Amazon's spectacle reminds me of Lebron's "The Decision". It's one thing to work out the details and make an announcement, but to purposefully turn it into a show about "What can you do for me?" instead of "Here's what I can do for you" made it not sit well with people.
Also, the pull-out letter also basically dumps the blame on state/local officials for not wanting Amazon, despite not all stakeholders being present at the table when discussions started.
I am announcing an exploratory committee on whether or not I may or may not Apply for YCS19 - I wont tell you if I will apply or not - or how much money my [stealth] startup-unicorn will attempt to raise for an innovative and world-changing product we have yet to decide on seeking a co-founder for. But I am telling you now that I am planning on letting you know, at the end of this quarter - or maybe next month or who knows when, that I am looking into a potential announcement about this announcement where I tell you if I will make a further announcement about my announcements.
I don't see it as a "what can you do for me". A lot of Amazon's interest were aligned with that of many New Yorkers. Both Amazon and most New Yorkers want to have a strong transportation system and a diverse economy that doesn't just rely on taxing bloated financial bonuses to pay for services. They also want New York to be an in-demand tech hub with a deep labor pool and be a place where people actually want to live. Cities should strive to be places where employers want to invest. We aren't talking about handing over duffle bags of money to Bezos. They agreed to offset some of NYC's exorbitant taxes and regulations that make this city hostile to many businesses. And supposedly the incentives were available to any employer of that size. The fact is that having a large Amazon hub in NYC would greatly benefit the city and its denizens
Not just "What can you do for me", but "We'd never consider you for a HQ in a million years, but by all means give us a bunch of business intelligence gathered on your own dime we can use to site fulfillment warehouses..."
A big difference is that contrived drama is at the very core of the entertainment business of professional sports. It makes for much of the entertainment! It's less helpful in the more mundane enterprise of 'building a bunch of offices and warehouses'.
1. Basketball is entertainment, and 'The Decision' was the result of years of speculation by the fans and the media. Furthermore you see similar spectacles for such things as National Signing Day, where top recruits hold press conferences to announce what college they are attending.
2. There is animosity and jealousy towards 'entitled millionaire athletes' that was made worse with players being able to control their own destiny instead of suffering under terrible management. "If they get to choose where to work and do so with their friends, why can't I" yells Joe Six-Pack.
3. The super team. Somehow NBA fans forgot or were ignorant of how absolutely stacked championship teams had been throughout history, featuring multiple hall of fame players and coaches. Elements of #2 play into this as well where it is management, not players, that should build championship teams.
4. A player like LBJ is far, far more likely to deliver (which he did with multiple championships) in the NBA than a company like Amazon is to deliver a value worth the taxpayer dollars they absorb.
It is always vocal minoirities who do things, even with very popular topics.
Animal cruelty? There is only a vocal minority who takes a public stance, despite this beeing a very clear cut issue in terms of public opinion. Migration is the other way round: most people don't give a fuck, but have a loud vocal base that will even hurt themselves to make a point and you will be heard.
Most New Yorkers don't live in LIC and won't be directly impacted. If you asked me about a proposal in a borough I never go to I'd probably say "yeah sure no problem"!
I think the numbers in these pools are moderate enough to cast doubt on your claim. Would need to know about methodology, who paid for the survey, etc.
Even after reading this, I think the claim “most New Yorkers supported the project” is extremely dubious.
Amazon could have easily ignored them for all eternity if they wanted. A vocal minority can't influence a random housing development, you think they had any say over Amazon? That's a STRETCH
The opposition is not because some high tech firm, whether it is Google or Amazon, is expanding in NYC.
The opposition is because of the Massive tax breaks and other $$$ giveaways New York was going to hand over to Amazon. I don't recall Google extorting NYC for $$$ before they decided to expand....
A "tax break" is just a reduction in taxes that otherwise wouldn't be paid at all. It still means a profit for the city.
It's not like NYC is paying Amazon to come to NYC. NYC would still make huge tax revenues from additional sales, real estate, income taxes, and corporate taxes.
Now they're turning that all away. It's such an irrational decision that if I were Amazon, it would raise a big red flag for me as well.
No need to open in a community that doesn't want your money.
Eh, sadly I think if Amazon had shut up about the process and just silently negotiated for tax breaks this probably would have gone through without issue. These sorts of stupid tax breaks get offered to large companies all the time and it's always a race to the bottom (and, with our broken campaign finance laws and legality of post-service employment, often times deals that are just clear losses get passed so some politician can get a sweet 5mil/year when they retire onto that same company's board of directors)
A sheriff of a small town told me how they ended up spending thousands of dollars to SWAT team which he thinks he will never use. The reason ? After some school shooting in another end of USA the folks of his county wanted to know how their LEAs plan to defend the local schools. The correct response here was that they do not expect such law probability even and even if it happens there is very little they can actually do.
But public does not like it and hence they had to put together a fake plan and waste money. Which could have otherwise gone into preventing real crimes.
You haven't seen the perpetual and energetic fights in my part of the nation about public funding for football (and other professional sports) stadiums. Sports businesses trying to get tax money to be spent in order to enhance their profitability is absolutely something that brings out the opposition.
Is it just a coincidence that the Giants and Jets both play in New Jersey. Maybe Amazon should just move across the river and call it the New York office.
Hundreds of thousands of people don't turn out for a parade for Amazon. They do when pro teams win championships.
Football stadiums get subsidized because football is extraordinarily, wildly popular with most of the people that pay taxes. Those taxpayers spend massive sums of money on sports every year, across the NFL / MLB / NBA / NHL / MLS / NCAA. Those people pay most of the taxes that fund the government that then pays for the stadium subsidies.
Taxpayers love sports, love spending money on sports, and the majority of taxpayers are clearly fine with subsidizing sports at all levels. They vote with their dollars and... votes, over and over again, year after year, decade after decade, to keep supporting sports subsidization.
See: football attendance and ticket spending on NFL and college games annually, as well as sports packages for television, merchandise sales, etc.
It worked out for Amazon. The biggest goals of HQ2 were to get around barriers to further growth and development in Seattle and to hedge against the risk of further populist backlash in Seattle. The fact that a populist backlash in New York happened so suddenly demonstrated that NY suffers the same afflictions as Seattle.
Pretty on point. Amazon is pretty decided to step aside those toxic politics, that is why I am surprised they choose NYC in the first place, because the climate there isn't that different from Seattle. Well, it turns out to be rather quick running into its conclusions. Fun ride.
Google doubled their occupancy to 7k. Amazon was promising 25k jobs. I'm stunned out how so many people in this thread are pretending thats equivalent.
empty promise is useless. did they sign a contract saying if they hire 1 person less than 25k and their average salary is 1 dollar less than 150k by certain time then they will refund all tax breaks? when bezos signs that contract then I would believe this.
Exactly, this was a huge communication error on Amazons and the politicians' side. Offering such huge subsidies to a single company will never go down well in the current political landscape - especially not in a city with a resurgent left.
But because the dog and pony show draws more public scrutiny, is that not a better, more transparent process for the tax payers vs the norm of corporations "quietly" making deals with city governments?
If Amazon required all bids and contracts be made public AND brought in the media circus to invite scrutiny that would seem to be the most in the public interest.
LIC and Queens was more resistant to hipster techbros than say, Chelsea. Manhattan is already a playground for the rich, lower manhattan even more so. LIC was justifiably worried about tax payer subsidized gentrification.
I mean, they're still doing that. Amazon is still planning on staffing up their existing NY offices, just to the tune of 5k new jobs instead of 25k.
The big dog and pony show was about asking for major tax benefits. They're still welcome to open a giant LIC office, they just won't get showered with a tax windfall for it. That's Amazon's decision that it wasn't worth it.
From what I heard, Google also doesn't get the kind of deals with tax breaks that Amazon did. Amazon wanted to leverage their added value (which is clearly existing) into some benefits. That did not work in this case, but it wasn't at all obvious it won't. Majority of New Yorkers supported the deal, as it was.
Also, "nobody bats an eye" is not right either - there are tons of protests against Google, which has been widely reported. They just didn't have a focus point like Amazon did, but if any city had a wide contingent of young socialist politicians caring about PR much more than for the jobs for the city population - the same could happen to Google too.
I think you're misreading Musk's reputation outside of tech circles. If they're aware of him at all, he's more or less viewed as a Bond villain at this point.
After being a resident of NYC for 30 years and seeing the city change and become a technology hub and just a financial center I think this is a real loss for NYC.
It would also be in Long island City which would provide a huge influx of new workers and move that neighborhood forward in development rapidly. The down side would be that it would push some residents and business owners out but this is simply a fact of life in NYC where on a long enough time line every undesirable neighborhood eventually become desirable simply because of increase in residents and increase in real estate prices. That would also conversely make adjacent neighborhoods more attractive.
As for the tax breaks those would eventually be off set and it would still be cheaper than the amount that was spent on a useless Subway line that took a decade and really added no real capacity where it mattered.
How many jobs are in LIC though? This would've been a massive boon to the LIC and the NYC job market without the added congestion that putting these jobs in Manhattan would've caused. Manhattan is already at/over capacity, but I don't think the Manhattan -> LIC rush hour subway is.
If you're talking about the 2nd Ave stub, yeah, it was crazy expensive but it's serving 200K passengers a day, alleviating crowding on the Lex (entire Lex is like 1.3m), and UES to Times Square is hella faster.
Anyway, for me it hinges on how much special treatment Amazon got, $100K in tax abatements per job seems excessive, but others say it was pretty standard, would have been a huge anchor tenant for NYC tech and LIC, so much smoke blown on both sides it's hard to say ¯\_(ツ)_/¯ .
If they want to sell and support AWS to bigcos in NYC they are going to need a major presence regardless, not sure how much sense it makes for their other businesses to have a big HQ in NYC.
Tax abatements like this are a serious antitrust issue as well. Smaller competitors don't have the political clout to get tax breaks like this, will have to pay more, will pass those costs onto customers, and won't be as competitive.
They are also aggressively expanding into display ads, and the epicenter of the display ads ecosystem is in NYC. A lot of the hiring in tech they do in NYC was for ads positions.
We're all going to have to do something for the people at the actual bottom once we cater to the people racing to the bottom. The people that can't afford to live at the bottom of NYC also can't afford to move their families to Central African Republic and run the tshirt machines producing stuff they ship back where they came from.
The USA already has a tax structure in place. Amazon could afford to pay the existing taxes if they wanted to. Heck, they're paying their tax accountants to figure out how not to pay those taxes. Why doesn't Amazon just buy, say, Nebraska, and set up shop there?
UBI, livable wages, raise estate and corporate taxes, operable unions without "right to work" (for less) / union-busting laws, more worker-owned co-ops and integrated standard-of-living net that lifts instead of treating people like criminals.
But first, getting rid of the corporate capture of both major political parties, elected officials, government and policy-making is a precondition to do anything to reverse the neoliberal, cannibalistic anarcho-capitalism inverted totalitarianism being forced on us.
the issue for me is that the main benefit of the tax breaks is capitalized by owners of AMZN stock, mainly Bezos, the wealthiest man in the world. AMZN is going to grow somewhere, they should pay taxes where they grow.
Would the tax breaks eventually be offset? Amazon paid zero federal tax for the last two years running. They're experts at tax avoidance. I don't see any reason to assume they wouldn't do the same in NY.
> Amazon paid zero federal tax for the last two years running
Not paying Federal income tax isn't paying no taxes. Also, the "zero federal tax" meme is popular among the Bernie Sanders crowd, however, much of Amazon's credits were due to paying stock-based compensation. In 2017, they paid out almost a billion dollars in stock compensation -- compensation for which recipients are taxed -- and taxed at a higher rate than the equivalent funds would have been taxed if retained by the company since such compensation is taxed as ordinary income -- not only are federal income taxes due, but also social security and medicare taxes. The point is that $917 million in stock compensation was written off against Amazon's income, but that $917m likely yields roughly $250 million in federal tax revenue , while if that were taxed as company income, it would yield roughly $110m given the historical effective tax rate paid by Amazon.
Essentially this: If Amazon didn't exist, the US government would be far worse off in terms of tax revenues, despite Amazon paying "zero" taxes. An intelligent view of the situation wouldn't look at "federal taxes paid" by the entity of Amazon, but their total tax revenue impact on the United States government -- including their state and local, and taxes paid by their employees. If you wanted to be more intellectually honest about Amazon and taxes, you'd also include the tax impact of everyone that profits as a result of Amazon. There's also the impact at the consumer level -- the price of products is the sum of all of the inputs used to produce, market and deliver that product. If you raise the price of any of those inputs, prices necessarily increase. Let's say we increase the taxes of Amazon -- that means that their "Hefty Garbage Bags" are now selling for more money, but that also means that competitors selling Hefty Garbage Bags can also raise their prices. Essentially corporate taxes have the same market-wide effect as a tariff -- raising prices for everyone. Who gets harmed most by higher prices for consumer goods? It isn't the "rich." It's the poor and middle class. Lower prices for goods helps the economy far more than the equivalent amount collected in taxes due to deadweight loses.
I just don't understand the logic of politicians such as Ocasio-Cortez. Amazon HQ was going to bring 25,000 high paying jobs to the area, providing growth and opportunities for her constituents.
Her argument against is that the Amazon HQ would further gentrification and she was appalled by the government subsidies. So she'd rather limit new growth, prevent new jobs, and stifle wealth to prevent luxury condos and Starbucks from going up? Make no sense, she is literally preventing her constituents from moving up the economic ladder.
Do you think there are 25,000 high skilled workers in new york sitting around waiting for Amazon to show up? No, those workers are in high demand. So the only option is too pull from outside the region further driving up the cost of housing. Its pure numbers. What about the low skill jobs? Amazon doesn't employ cleaners and other low skill workers. They contract those jobs out, so the low skill employees see no benefit from working at Amazon anyway. Even if we pretend that Amazon can only employ native new yorkers, there aren't enough to go around. So they'll be taking jobs from other organizations, like small businesses, who can't afford to compete with Amazon.
So, what's the benefit to new york? Yea, there are 25000 new jobs. But the choice isn't 25000 jobs or no jobs. Its 25000 jobs with amazon and some number of jobs from other businesses. Other businesses will employ those high skill workers because there aren't enough to go around.
AOC’s logic is very straight forward. She wants to take money from you and I through massive taxation and redistribute it to her low income constituents through massive social programs. Don’t let her “soak the rich” bait and switch rhetoric fool you, the middle class always pays for new government spending.
she's anti status-quo but are unwilling to sacrifice short term for it.
basically her dream case scenario is to tax amazon 5B and then invest 3B it to bring them to Queens.. and then rake the returns going forward. In what fantasy world would that ever play out?
Hey, remember those Amazon insiders that bought property on the cheap?
"...Amazon employees are apparently eager to get a head start on the New York City real estate game.
Condo sales in Long Island City are soaring following the announcement that the Queens, New York, [a] neighborhood will host part of Amazon's HQ2, The Wall Street Journal reports. According to The Journal, one brokerage firm sold 150 units in four days last week — 15 times its usual volume — after Amazon announced plans to open a headquarters in Long Island City...."
Depends if they can hold. A lot of speculators are going to have to take an L if they thought they were going to flip as Amazon ramped up. Especially if they took debt to do so.
If they bought before people knew Amazon was coming and sold now would they really lose anything? Probably still kept up with the price of inflation even now
So this was (IMHO) a shit show from go to whoa. The dog and pony show was a transparent shakedown where Amazon would still probably go where they were always going to go.
The whole splitting HQ2 I think showed this. Like it's not even an "HQ" in any sense of the word. It's just an expansion.
Also with talk of "25k jobs"... what jobs? Are we talking software engineers or warehouse workers? There's a difference.
I don't know the inner workings of this but it seems like Cuomo was the driver here with de Blasio on board. This was a missed opportunity. NYC needs several things from NYS that are politically unpalatable upstate. Top of that list is:
- Property tax reform; and
- Congestion pricing.
NYS grossly favours SFHs for property taxes. For example, a $3m brownstone in Park Slope I saw had ~$700/month in property taxes. A similarly priced apartment would have more like $1500-2000/month taxes. A $100m apartment would be taxed at ~$15k/month.
NYC has on several occasions tried to introduce congestion pricing on people driving in or into Manhattan (something I 100% support) but the efforts have failed as this is the jurisdiction of NYS and NYS has no interest in this (so far).
Why not frame this issue as NYC supporting these efforts to fix issues with NYC like these? The deal may have gotten much more traction were this the case.
So I understand the need for government intervention in large projects, say if Amazon were to build 8m sq ft of office space. Regulatory approval can be nigh on impossible.
That much office space is hard to find in NYC. I think Amazon missed the boat with Hudson Yards (probably the last place this would've been possible in Manhattan).
I agree with other commenters that the net effect of this is about zero. Amazon is trying to have a PR moment. They'll still expand in NYC as it suits their needs. They'll still get tax breaks like any large corporation in NYS/NYC would.
> what jobs? Are we talking software engineers or warehouse workers?
Workers with an average salary of $150,000, I think it's disingenuous to act like you don't know that but you're also an expert in property tax reform.
Pay one person a salary of $1m and you can pay 9 people $55k to average $150k. The average means nothing. Will there some site lead earning $20m/year bringing up the average?
Property tax reform could work for single family homes if we decoupled property tax from land tax. NYS should only raise taxes on the value of land given the surrounding population density, natural properties and accessibility to public infrastructure. Check out some Henry George, if you're interested in learning more.
I didn't read Henry George, whoever that is, I'm reading you right now. Are you suggesting to tax a single family home the same as a six, if they take up the same amount of space?
What happens if someone has owned the home for 60 years, they're older and retired, and suddenly it so happens their neighborhood got popular a decade ago and their property values doubled, and some rezoning happened at a nearby avenue. That's one example. How about we try the academic flirtations with tax experiments at a smaller scale elsewhere, first?
NYS grossly favours SFHs for property taxes. For example, a $3m brownstone in Park Slope I saw had ~$700/month in property taxes. A similarly priced apartment would have more like $1500-2000/month taxes. A $100m apartment would be taxed at ~$15k/month.
The Park Slope home you had was probably newly renovated. That matters - the sale price doesn't. 700 is even a lot, relatively speaking. In any case, houses from the 19th century cost money to maintain, and sometimes, shockingly, they're populated by people who can't afford 1k a month in property tax. The property values went up high and fast - are we going to punish homeowners for that? This isn't a suburb where taxes must come primarily from property tax - there's a NYC-specific income tax, as you're probably well aware.
Then, here's something else, tax those 2,3,4-families more, rents will go up as a result; they're free-market rate apartments, not rent stabilized.
I don't know what any of this has to do with Amazon, though.
NYC has on several occasions tried to introduce congestion pricing on people driving in or into Manhattan (something I 100% support) but the efforts have failed as this is the jurisdiction of NYS and NYS has no interest in this (so far).
They introduced it - it just impacts taxis and for-hire vehicles.
Note: if you look into this a lot of condos have deceptively low monthly taxes due to a tax scheme (now defunct) called J-51 (IIRC) where property taxes started at 0 and would go to normal levels over 20-30 years.
A clarification: NYC didn't offer Amazon subsidies. New York State did. That's really the core of the tension - the whole deal was negotiated in secret then announced to the world as a finished product. That tends not to earn you goodwill with city politicians you deliberately excluded from the process.
My understanding was that Amazon was intending to use existing city programs to fund $1.3B of the $3B in incentives, most of that tied to the number of employees they hire to work in specific zones including LIC [1].
Why do they have to involve the city politicians in the decision-making process if they don't need any special treatment?
[1] "While New York City has not offered Amazon any direct subsidies, the company also plans to take advantage of two city tax breaks that will further sweeten the deal by nearly $1.3 billion.
One is the Relocation and Employment Assistance Program, which offers businesses moving to certain parts of the city a tax credit of up to $3,000 per employee for 12 years. The program will benefit Amazon to the tune of $897 million, Gov. Andrew Cuomo said.
The other is the Industrial & Commercial Abatement Program, which provides property tax abatements. It will be worth nearly $400 million to Amazon, Cuomo said."
I think NYC (or SF or any high cost of living area) is a crazy place to put HQ2. In terms of subsidies, while it's easy to dunk on Amazon, and no business should be getting subsidies IMO, there is a real issue here:
Cost of Living in NY is higher and Amazon will have to pay higher wages if it puts jobs there rather than a place like Nashville. That's higher wages for the same job. Pretty much every company has a cost of living multiplier and pays different wages for the same position based on where you live. So given that Amazon has a choice to locate in the low wage or high wage area, it seems reasonable for the high wage area to offer to offset some of those extra costs. Otherwise why would AMZN even consider a high cost of living area like NYC?
Now to me it's clear that the market signal is that they should open the new office in a lower cost of living area, which is what's going to happen now. A small victory for reason. This means more Amazon workers will be able to afford to buy a house and Amazon will be able to pay them less. Good news.
There's a reason you get superstar hubs, instead of companies and employees equalizing to somewhere else as soon as one metro gets a bit more expensive. Network/ecosystem effects are a real thing.
Google already has some dev offices in cheaper areas, like Pittsburgh, where office space is cheaper and the salaries they pay slightly lower. And yet, they still choose to double their headcount in NYC.
Just saying, "well I guess Google is just being irrational for no reason" would be simplistic, childish thinking. Google doesn't choose sites or increase headcount on a whim. They're going to do it because there are real advantages to the major tech hubs.
Educated guess, as someone who works at Google now and used to work at Amazon: it's easier to attract people to major tech hubs, because they offer more career stability in the form of having lots of other tech companies around. Being in Kansas City making a Google salary might sound great, until you realize that if you lost that job for some reason, there's nothing around in the same tier.
Also, the kind of person who wants to live in a cheaper city, with a big house for their family, is also the kind of person who's going to be reluctant to move from wherever they currently live anyway. That demographic is going to be hard to convince.
As an outsider (to both Amazon and NYC), I always assumed NYC's motivation was wanting to diversify its industry.
Right now it seems heavy in the financial sector to me. Arguably tech is a big part of the economic future, so one view is that it would be smart to have some of that.
It's my understanding that while NYC isn't really a tech hub, the startup / tech scene there has grown stronger in recent years. So I pretty much assumed they were trying to capitalize on this momentum and do a big push to achieve something like critical mass.
Whether that's a worthy goal is very much for debate, but it seemed like that's what they thought they were getting in exchange for the sweet deal they were offering.
The subsidies were very contingent on Amazon delivering all of their promised uplift. But I think people scoffed at the top-line best case subsidies.
I forget where, but I remember seeing someone dig into the details of the offer and Amazon was not actually getting that much better of a deal than any other NYC business.
They were getting very near the same deal that any other company can get through a common tax-reduction program in NY. The difference was scale: 25k jobs was vastly, vastly more than any other company had used for this.
The sheer number of people from NY saying they are "proud" of this shows just how far removed people are from reality.
Honestly I'm surprised that so many people have come out against this, but no one seems to care about the Excelsior job program in general. I haven't even seen a person suggest that the program should be amended to preclude a company like Amazon from using it.
They didn't. NY State offers a 'package' to all companies that move in. That's all they really got in terms of tax breaks. NYC only allowed it to bypass some building reviews/regulations.
Google didn't need any dog and pony show or significant forms of corporate welfare (that we know of) to announce a doubling of their presence in New York.
Exactly. The 25k number was just to make a splash and notice they aren't doing that again. Because there aren't really any other areas that could give them 25k skilled employees. They will scale up in Nashville which is expected since it is a growing area, and they will still be in NY due to the talent. The "HQ2" show was primarily to extract large concessions which almost worked. My initial reaction as a NY'er was "well that didn't go well" but now I think it was great that we did not fall for it.
I don't even think they're really gonna scale up in Nashville. At least not in any meaningful way. 10 years from now, both Amazon and Google will have right around 25 thousand workers each in NYC.
The reality is that NYC is not Wisconsin, they don't need to give out money.
EDIT: I'd even go a step further, and predict that both Amazon and Google will also have ludicrously large presences in the DC-NOVA area in 10 years as well. In fact, Amazon's presence in the DC-NOVA area will be even bigger than they initially said it would.
There's absolutely no way they are scaling up NY to the same degree they would have with the subsidies. There's no reason to. The value proposition is gone, so now Amazon will slow-roll growth in NY like they will any other office.
The fact that you (and many others) consider this a win is an attempt to revise history. This tax deal was all about Amazon expanding very quickly. That deal is gone. But feel free to pat yourself on the back for not "falling for it". Maybe it works out great as other companies will lease those buildings and hire a combined ~20k employees averaging $150,000 in compensation, but that's likely not going to happen.
What if another state gave the concessions, and then it worked out spectacularly for them, completely reviving a city and building up a new ecosystem that funnels in new wealth and new money. Would NY be kicking itself then?
111 8th is a major internet traffic exchange point. It's also gargantuan, it's 2.9 million square feet and occupies a whole city block.
One of the interesting things about 111 8th is that it was designed for much higher than normal pounds per square foot floor loading. Which means that Google could convert the entire thing to datacenter space if they really wanted to. Already a significant portion of it is conditioned datacenter/telecom space run by tenants.
How do actual numbers pale in comparison to a number that was nothing more than projected for some hazy undetermined future date? That 25K number was only ever qualified as "over the next decade."
Google on the other hand bought 111 8th ave 8 years ago(houses 7K employees) and now they are opening a new space in the same area that will house an additional 12K more employees[1]. That will bring their total to 19K employees in a 10 year time frame.
And this was all done without extracting corporate subsidies and without all the pageantry.
I think that 7K is just employees: "employs more than...". That is a deliberate distinction from "workers". I wouldn't be surprised if the count passed 10K once you considered contractors. They're mostly in non-engineering roles: cafe staff, recruiters, marketing, physical security (did those get converted to employees like they were doing in Mountain View?), facilities, etc.
Google's expansion doesn't require its employees to live in a part of the city that lacks adequate schools and parks. Whereas if you work in LIC it's not like you can really commute into the city from New Jersey or Stamford.
LIC has some amazing parks. Stop by Socrates Sculpture Park sometime — really cool art installations, great waterfront views of Manhattan, across the street from a cool museum (Noguchi of the coffee table fame), and you are quick walk down Broadway to some great restaurants in Astoria.
But as a thought experiment, say they did create 25,000 jobs at an average salary of 100,000. What type of taxes and secondary effects on the economy does this have?
Does the city get back more than the 3 billion in concessions and how long does that take?
Looking at it from a strictly "benefit to government's tax coffers" standpoint (since that's the argument for the tax breaks):
Would those new Amazon jobs cause 25k people to move to NYC? Or is it more likely to just make the local market more competitive? How would other businesses react? Would they move? Embrace remote? If they increase salary across the board and live with unfilled positions, how does that affect tax revenue? Even if those people do move, how does that influx affect people with lower paying jobs? Will they be pushed out? How does that affect tax revenues?
Those are the kinds of questions I saw raised by opponents, and it seems like there weren't clear answers to them.
Google announcing they <WANT> to double their presence in New York is not the same as Amazon signing an agreement of understanding with the city and state.
Google hasn't committed to anything. Once it does, it will most likely seek the same tax benefits that Amazon did from the pre-existing programs if it qualifies
If Amazon hadn't turned this whole "HQ2" thing into a national drama they could have built a huge presence there without riling up so much backlash. Hopefully this ridiculous stunt is a lesson to them.
<speculation>
Honestly I think they had only a very few locations in mind when starting this "search" anyway, but wanted to frame it as this big, open-ended, national competition in order to wring the highest dollar amount out of their favorite spots. They were never going to take the risk of attracting workers to Tulsa, Detroit, or {insert other city in Middle America} over an existing large pool of talent in an attractive metropolitan area.
</speculation>
Pretty widely speculated that they were going to go to NYC and VA regardless of what the other cities did & the HQ2 gambit was just meant to maximize their bargaining position with these governments
Definitely Amazon. They ran ads about it and made a very public campaign that lasted years. Nobody forced them to run a secret auction for who was willing to give them the most taxpayer dollars. Apple, Google, and Facebook are all setting up big new offices in New York right now, they didn't need billions of dollars in subsidies to do it.
I wonder how many Queens residents sold their apartments/condos before this news broke? Talk about timing. I know of one person who was drooling at this unexpected windfall and will now be very... sad.
Between this and the L train drama impacting Williamsburg, I wonder how much volatility the outer borough housing market can take.
Sure there has been a housing bubble there for a decade, and I'm certain there are some real estate insiders benefiting from this arbitrage, but this kind of dysfunction can't be good for the economy.
I think in the long term that condo will have value. Queens is reasonably priced and a decent commute to Manhattan. My suspicion is long term, it will be commute time that dictates housing prices. (Look at cities in Europe, where there's excellent public transit - the "nice" areas are downtown, and the "slums" or "rough" areas are often in the burbs.
Readit News
Google buys entire city blocks and nobody bats an eye. Turns out that publicly shaking down cities across the US tends to draw out the opposition.
More publicity = more scrutiny = more angry opponents of your business decision
Also, the pull-out letter also basically dumps the blame on state/local officials for not wanting Amazon, despite not all stakeholders being present at the table when discussions started.
#YCFundMeToo
A big difference is that contrived drama is at the very core of the entertainment business of professional sports. It makes for much of the entertainment! It's less helpful in the more mundane enterprise of 'building a bunch of offices and warehouses'.
1. Basketball is entertainment, and 'The Decision' was the result of years of speculation by the fans and the media. Furthermore you see similar spectacles for such things as National Signing Day, where top recruits hold press conferences to announce what college they are attending.
2. There is animosity and jealousy towards 'entitled millionaire athletes' that was made worse with players being able to control their own destiny instead of suffering under terrible management. "If they get to choose where to work and do so with their friends, why can't I" yells Joe Six-Pack.
3. The super team. Somehow NBA fans forgot or were ignorant of how absolutely stacked championship teams had been throughout history, featuring multiple hall of fame players and coaches. Elements of #2 play into this as well where it is management, not players, that should build championship teams.
4. A player like LBJ is far, far more likely to deliver (which he did with multiple championships) in the NBA than a company like Amazon is to deliver a value worth the taxpayer dollars they absorb.
https://www.wsj.com/articles/majority-of-new-yorkers-support...
Animal cruelty? There is only a vocal minority who takes a public stance, despite this beeing a very clear cut issue in terms of public opinion. Migration is the other way round: most people don't give a fuck, but have a loud vocal base that will even hurt themselves to make a point and you will be heard.
Surprised AMZN had such a thin skin.
And after all this, they are going to move into vacant office buildings in DC near the airport, and in Nashville.
Even after reading this, I think the claim “most New Yorkers supported the project” is extremely dubious.
Amazon could have easily ignored them for all eternity if they wanted. A vocal minority can't influence a random housing development, you think they had any say over Amazon? That's a STRETCH
The opposition is because of the Massive tax breaks and other $$$ giveaways New York was going to hand over to Amazon. I don't recall Google extorting NYC for $$$ before they decided to expand....
It's not like NYC is paying Amazon to come to NYC. NYC would still make huge tax revenues from additional sales, real estate, income taxes, and corporate taxes.
Now they're turning that all away. It's such an irrational decision that if I were Amazon, it would raise a big red flag for me as well.
No need to open in a community that doesn't want your money.
But public does not like it and hence they had to put together a fake plan and waste money. Which could have otherwise gone into preventing real crimes.
Unless it's for a football stadium.
You haven't seen the perpetual and energetic fights in my part of the nation about public funding for football (and other professional sports) stadiums. Sports businesses trying to get tax money to be spent in order to enhance their profitability is absolutely something that brings out the opposition.
Football stadiums get subsidized because football is extraordinarily, wildly popular with most of the people that pay taxes. Those taxpayers spend massive sums of money on sports every year, across the NFL / MLB / NBA / NHL / MLS / NCAA. Those people pay most of the taxes that fund the government that then pays for the stadium subsidies.
Taxpayers love sports, love spending money on sports, and the majority of taxpayers are clearly fine with subsidizing sports at all levels. They vote with their dollars and... votes, over and over again, year after year, decade after decade, to keep supporting sports subsidization.
See: football attendance and ticket spending on NFL and college games annually, as well as sports packages for television, merchandise sales, etc.
So it's absolutely an expansion of a similar scope.
That type of payday might be worth a bit of scrutiny.
IRRATIONAL left. This investment on the part of Amazon gave way way way more to the city than it got back in subsidies.
It's kind of ridiculous. If I were Amazon, I would drop NYC in a heartbeat if they didn't appreciate that degree of investment.
The subsidies were 1.525 billion. Amazon's investment was expected to be around 2.5 billion. Only an irrational fool cannot do that math.
Was it highly subsidized by taxpayers like Amazon's purchase would have been?
It's not like Amazon was getting CASH to move to NYC.
If Amazon required all bids and contracts be made public AND brought in the media circus to invite scrutiny that would seem to be the most in the public interest.
The big dog and pony show was about asking for major tax benefits. They're still welcome to open a giant LIC office, they just won't get showered with a tax windfall for it. That's Amazon's decision that it wasn't worth it.
Also, "nobody bats an eye" is not right either - there are tons of protests against Google, which has been widely reported. They just didn't have a focus point like Amazon did, but if any city had a wide contingent of young socialist politicians caring about PR much more than for the jobs for the city population - the same could happen to Google too.
Unless you're Elon, then it's celebrated.
Shaking down someone for money is done by threatening them, i.e. extortion. Amazon did not threaten NYC, and therefore it is not a shakedown.
Im not sure what the point of any of this was.
Dead Comment
It would also be in Long island City which would provide a huge influx of new workers and move that neighborhood forward in development rapidly. The down side would be that it would push some residents and business owners out but this is simply a fact of life in NYC where on a long enough time line every undesirable neighborhood eventually become desirable simply because of increase in residents and increase in real estate prices. That would also conversely make adjacent neighborhoods more attractive.
As for the tax breaks those would eventually be off set and it would still be cheaper than the amount that was spent on a useless Subway line that took a decade and really added no real capacity where it mattered.
In fact they tore up an existing redevelopment plan for HQ2
The bottom line is that the Amazon deal had very broad support in NYC, and a very vocal irrational minority just ruined it for everyone.
Although I hope that it’s a bustling tech hub in 5 years.
Anyway, for me it hinges on how much special treatment Amazon got, $100K in tax abatements per job seems excessive, but others say it was pretty standard, would have been a huge anchor tenant for NYC tech and LIC, so much smoke blown on both sides it's hard to say ¯\_(ツ)_/¯ .
If they want to sell and support AWS to bigcos in NYC they are going to need a major presence regardless, not sure how much sense it makes for their other businesses to have a big HQ in NYC.
It's possible to be both at the same time.
That's before other taxes, like property (directly or indirectly through rent), sales, etc.
They don't need 25k jobs to support AWS clients in NYC. It's not like they're supporting on-site installations.
The USA already has a tax structure in place. Amazon could afford to pay the existing taxes if they wanted to. Heck, they're paying their tax accountants to figure out how not to pay those taxes. Why doesn't Amazon just buy, say, Nebraska, and set up shop there?
But first, getting rid of the corporate capture of both major political parties, elected officials, government and policy-making is a precondition to do anything to reverse the neoliberal, cannibalistic anarcho-capitalism inverted totalitarianism being forced on us.
And it's in Long island City not in Manhattan like Facebook and Google.
Dead Comment
Not paying Federal income tax isn't paying no taxes. Also, the "zero federal tax" meme is popular among the Bernie Sanders crowd, however, much of Amazon's credits were due to paying stock-based compensation. In 2017, they paid out almost a billion dollars in stock compensation -- compensation for which recipients are taxed -- and taxed at a higher rate than the equivalent funds would have been taxed if retained by the company since such compensation is taxed as ordinary income -- not only are federal income taxes due, but also social security and medicare taxes. The point is that $917 million in stock compensation was written off against Amazon's income, but that $917m likely yields roughly $250 million in federal tax revenue , while if that were taxed as company income, it would yield roughly $110m given the historical effective tax rate paid by Amazon.
Essentially this: If Amazon didn't exist, the US government would be far worse off in terms of tax revenues, despite Amazon paying "zero" taxes. An intelligent view of the situation wouldn't look at "federal taxes paid" by the entity of Amazon, but their total tax revenue impact on the United States government -- including their state and local, and taxes paid by their employees. If you wanted to be more intellectually honest about Amazon and taxes, you'd also include the tax impact of everyone that profits as a result of Amazon. There's also the impact at the consumer level -- the price of products is the sum of all of the inputs used to produce, market and deliver that product. If you raise the price of any of those inputs, prices necessarily increase. Let's say we increase the taxes of Amazon -- that means that their "Hefty Garbage Bags" are now selling for more money, but that also means that competitors selling Hefty Garbage Bags can also raise their prices. Essentially corporate taxes have the same market-wide effect as a tariff -- raising prices for everyone. Who gets harmed most by higher prices for consumer goods? It isn't the "rich." It's the poor and middle class. Lower prices for goods helps the economy far more than the equivalent amount collected in taxes due to deadweight loses.
Deleted Comment
Her argument against is that the Amazon HQ would further gentrification and she was appalled by the government subsidies. So she'd rather limit new growth, prevent new jobs, and stifle wealth to prevent luxury condos and Starbucks from going up? Make no sense, she is literally preventing her constituents from moving up the economic ladder.
So, what's the benefit to new york? Yea, there are 25000 new jobs. But the choice isn't 25000 jobs or no jobs. Its 25000 jobs with amazon and some number of jobs from other businesses. Other businesses will employ those high skill workers because there aren't enough to go around.
she's anti status-quo but are unwilling to sacrifice short term for it.
basically her dream case scenario is to tax amazon 5B and then invest 3B it to bring them to Queens.. and then rake the returns going forward. In what fantasy world would that ever play out?
"...Amazon employees are apparently eager to get a head start on the New York City real estate game.
Condo sales in Long Island City are soaring following the announcement that the Queens, New York, [a] neighborhood will host part of Amazon's HQ2, The Wall Street Journal reports. According to The Journal, one brokerage firm sold 150 units in four days last week — 15 times its usual volume — after Amazon announced plans to open a headquarters in Long Island City...."
https://www.businessinsider.com/amazon-employees-buy-apartme...
However I think those buyers will still do just fine. I doubt very many people have lost money by investing in NYC real estate.
Regardless, I suspect Amazon employees would know better than to bank on Amazon following through on a commitment.
The whole splitting HQ2 I think showed this. Like it's not even an "HQ" in any sense of the word. It's just an expansion.
Also with talk of "25k jobs"... what jobs? Are we talking software engineers or warehouse workers? There's a difference.
I don't know the inner workings of this but it seems like Cuomo was the driver here with de Blasio on board. This was a missed opportunity. NYC needs several things from NYS that are politically unpalatable upstate. Top of that list is:
- Property tax reform; and
- Congestion pricing.
NYS grossly favours SFHs for property taxes. For example, a $3m brownstone in Park Slope I saw had ~$700/month in property taxes. A similarly priced apartment would have more like $1500-2000/month taxes. A $100m apartment would be taxed at ~$15k/month.
NYC has on several occasions tried to introduce congestion pricing on people driving in or into Manhattan (something I 100% support) but the efforts have failed as this is the jurisdiction of NYS and NYS has no interest in this (so far).
Why not frame this issue as NYC supporting these efforts to fix issues with NYC like these? The deal may have gotten much more traction were this the case.
So I understand the need for government intervention in large projects, say if Amazon were to build 8m sq ft of office space. Regulatory approval can be nigh on impossible.
That much office space is hard to find in NYC. I think Amazon missed the boat with Hudson Yards (probably the last place this would've been possible in Manhattan).
I agree with other commenters that the net effect of this is about zero. Amazon is trying to have a PR moment. They'll still expand in NYC as it suits their needs. They'll still get tax breaks like any large corporation in NYS/NYC would.
This really is just a corporate tantrum.
Workers with an average salary of $150,000, I think it's disingenuous to act like you don't know that but you're also an expert in property tax reform.
Property tax reform could work for single family homes if we decoupled property tax from land tax. NYS should only raise taxes on the value of land given the surrounding population density, natural properties and accessibility to public infrastructure. Check out some Henry George, if you're interested in learning more.
What happens if someone has owned the home for 60 years, they're older and retired, and suddenly it so happens their neighborhood got popular a decade ago and their property values doubled, and some rezoning happened at a nearby avenue. That's one example. How about we try the academic flirtations with tax experiments at a smaller scale elsewhere, first?
The Park Slope home you had was probably newly renovated. That matters - the sale price doesn't. 700 is even a lot, relatively speaking. In any case, houses from the 19th century cost money to maintain, and sometimes, shockingly, they're populated by people who can't afford 1k a month in property tax. The property values went up high and fast - are we going to punish homeowners for that? This isn't a suburb where taxes must come primarily from property tax - there's a NYC-specific income tax, as you're probably well aware.
Then, here's something else, tax those 2,3,4-families more, rents will go up as a result; they're free-market rate apartments, not rent stabilized.
I don't know what any of this has to do with Amazon, though.
NYC has on several occasions tried to introduce congestion pricing on people driving in or into Manhattan (something I 100% support) but the efforts have failed as this is the jurisdiction of NYS and NYS has no interest in this (so far).
They introduced it - it just impacts taxis and for-hire vehicles.
Deleted Comment
- Park Slope brownstone, $548/month: https://streeteasy.com/sale/1375411
- Park Slope condo, $1740/month: https://streeteasy.com/building/105-8-avenue-brooklyn/3
Note: if you look into this a lot of condos have deceptively low monthly taxes due to a tax scheme (now defunct) called J-51 (IIRC) where property taxes started at 0 and would go to normal levels over 20-30 years.
I am also proud of my cantankerous fellow New Yorkers who fought this.
Why do they have to involve the city politicians in the decision-making process if they don't need any special treatment?
[1] "While New York City has not offered Amazon any direct subsidies, the company also plans to take advantage of two city tax breaks that will further sweeten the deal by nearly $1.3 billion.
One is the Relocation and Employment Assistance Program, which offers businesses moving to certain parts of the city a tax credit of up to $3,000 per employee for 12 years. The program will benefit Amazon to the tune of $897 million, Gov. Andrew Cuomo said.
The other is the Industrial & Commercial Abatement Program, which provides property tax abatements. It will be worth nearly $400 million to Amazon, Cuomo said."
(https://patch.com/new-york/new-york-city/nys-amazon-deal-wha...)
Dead Comment
Cost of Living in NY is higher and Amazon will have to pay higher wages if it puts jobs there rather than a place like Nashville. That's higher wages for the same job. Pretty much every company has a cost of living multiplier and pays different wages for the same position based on where you live. So given that Amazon has a choice to locate in the low wage or high wage area, it seems reasonable for the high wage area to offer to offset some of those extra costs. Otherwise why would AMZN even consider a high cost of living area like NYC?
Now to me it's clear that the market signal is that they should open the new office in a lower cost of living area, which is what's going to happen now. A small victory for reason. This means more Amazon workers will be able to afford to buy a house and Amazon will be able to pay them less. Good news.
Google already has some dev offices in cheaper areas, like Pittsburgh, where office space is cheaper and the salaries they pay slightly lower. And yet, they still choose to double their headcount in NYC.
Just saying, "well I guess Google is just being irrational for no reason" would be simplistic, childish thinking. Google doesn't choose sites or increase headcount on a whim. They're going to do it because there are real advantages to the major tech hubs.
Educated guess, as someone who works at Google now and used to work at Amazon: it's easier to attract people to major tech hubs, because they offer more career stability in the form of having lots of other tech companies around. Being in Kansas City making a Google salary might sound great, until you realize that if you lost that job for some reason, there's nothing around in the same tier.
Also, the kind of person who wants to live in a cheaper city, with a big house for their family, is also the kind of person who's going to be reluctant to move from wherever they currently live anyway. That demographic is going to be hard to convince.
Junior devs and low performing seniors.
Amazon claimed my city didn't have enough talent.
What they meant is that 6 figures is too much to pay per programmer.
Right now it seems heavy in the financial sector to me. Arguably tech is a big part of the economic future, so one view is that it would be smart to have some of that.
It's my understanding that while NYC isn't really a tech hub, the startup / tech scene there has grown stronger in recent years. So I pretty much assumed they were trying to capitalize on this momentum and do a big push to achieve something like critical mass.
Whether that's a worthy goal is very much for debate, but it seemed like that's what they thought they were getting in exchange for the sweet deal they were offering.
I forget where, but I remember seeing someone dig into the details of the offer and Amazon was not actually getting that much better of a deal than any other NYC business.
The sheer number of people from NY saying they are "proud" of this shows just how far removed people are from reality.
Dead Comment
How about a little more? The planet is sad because 25,000 people won't be taking the subway to work.
https://www.washingtonpost.com/technology/2018/12/17/google-...
The reality is that NYC is not Wisconsin, they don't need to give out money.
EDIT: I'd even go a step further, and predict that both Amazon and Google will also have ludicrously large presences in the DC-NOVA area in 10 years as well. In fact, Amazon's presence in the DC-NOVA area will be even bigger than they initially said it would.
The fact that you (and many others) consider this a win is an attempt to revise history. This tax deal was all about Amazon expanding very quickly. That deal is gone. But feel free to pat yourself on the back for not "falling for it". Maybe it works out great as other companies will lease those buildings and hire a combined ~20k employees averaging $150,000 in compensation, but that's likely not going to happen.
Cut off your nose to spite your face.
Amazon already has a presence in NYC.
https://en.wikipedia.org/wiki/111_Eighth_Avenue
111 8th is a major internet traffic exchange point. It's also gargantuan, it's 2.9 million square feet and occupies a whole city block.
One of the interesting things about 111 8th is that it was designed for much higher than normal pounds per square foot floor loading. Which means that Google could convert the entire thing to datacenter space if they really wanted to. Already a significant portion of it is conditioned datacenter/telecom space run by tenants.
Google on the other hand bought 111 8th ave 8 years ago(houses 7K employees) and now they are opening a new space in the same area that will house an additional 12K more employees[1]. That will bring their total to 19K employees in a 10 year time frame.
And this was all done without extracting corporate subsidies and without all the pageantry.
[1] https://www.wsj.com/articles/google-plans-large-new-york-cit...
> Whereas if you work in LIC it's not like you can really commute into the city from New Jersey or Stamford.
Why not? Take the Path to the E or the metro north to the 7.
Does the city get back more than the 3 billion in concessions and how long does that take?
Would those new Amazon jobs cause 25k people to move to NYC? Or is it more likely to just make the local market more competitive? How would other businesses react? Would they move? Embrace remote? If they increase salary across the board and live with unfilled positions, how does that affect tax revenue? Even if those people do move, how does that influx affect people with lower paying jobs? Will they be pushed out? How does that affect tax revenues?
Those are the kinds of questions I saw raised by opponents, and it seems like there weren't clear answers to them.
Google hasn't committed to anything. Once it does, it will most likely seek the same tax benefits that Amazon did from the pre-existing programs if it qualifies
?
Pretty widely speculated that they were going to go to NYC and VA regardless of what the other cities did & the HQ2 gambit was just meant to maximize their bargaining position with these governments
https://news.ycombinator.com/item?id=18503434
Sure there has been a housing bubble there for a decade, and I'm certain there are some real estate insiders benefiting from this arbitrage, but this kind of dysfunction can't be good for the economy.