Tuesday, November 13, 2018

The Crony Part of Amazon's Deal With New York State and New York City Officials

Ok, here is the down and dirty of what Amazon squeezed out of New York State and New York City officials as part of their move to Long Island City in the New York City borough of Queens:

Amazon will receive performance-based direct incentives of $1.525 billion based on the company creating 25,000 jobs in Long Island City. This includes a refundable tax credit through New York State’s Excelsior Program of up to $1.2 billion calculated as a percentage of the salaries Amazon expects to pay employees over the next 10 years, which equates to $48,000 per job for 25,000 jobs with an average wage of over $150,000; and a cash grant from Empire State Development of $325 million based on the square footage of buildings occupied in the next 10 years. Amazon will receive these incentives over the next decade based on the incremental jobs it creates each year and as it reaches building occupancy targets. The company will separately apply for as-of-right incentives including New York City’s Industrial & Commercial Abatement Program (ICAP) and New York City’s Relocation and Employment Assistance Program (REAP).
I am all for tax cuts but a refundable tax credit to an individual company is murkier and smacks of cronyism. Why not refundable tax credits to all companies in NYC based on incremental workers employed?

In one sense, any company that can find an angle to reduce its tax bill is a plus but the Amazon deal suggests a relationship between the company and government officials that is not always going to be a move in the direction of free markets.

And, of course, the Empire State Development grant of $325 million is just total crony central planning.


1 comment:

  1. The much vaunted private sector shows the nature of the game that has to be played to remain as competitive as possible.

    True capitalism and competitive business "anything" is long past dead.