By Ben Casselman, news agency New York Times
Amazon created a retail empire based on low prices and free shipping. However, for taxpayers, their new offices were not cheap.
New York and Virginia together donated more than $ 2 billion in tax credits, rebates and other incentives to attract the company. This figure does not include hundreds of millions of dollars in possible infrastructure, employee training and other state aid.
For some time, economists have criticized tax incentives because they think they are inefficient and unnecessary, arguing that they face cities and states against each other and leave less money for education and public works, which ultimately more for the growth of local economies and improving the means of subsistence. Surveys have shown that most incentives have a small role in corporate decisions, that is, governments usually end up paying businesses to do what they will do anyway.
In fact, when New York and Virginia were elected for its new offices, Amazon rejected seemingly more joyful offers from its neighbors. Maryland and New Jersey offered stimulus packages for many millions of dollars, which would far exceed those acceptable to Amazon.
"Additional subsidies of $ 7.5 billion were not enough to convince the Amazon to move to the other side of the river," said Michael Farren, an economist at the Mercatus Center, a libertarian research center, to mention the difference between 8.5 billions of dollars from Maryland and less than $ 1 billion from Virginia. "This means that subsidies have never been the important thing in the first place."
In her announcement Tuesday, Amazon said "attracting the best talent was the main lever" of his decision. The motives were "a factor," he said, but a secondary one.
The New York Motivation Package is much larger than Virginia's. Amazon promised to create about 25,000 jobs in each location, but New York offered twice as much as promised Virginia.
"This is the first thing we said," said Maria Doulis, vice president of the non-Communist Citizenship Budget Commission, which has offices in New York and Albany. "Our reaction:" How? Will they pay half? Why do we seem to pay so much? "
New York promised the Amazon's $ 1,525 million incentives, including $ 1,200 million for the next ten years, as part of the State's Excelsior tax deduction. The state also promised to help Amazon with infrastructure improvements, staff training programs, and even help to "ensure access to a heliport" … none of the above was worthless.
Virginia promised Amazon an incentive package worth $ 573 million, including $ 550 million in cash donations: $ 22,000 per job. The state has also pledged to help the Virginia Polytechnic Institute and Virginia Tech with $ 250 million to build a campus in Alexandria, near the Amazon site in Arlington, where it will offer degrees in computer science and software technology similarly , Virginia offered to help the company get a heliport).
New York has a history of generous incentive packages, including an agreement in 2007 for US $ 5.6 billion in subsidized electricity for an Alcoa plant for 30 years in order to keep it in the state, according to Good Jobs First , a control office that monitors corporate subsidies.
For each job, the offer from New York to the Amazon is almost formal for the state, but much higher than the national average for such agreements, said Timothy J. Bartik, an economist at the Upjohn Institute in Kalamazoo, Mich., Who studied incentives. tax.
"New York is doing its usual practices," said Bartik. "Give many important incentives, many long-term motivations."
Governor Andrew Cuomo defended the deal, arguing that New York should offer incentives because it is burdened with high taxes in comparison. The tax rate for corporate income in New York is 6.5%, slightly higher than 6% of Virginia, according to the FT. However, other business and individual taxes are higher in New York.
"It does not start in a level playing field," said Cuomo on Tuesday. "If everything was the same, if we do nothing, they go to Texas."
Amazon facilities in New York could also benefit from federal tax deductions under the tax law passed by Republicans last year. This law created a program to encourage development in so-called "convenience zones", including the Long Island City departments.
New York City did not offer any special tax deduction to Amazon as part of the deal. However, the company will be able to benefit from city tax credits, including a program aimed at encouraging businesses to create jobs outside of Manhattan's busiest areas. For Amazon, the program, which is open to all companies, could be worth up to $ 900 million for twelve years, in addition to state incentives.
Mr Doulis, from the Citizens' Budget Committee, pointed out that these credit and other similar items might have been useful. In the 1980s and 1990s, Doulis explained that companies were in danger of expanding to Queens or Brooklyn, and tax cuts were an important incentive. However, for the time being, Long Island City is a rapidly evolving neighborhood, full of trendy bars and luxurious apartment complexes.
"The neighborhood was very different 25 years ago," he said. "We live today in a very different world."
However, Noulis commented that the arrival of the Amazon was a big blow to the city as it tried to establish itself as a technology center that competes with Boston, Seattle and even Silicon Valley. On Tuesday, Cuomo and mayor Bill de Blasio said the decision of the Amazon was a vindication of this strategy, which would benefit all Newcastles, according to the mayor.
Tom Stringer, who works for BDO's consultant as a consultant in decision-making companies, said expensive places such as New York and Virginia should offer incentives to compete with cheaper locations. In addition, Mr Stringer said the agreements would be repaid in the long run in terms of jobs and tax collection.
"Motives are not subsidies," said Stringer. "It's investment."
Alexandra Ocasio-Cortez, a Democrat who since January will represent parts of the Queens in the House of Representatives, was one of the many elected officials who criticized the deal. In a series of tweets, Ocasio-Cortez pointed out that an Amazon-sized company should not "take hundreds of millions of dollars in tax cuts at a time when our metro is subdued and our communities need more investment."