A major problem with allowing politicians to offer lavish tax incentives to private companies is that politicians tend to be egomaniacs who want to claim a “big win,” regardless of the long-term details. Exhibit A: the Amazon HQ2 bullshit.
(Actually, Amazon HQ2 is Exhibit One Zillion of a decades-long pattern of civic abuse perhaps best exemplified by Scott Walker’s insane-from-day-one giveaway to FoxConn, which naturally featured a prominent White House photo-op. But this is a blog post so let’s not be precious.)
Now that Amazon’s choice has already been made, New York officials have finally revealed details of their offer to the company. Which was a closely guarded secret when it really mattered, but now that the process is over, the state is quite proud to share! The Wall Street Journal reports that while Amazon settled on Long Island City for its facilities, that was not their only choice: the city also offered them possible locations in Midtown West, the Financial District, or in Brooklyn, as well as other sites outside of the five boroughs. And the state explicitly offered to use eminent domain to help Amazon obtain whatever land it needed. In this way we see that our government really can be a full-service concierge to all of the needs of a citizen, provided that citizen is Jeff Bezos.
In return for the $2.8 billion in tax breaks and economic incentives that the city and state are handing to one of the world’s most valuable companies, government officials have claimed that the economic benefits from Amazon’s arrival will be nearly ten times larger than the incentives. But the AP notes that that calculation is based on some questionable assumptions:
The state’s predicted 9-to-1 return on its investment was based on a widely used economic model that compares the costs of tax incentives with expected tax gains, but it didn’t factor in the substantial costs of accommodating Amazon’s growth in the city, economic development researchers said after reviewing the documents.
So the standard and widely accepted model that produces the economic justification for these deals counts the benefits... and not the costs. Interesting.
The reports also don’t measure the Amazon “HQ2” project against any other possible development of its intended site in the booming Long Island City neighborhood.
They also don’t factor in what else would have been built in the neighborhood either! Naturally if Amazon hadn’t moved into Long Island City, it would simply be a grassy field, forever.
Outlaw this entire practice please.