On Sept. 7, 2017, Amazon announced the search for a second headquarters to rival its main headquarters in Seattle. They posted a nationwide Request for Proposal, outlining information needed from applicants and a six-week submission deadline.
Amazon’s expansion plans made national headlines and attracted 238 proposals from across the USA and Canada. The whole country was agog chasing after this holy grail, as Amazon promised its new headquarters would bring 25,000 high-paying jobs.
In early November 2018, Amazon pivoted, and decided it would chose two locations instead of one, because their explosive need for experienced tech workers was too large for one location. On Nov. 13, 2018, Amazon chose New York City and Arlington County, Va.
While Maryland offered $8.5 billion in subsidies, the highest of all applicants, with New Jersey also offering $7 billion, Amazon chose what it thought to be the two best cities for long-term growth.
New York City promised $3 billion in direct and conditional subsides, while Arlington County only had to pony up about a third of that.
If New York City offered less, would they have won the Amazon contest? Probably, however Amazon did an incredible job of pitting applicants against each other to extract the highest possible benefits.
Immediately after Amazon chose NYC, there was loud resistance from some of the progressive elected officials whose districts fall in and around the area where the headquarters would be located.
The reasons for pushback included: the need for promises to hire from within the existing community; questions about the quality of the jobs; the ability of workers to collectively bargain; concerns that the money would be better spent investing directly in functioning mass transit; issues of thriving schools and affordable housing; and finally, the feeling that we shouldn’t need to pay massive corporations to bring them to our community.
While these questions and concerns may be valid, there were several arguments in favor of bringing Amazon to our community that they overlooked.
For starters, the explosion of new economic activity generated by 25,000 high-paying jobs, and the additional new industries and jobs that would have been created, were projected to bring $27 billion in new tax revenue.
This additional tax revenue could have been put in a lock box, dedicated to address many of the progressive political concerns, including new schools, job training and upgrading the beleaguered mass transit system.
I wonder how many of the anti-Amazon protestors regularly order through Amazon’s website, as opposed to supporting higher priced local small businesses in their own communities? New York’s neighborhood grocery, book, clothing and electronic stores are all gone or dying because of e-commerce.
What is most disingenuous and not spoken about by the anti-Amazon crew is the fact the New York politicians spent $10 billion last year on business incentives, more than any other state.
There was never any organized politicking in response to that spending. In 2017, New York handed $420 million in tax breaks to the entertainment industry to film in state. This was the highest expenditure in the nation. Where was the outcry against that?
What a disaster this has been. Instead of a long-term plan that would keep the New York metro area, including Long Island, on a path to sustained growth, future businesses looking to relocate to our region received this message: “New York is closed for business.”
Many of the protesters aren’t old enough to remember the rough and tumble crime-ridden New York City of the mid-1970s to the late 1980s.
With a drop of $2.3 billion in New York state tax revenue last year, declining population in New York at a rate faster than any other state, and a decrease in the financial sector’s influence, it isn’t hard to imagine a slow steady move toward mediocrity.
Cleveland, Detroit, Buffalo and Hartford were once great cities in America, but they didn’t have the foresight to reinvent themselves to stave off loss of their prominent industries. NYC lost the garment industry to cheaper production in Asia with over 300,000 employees at its peak in 1950.
Now there are less than a tenth of that. Recent college grads want to go where the jobs are. Amazon represented a bright future for the region, even if job seekers weren’t considering employment there.
The harsh reality is the corporate tax incentive game is the fault of government. Businesses have caught on quickly that they can hold their local governments hostage, asking for tax incentives with a threat of leaving.
New York and New Jersey offer incentives to each other’s businesses. The same happens with Nassau and Suffolk, as incentives are offered for companies to stay in place with little actual new job creation and tax dollars are squandered.
Amazon represented an opportunity to break free from that ludicrous cycle and we blew it.
One thing elected officials can do to fix the tax incentive mess and work together to attract new capital, including corporations from overseas, is to sign a non-aggression pact.
No town, county, city or state in New York, New Jersey, or Connecticut should offer any tax break to any business located within their borders.
This would focus resources on attracting out-of-region talent, instead of a corporate headquarters moving from Manhattan to Jersey City or visa versa.
Tax incentives should be aimed at net new jobs to a region. Otherwise, we are on a race to nowhere. The loss of Amazon and all the commerce it would have brought to the region, is the reality check.
