[afiori]

Well if Amazon could not find 25k employee in the given time they would not receive the 3 billions in tax relief

[speedplane]

> Well if Amazon could not find 25k employee in the given time they would not receive the 3 billions in tax relief

The problem of the deal wasn't the mechanics, it was how it was sold to the public. A competition putting cities against cities, negotiated without any public input, a large tax break to one of the richest companies in the world, choosing already popular cities rather than really investing in a newer one. Amazon could have definitely closed this deal if they pitched it properly.

[afiori]

Maybe, but as it is pointed out many times here and in the open letter this was basically a replay of Brexit. another commenter said that his mom believed the city would give amazon 3 billions up front. the public approved of the deal, the only demographic to disapprove was the internet.

70% of local residents approved of the deal. that is a lot.

[graycat]

Yup. To get attention the activists want their shocking stories told, and to get eyeballs and ad revenue the media wants shocking stories to tell.

See my more general response along these lines in

https://news.ycombinator.com/item?id=19236564

[bobthepanda]

> and a tax base necessary to invest in Queens that has received very little investment in decades.

In what alternate universe is this? Queens is hardly Camden or Detroit. The neighborhood in question has 40+ story office and residential towers sprouting up like weeds. Queens is at a record low employment rate ever since this started getting tracked at the county level: https://fred.stlouisfed.org/series/NYQUEE1URN. And there are similar statistics for the metro area. It is unclear to me that New York City needs to throw any tax credits for jobs when we are running probably very close to full employment.

[asabjorn]

This is about diversifying the economy away from real estate and wall street. It is also about bringing high-paying jobs to Queens, and encourage the kind of investment that brings.

From what I understand developers started building in anticipation of Amazon coming there, and that investment is now in question.

[bobthepanda]

The area has been built up with skyscrapers over the past decade, well before HQ2 had even been announced. Development in New York is not so quick that you could shovel a project through in the four months after the announcement.

New York's economy is plenty diverse. There's real estate and Wall Street, sure, but there's also legal services, advertising, media, health, education (NYC has the largest student population in the country), hospitality, tourism, etc. This is no one company town like Gary.

[cjbprime]

I wouldn't describe LIC (or any part of Queens) as being "built up with skyscrapers" personally. I'd say there are a handful of tall apartment buildings.

[asabjorn]

So you are saying Queens is in a great place and we do not need to create much more opportunity there?

[bobthepanda]

There's certainly no need to beg for it.

[Eridrus]

LIC does not have many commercial tenants, and none on the scale of Amazon.

It would be a good thing to not concentrate all jobs in Manhattan.

Also, if you walk around LIC, it's not as developed as you might think, sure there are huge buildings, but they're next to empty lots & industrial spaces. It's largely a desirable area because of it's proximity to Manhattan, not really anything intrinsic about the neighborhood.

[bobthepanda]

All of our transportation is Manhattan-centric. That's why all the jobs are in Manhattan.

Putting jobs in LIC will still force workers from the non-Queens sections of the metro area to go into Manhattan and then back out to Queens. Even the LIRR can't really serve LIC, because it's impossible to build a station that serves waterfront LIC that is on the way to Penn.

[Eridrus]

The Amazon proposal explicitly came with half a billion in funding for transportation in Queens.

And it's also ignoring the fact that a lot of people already live in Queens, and that LIC specifically is connected to Brooklyn via the G.

It's not an ideal situation, but it's a chicken & egg problem, there's no reason to build commuter transit there without employers and employers don't want to be there without that transit, so the Amazon deal would have done a good amount to break that stalemate.

[ec109685]

Amazon jobs aren’t unionized, nor secure.

[afiori]

it was required as part of the grant

[graeme]

If google creates jobs in long island city, they would get the same handout though. Any company locating there does: it's a program NY state and NYC made to encourage development outside of Manhattan.

[ddebernardy]

So in other words, you're suggesting that the handout was baked in from the get go because the HQ was in Queens, and Amazon being Amazon had nothing to do with it?

If that's the case, the media have done a terrible job reporting this.

[orangecat]

you're suggesting that the handout was baked in from the get go because the HQ was in Queens, and Amazon being Amazon had nothing to do with it?

Mostly, yes. About $2.5 billion of the tax benefits were "as of right", meaning they're available to any company that fulfills certain requirements. There was also a separate Amazon-specific $500 million grant to assist with construction. More details at http://www.gothamgazette.com/state/8110-a-closer-look-at-the...

If that's the case, the media have done a terrible job reporting this.

Shocking, isn't it?

[sublupo]

So then what was the point of the heavily publicized hq2 search? If, in the end, Amazon chose a deal that was available to everyone, then what did they negotiate?

[tedunangst]

Other cities could attempt to beat NYC's standing offer.

[jdhn]

>the media have done a terrible job reporting this.

I believe that they've reported it the way that they wanted to. The media knows that outrage sells, and when the public is already suspicious of rich tech companies, there's no reason to accurately report the facts.

Here's a personal anecdote. My mom thought that Amazon was outright being given $3 billion to come to NYC, and said that it was unfair that they were getting the money before they hired anybody. She didn't even know that the tax credits were performance based until I told her.

[CoolGuySteve]

$500mm was specific to Amazon in terms of a land grant and property rights.

That site is currently a plastic factory next to a Superfund site and the infamous Queensbridge projects though. It's likely the cit/state would make the same concessions to anyone that could place clean high income jobs in the area.

[graeme]

Yup, that's exactly it. As others mentioned, $2.5 billion of the three billion were credits any company can access. $500 million was related to the site amazon chose, a dilapidated area which the state wanted to encourage development of.

(I mean the specific HQ site within LIC)

[graycat]

> If that's the case, the media have done a terrible job reporting this.

From the media, you expected something else?

For a more general explanation, see my post in this thread at

https://news.ycombinator.com/item?id=19236564

[Redoubts]

So what was the deal Amazon negotiated, and why does the public opinion matter on what ultimately is just a land purchase?

[afiori]

as far as i understand, amazon negotiated with other cities to see if they could get a better deal than with new york

[throwaway0220]

> If google creates jobs in long island city, they would get the same handout though.

Nops [1][2].

[1] http://nymag.com/intelligencer/2018/12/google-to-invest-usd1...

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

[graeme]

You didn't read your articles very well. Google is investing in new york. The tax credits were for companies in a specific part of new york, in this case long island city.

Google is not in long island city or in an area eligible for these particular credits.

[kelnos]

Your first link references Google buying a building in Manhattan, which is not Long Island City, and so that doesn't apply.

Not sure about your second link because it's behind a paywall.

[credit_guy]

> I'll never get why the notion of giving a tax handout to a company that's one of the most valuable in the world shouldn't be a non-starter.

Not sure whether the moral of the story here isn't simply that a triple negative should be a non-starter

[DenisM]

> What about the Google jobs? Do those count as infinite return? If so, more infinite returns, and less 9:1 returns, please.

I could give you one cent tomorrow in exchange for nothing, you will have an infinite return in a day. Or I can given you $2 tomorrow in exchange for $1 today, a relatively modest 100% return in a day.

End of the day you either gained one dollar or one cent. The dollar buys you more thing. That's the difference between a handful of Google jobs and tens of thousands of Amazon jobs.

Could you repeat the one cent thing? Maybe a few times but it will also take a few more "days", and probably won't reach one hundred repetition any time soon. This is a shallow and/or low-throughput well, only so much water can be drawn from it.

[Justsignedup]

Not missing anything really. Sure it creates jobs, but honestly with how much we're paying for it, we're better off literally giving this money directly to people's bank accounts. It'll go further.

NY is not hurting for jobs. NY has so many jobs, in fact it doesn't have enough housing for the number of workers here. That's the real problem.

[freewilly1040]

This was different than organic job growth because of the number of jobs at stake:

> Amazon chose New York and Virginia after a year-long national competition with 234 cities and states vying for the 25,000-40,000 jobs. For a sense of scale, the next largest economic development project the state has completed was for approximately 1,000 jobs

What's the goal of tax policy? There's a) achieving the appearance of fairness, and b) maximizing revenue for your constituents. The two goals are not always aligned.

If you care more about fairness, then sure, the tax law is the tax law and you should hold the line no matter what. Personally I'd rather maximize revenue, especially here where the knock effects on the economy were pro-growth.

[icelancer]

> Personally I'd rather maximize revenue, especially here where the knock effects on the economy were pro-growth.

Agreed, not to mention the blow this strikes against the state's willingness to be "open for business" as the NY State Budget Director pointed out.

[wbl]

Being fair would mean accepting Amazon was going to get the statutory incentives.

[microcolonel]

> I suspect I'll never get why the notion of giving a tax handout to a company that's one of the most valuable in the world shouldn't be a non-starter.

I mean, it's pretty straightforward. When you set your basic taxes high enough, it no longer makes sense for some people to do business in your jurisdiction rather than another, so in order to convince those businesses to do business in your jurisdiction (and still generate revenue), you must reduce the effective tax burden on that business.

If you do not reduce the effective tax burden, they will leave (which is what you see).

The fact that some other businesses are willing to have some offices in your jurisdiction at full price is neither here nor there.

Use empathy to predict the behaviour of people under your system, and use accounting to get the figures; it is not difficult to see why tax incentives make sense in a place like NY. If you don't want to see your state and local government pander to individual companies, then lower the cost of doing business for everyone in the state.

[Nasrudith]

Tax rates seem to be a want bonus compared to their actual needs anyway. If it was really as big a factor as pundits claim we would see a lot of jobs in unincorporated areas - yet instead they are in places where populations and infastructure are. Essentially it is a reverse of why there is a sticky price point of items disconnected from actual price - it is what the market will bare.

If the fundamentals of an area are good the appropriate response to people demanding concessions leaving is "don't let the door hit you on the way out".

[microcolonel]

> Tax rates seem to be a want bonus compared to their actual needs anyway.

All else being equal, companies should really be doing what is right for themselves. If it's more costly to be in your community, then your shallow assumptions about their "actual needs" do not, and should not, factor in.

[aetherson]

Doesn't the fact that Amazon did in fact leave kind of prove you wrong?

[tehlike]

I cant see why hq2 location cannot be based on bidding.

Tax breaks are part of negotiation. Math is clear.

[sp332]

Well the laws should be applied equally to everyone, including tax laws. That's a pretty simple principle. If you're going to make an exception, you need to reassure people that rule of law is still a thing and you're not just letting a company buy a different set of laws for themselves, which is kinda what this looks like.

[tehlike]

I get the rule of law aspect, but law leaves room for negotiation for this, otherwise someone woyld have sued the city, no?

[icelancer]

> Well the laws should be applied equally to everyone, including tax laws.

Do you feel this way about all laws, including drug laws regarding possession and mandatory minimums?

[thoughtstheseus]

Yeah, hopefully the next time an $800B company developing cutting edge software/tech wants to locate in an economically stressed area stakeholders do better job reassuring people the rule of law still applies.

[endorphone]

The math isn't clear at all. Amazon is putting countless other businesses, who employ countless hundreds of thousands, out of business. That's just the nature of capitalism and efficiency, but when they demand special treatment to do so..that's just perverse.

[tehlike]

For centuries businesses come and go. I am sure at every level of government incentives happen. Tax break is an incentive. Other businesses could get expedited approvals or permits, some might get licenses etc.

Part of american way of doing business, really.

[endorphone]

I was replying specifically to the meaningless statement that "Math is clear". Replying that the math is unclear doesn't really clarify it or demonstrate your point.

The economy has economic activity. That activity is taxed at various levels. When a leader, taking a huge slice of the activity, demands special treatment to take even more of the economic pie, the math is clearly bad.

[berberous]

If you want to somehow ban the concept nationally, fine, but otherwise if a city/state doesn't play the incentive game they will probably just lose out to others that will.

[endorphone]

NYC, San Francisco, and a few other areas have absolutely no need for incentives. They're very robust, energized areas, and don't need to beg for employers to come there and leverage the dynamics and workforce. Amazon's ridiculous dog and pony show -- which wasted outrageous amount of public time and money -- was absolutely dystopian: Company that already is one of the largest in the world, with an enormous competitive advantage, demands even more competitive advantage. And let's be real -- Amazon mostly deals in what are zero sum markets. That I bought a camera and some cookies from Amazon just stopped me from buying it from someone else.

Further it's worth looking at LA and the NFL. The NFL takes advantage of governments -- usually desperate governments -- to build their stadiums for them, and when LA didn't play ball the NFL went sulking out of town. Eventually they went back, paying for the stadium and all ancillary costs, out of their own pockets, with zero incentives. Because in the end it simply makes sense.

[prepend]

Long Island City is not Manhattan. They do benefit from giving incentives as they are not a robust, energized area. Thus the plastic factory/ superfund site with no jobs.

[endorphone]

Long Island City is directly opposite Manhattan (and to reply to the other comment, is most certainly a part of NYC), is extremely lucrative property, and much of it has sat unused largely because property owners have been trying to rezone as residential (where it is worth hundreds of millions an acre). NYC is extremely robust. NYC doesn't need Amazon, and never needed Amazon. And contrary to the claims in the linked letter (a spittle laden diatribe of someone mad that they didn't get their way), there was opposition right at the very outset. Significant opposition. Opposition that Long Island City doesn't want to be Manhattan, for instance.

[afiori]

If I understand you, what you are describing is gentrification.

> Opposition that Long Island City doesn't want to be Manhattan, for instance.

Being converted in a residential area for rich people does not look better.

> there was opposition right at the very outset. Significant opposition.

Considering the level of misinformation and how politically entrenched it was this means less than usual.

[icelancer]

> NYC, San Francisco, and a few other areas have absolutely no need for incentives.

I see you are not familiar at all where Amazon HQ2 was going to go. (Not NYC.)

[endorphone]

A brave attempt at pedantry given that Long Island City is most certainly a part of NYC.

[kortilla]

>I suspect I'll never get why the notion of giving a tax handout to a company that's one of the most valuable in the world shouldn't be a non-starter.

Every company that would have built in Long Island city is eligible for the same tax credit program. Using the word “handout” is propaganda designed to make you think the government wasn’t still taking in more than was credited. Amazon did not get this without bringing in tens of billions more tax revenue.

>so, more infinite returns, and less 9:1 returns, please.

>Or is there something else at work here?

Yeah, those infinite returns don’t exist. Nobody else is building in LIC with that scale so there is no comparable thing providing “infinite returns”. Even if there was a company doing so, it would be eligible for the same tax credits. Amazon wasn’t getting an Amazon-specific handout.

Even if all companies weren’t getting it, I sure as hell would want 25,000 jobs that bring 70% of normal tax revenue for 10 years instead of adding a trickle of jobs at normal tax revenue that doesn’t even reach 25k jobs in 10 years.