Amazon settles into low-tax New York City

“Amazon Announces New York and Virginia as HQ2 Picks” (nytimes):

Amazon could receive more than $2 billion in tax incentives across the two top locations, the company said in its announcement. Up to $1.2 billion of that will come from New York state’s Excelsior program, a discretionary tax credit. In Virginia, the company could receive up to $550 million in cash incentives from the state.

Plainly both New York and Virginia will be low-tax environments for Amazon (not for small competitors, though! The Tax Foundation ranks New York almost dead last in business tax climate; only California and New Jersey are more punishing places to have a company), but how exactly are the “tax incentives” ladled out?

Amazon will pay less in state income tax? In payroll taxes? In property taxes? A combination of these taxes? 

“The mystery tax breaks bringing Amazon to LIC; New York has an incentives package for Amazon, but taxpayers may never know what’s in it” talks about “tax credits,” but doesn’t say if these are credits against state income tax or local property tax or what.

[Separately, anyone planning to sue an Amazon employee for child support or alimony should probably wait for the lawsuit target to be transferred from Washington (capped child support and limited alimony) to New York ($100,000 per year in tax-free child support readily obtainable and far longer taxable alimony duration). New York enables child support profits to be collected through age 21, while Washington cuts them off at age 18. New York is also more favorable for plaintiffs seeking to obtain sole custody of a child (see TMZ for why it was smart for Katie Holmes to sue Tom Cruise in New York rather than in California). For plaintiffs suing the very highest Amazon earners, the Virginia location offers unlimited child support by formula, but a child stops yielding cash at age 18.]

I wonder if the Amazon New York location will end up presenting the nation’s largest contrast in leisure time. “Amazon’s New Neighbor: The Nation’s Largest Housing Project” (nytimes) says that 6,000 people who have no financial incentive to work (they may actually suffer reduced spending power by working due to the welfare system structure) will live right next to people that the same newspaper says are essentially slaves (see “Inside Amazon: Wrestling Big Ideas in a Bruising Workplace; The company is conducting an experiment in how far it can push white-collar workers to get them to achieve its ever-expanding ambitions.”: “When you’re not able to give your absolute all, 80 hours a week, they see it as a major weakness,” she said.)

Readers: What do you think of New York residents paying the nation’s highest tax rates (tied with California?) so that Amazon can be in NYC but be taxed more like a business in Florida or Nevada?

Also, does this mean that the New York transportation system will melt down? How can it handle 25,000 more commutes per day via subway, Uber, private car, train, etc.? Every mode of transit in NYC (even walking in Midtown!) seems to be gridlocked and/or overburdened currently.

9 thoughts on “Amazon settles into low-tax New York City

  1. Companies keep chasing the highest operating costs in the most expensive urban centers, but maybe it’s an artifact of the government printing free money. It’s disappointing for those of us who invested in rural real estate decades ago, expecting the suburban migration that started in 1950 to continue.

  2. Three HQs seems a bit excessive, actually. I guess the most important piece of information now is which one will house Bezos. Or will he, Lear-like, travel around to visit his vassals?

  3. As a New Yorker who lives outside the city and commutes in once a week (mostly work remotely) I’m fine with this. My napkin math says that 25k employees making (say) median $90k yields $2.25B in salaries per year (possibly optimistic salary numbers, season to taste). And that isn’t counting knock-on benefits to the employment ecosystem in the NYC metro overall. Plus those people will need additional housing, various services etc.

    Cost of living will continue to rise regardless. Infrastructure will continue to degrade and receive duct tape and twine fixes by government no matter what happens with Amazon. May as well try to reap as many of the benefits of Amazon’s presence as possible. New York has spent (and will spend) billions in much dumber ways than this.

    It is already the case pre-Amazon that you are competing for housing with people who can put $800,000 cash (or more) in a bag to buy an apartment (reported by a friend in Brooklyn).

  4. I wonder if the Amazon New York location will end up presenting the nation’s largest contrast in leisure time. “Amazon’s New Neighbor: The Nation’s Largest Housing Project” (nytimes) says that 6,000 people who have no financial incentive to work (they may actually suffer reduced spending power by working due to the welfare system structure) will live right next to people that the same newspaper says are essentially slaves

    That NYT article doesn’t support the assertion about the 6,00 people. A number of them were quoted as expressing an interest in working for Amazon.

  5. According to NY’s paper of record, the NY Post, the rationale for the deal is a payoff to labor unions who will be given billions to develop Long Island City under “outmoded” work rules, i.e., over staffing, no show jobs, crony contracts, quadruple time for “overtime” — essentially in return for taxpayer money.

  6. This will be a very interesting experiment. I see it failing completely in 2 years or so or only be partially completed for staffing reasons. Bezos has burned his bridges with workers so completely in Seattle that very few want to work there. White collar people quit after a year or so due to over work and constant berating. So now no one applies for any job. So he is leaving town and going east to see if those crazy east coast people will put up with his demands.

  7. It would have made more sense to put this HQ in Connecticut or Pennsylvania, but if Amazon is getting corporate tax incentives, but employees just pay the income tax, maybe that’s the “New York”
    version of a “win win”. I knew from the start it would be a major metropolitan area on the East coast. As a Texan, I had no expectation it would be here, even though many of my colleagues thought so. I guess NYC or DC/Metro probably makes a lot of sense given that is likely where many of their customers are. Just why in the city and not Philly (where they could really use an economic boost like this).

  8. One can perhaps (as Rich notes) justify the benefits as a taxpayer (maybe; sort of; barely).

    The much-more corrosive effect, I think, is the anticompetitive nature of deals like these. Just another example of how the largest companies with the best lobbyists get the special favours, tax breaks, unpunished lawbreaking, and so on, which their small competitors can only dream of.

    That Amazon can continue to run the scam in which marketplace transactions remain free of sales tax, without every state threatening to toss Amazon’s entire executive suite in prison, is astounding. This despite the fact that Amazon not only collects the money, but in many cases even warehouses and ships the goods!

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