Absolutely. They need a LOT more high paying jobs to keep the taxes coming in.
It is a shame when people without financial intelligence are out there representing people. The polls showed most people were supportive of Amazon.
“We were subsidizing those jobs so for… the city was paying for those jobs. So frankly, if we were willing to give Amazon three…if we were willing to give away $3 billion for this deal, we could invest those $3 billion in our district ourselves if we wanted to.”
Good luck investing these $3B now. Maybe this belongs to the BU forum
I think it is bad that states and cities are now bidding against each other for investments but it has been going on for some time now and seems to be how things are done. Not sure how to stop it.
Re investing the $3billion in the district instead of giving it to Amazon, it does not really work that way I think. My understanding was the $3 billion was coming off of the taxes Amazon would ultimately pay, so if no Amazon then no $3 billion to invest unless other companies make investments without large subsidies.
This is completely the wrong way to look at this. As a public corporation, it is the management’s fiduciary responsibility to maximize shareholder return. All else being equal, if there are significant tax breaks to be had, it is their job to find them.
According to Fortune, Amazon will pay $0 in federal taxes with an 11+ billion dollar profit for 2018.
Only if you accept as axiomatic that corporate profits outweigh public benefit.
He may yet get it. Someone on the radio this morning claimed Bezos may be bluffing to get all he wanted from the city. He noted that pulling out from NY was announced on a blog not an official statement.
Amazon has paid zero in federal taxes for the last two years, I wouldn’t give them a dime.
In NYS, 1% of the people pay 46% of the total income tax collected. In effect, NYS has created a monopsony system. Rich people will now call the shots to an even greater extent than in the past.
Looks like in Chicago they will increase jobs and their footprint but no new headquarters. If more jobs then I am good with the that. Google is also bringing in like 1,000 new jobs and has been buying real estate in Chicago… We will take all the good jobs we can get.
Public benefit is not why shareholders invest in a company. If they wanted to do that, they could just give it away to charity.
In case you think I am being flip, I am being completely serious. “Fiduciary responsibility” is a serious obligation, and management can be sued if they egregiously violate it.
@notrichenough “Only if you accept as axiomatic that corporate profits outweigh public benefit.”
Unfortunately the investors in companies will put their money in the most profitable business so companies do not have the luxury of handing out goodwill to all cities even if they want to do so. Who doesn’t invest in the company that they think will get them the best return on their investment?
I wish this were not so but I understand why it happens. Local governments must be very careful about what they agree to and ensure any tax breaks granted make sense for their citizens, if not, let the company go elsewhere.
Perils of nondisclosure? Had the process been more open, they may not face so much backlash. It does irk me that cities had to swear to secrecy to bid. I get that the secrecy was needed to keep cities compete. But it keeps people in the dark and may have fostered mistrust. Turning somebody’s cute brilliant idea into a nightmare.
Correct.
The higher tax states can just lower their overall taxes to become more competitive with the other state that they are supposedly bidding against. Even Cuomo now admits that folks are fleeing NYS for lower tax locales.
All legal, of course, since tax income is frequently different than book income. I haven’t gone thru their '18 numbers, but the big offset in '17 was tax credit for stock options, a tax law change left over from the Clinton era.
Wouldn’t it depend on how the agreement is written out? Are they giving x% tax discount each year until it reaches $3B or do they get to take all $3B tax break during the first few years with the promise to hire 25,000 and create x amount of wealth over the course of 25 years? If the latter, they could take all the tax credit and things don’t turn out well and leave. A lot could happen in 25 years.
A lot could happen in just 5 years. Plus, I don’t think most people know their local civic spending patterns, realities, history.
People get the idea Amazon would hire some vast number at high salaries, they imagine the specific past boom in Seattle and SV, people they know making the big bucks. They look at top end numbers. (Oh, boy, 25000 jobs x 150k = $ 3.75 bil!!) They easily forget how many could be low hourly wage, less than full time, with limited benefits. No way this puts money into local schools, healthcare for poor state residents, housing subsdies, (not to mention infrastructure,) if the mechnism is broke, the proper allocation and outflow (delivery of those needed services) are missing. And Amazon isn’t going to take the poorest, untrained, unsuitable- the very sort who have trouble connecting to jobs, at all- and suddently pay them a living lifestyle.
How many here think that, if Amazon moved into their backyards, they would get hired? Not all of us are techies. I still say the thinking is incomplete.
And when my city made major concessions to a ‘dream’ enterprise, try guessing how many of those employees moved in from out of town, were not locals getting their break. They didn’t hire my neighbor or his kids. It’s not how big business works. I think we all need to look at this from street level. Not wishes and being easily misled.
I have not seen the specifics of the deal they had with NYC but I am sure it could have been either scenario; all at once or over X years.
I have read of cities offering incentives for companies investments, including jobs, and the companies ultimately do not do what they indicated. I would think governments need to be very specific in the terms to prevent this from happening but I recall several situations that turned out pretty bad for the cities.
It just seems, if you want money in the coffers, to pay for your community, you don’t start by giving it away. You don’t start with some bogus, oversimplified, ‘trickle up/down’ philosophy: if we give them X we will get 2X back for “us.” The companies building better high end housing for them will boom, the companies building infrastructure-- is that where you want your kid to have opportunity? Extending utility lines, building roads, on the team cleaning that square footage or delivering packages?
This is “Robbing Peter to Pay Paul.” Smoke and mirrors, if I dare say so. As I said originally, the folks selling boots to the construction workers, doing dry cleaning, running a lunch place, serving happy hour, selling expensive goods, etc, will see the employee dollars. And the high end techies will be earning and spending. Not everyone. How does that revenue get to the actual locals, those not already positioned downstream to see the revenue?
And NY will still have those issues without Amazon and 25,000 new jobs. I wish them well and look eagerly for their solutions.