Random Thoughts (Political Edition)

LeVeL

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Since Amazon was going to get $3 billion in subsidies and tax breaks to build there in the first place, it came under scrutiny from other sources and AOC was simply a scapegoat for them.

Besides, look at the Foxconn deal in Wisconsin as to how the situation can go wrong in the first place.
No, AOC actively cheered this decision by Amazon. Because why would you want to create 25k jobs in your city?
 

GRtak

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I know she did not like this, but I still think Amazon is just using her as a scapegoat. I get that the jobs would be beneficial, but the $3 billion in subsidies is a lot and would also take a long time to recoup.
 

TC

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I know she did not like this, but I still think Amazon is just using her as a scapegoat. I get that the jobs would be beneficial, but the $3 billion in subsidies is a lot and would also take a long time to recoup.
The problem is that NY didn't save any money, they lost it. The Amazon deal would have brought in a ton of tax revenue. FAR more then $3 billion. Reports are saying $27.5 billion, over 25 years. But now they have nothing. The only way NY comes out on top would be if they found some other massive company willing to fill that gap, who isn't granted any tax breaks or subsidies. If they can do that, then losing Amazon will be a win. But if they fail to do that, then this is a giant financial loss for NY. They now have to recoup $24.5 billion...

https://www.forbes.com/sites/stephaniedenning/2019/02/15/why-amazons-decision-to-pull-out-of-nyc-is-a-loss/#d1b89a02a1fe
 
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GRtak

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You need to read your own article.

Amazon was expected to generate $27.5 billion in tax revenue over a 25-year period

That is a long time to expect them to stick around. Which there is no guarantee of them doing.

One other thing I have not seen mentioned anywhere, is NY's terrible internet problems. Good internet is needed by an internet company. They maybe able to sidestep the problem by getting their own fiber connection, but that is still a not small, or inexpensive problem.
 

TC

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You need to read your own article.

That is a long time to expect them to stick around. Which there is no guarantee of them doing.
Thanks, got my figures and projections mixed up. Corrected my post.

The fact still remains that losing this deal has cost the state of New York money. They haven't saved a cent. And the truth is setting up shop in NY would have cost Amazon a lot of money. By the sounds of it, they were planning a big operation there. It would have been a major investment, which they probably wouldn't have abandoned anytime soon.
 

GRtak

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What was going to keep them there for 10 years, let alone 25?

What else was it going to cost New York and New York?
 

LeVeL

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You seem to be mixing up actual cost and opportunity cost. NY wasn't going to hand over $3b to Jeff Bezos - they were just going to charge $3b less tax than they would anyone else. The upside to this loss in potential tax revenue would have been 25k jobs and billions in investments into the city. Instead NY got nothing - no jobs, no investment, and no tax revenue whatsoever. There is no upside to Amazon's decision for NY here.
 

gaasc

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What was going to keep them there for 10 years, let alone 25?

What else was it going to cost New York and New York?
You seem to be basing your entire view of it being a good call on the possibility of them just leaving. Admittedly possible given some slightly nonsensical laws in the state but rather unlikely. If they moved it would be because they are now unable to fill all the needed jobs in a given area. Like they're doing right now. And they are not exactly dumping their Seattle HQ. But okay, let's do some admittedly imprecise math.

This site tells me that on Q1 of last year the average New Yorker made $3087/week. My hatred of them earning more in a week than I do in a month aside, that works out to $160,524/year.

And putting that number in this calculator tells me that people would have to give $49,834 right back to the tax man. Cool, however only $9,683 are going to the state. and those measly $9k (not rounding) multiplied with the 25,000 employee positions gives us...oh, $242,075,000

Divide your $3b in those and you get..a little bit more than 12 years. This is assuming Amazon themselves does not pay a single penny in Tax, and that nobody buys any fuel with it ($0.45/gal in tax) or a pack of cigarrettes ($4.35/pack on the state, $5.85 in NYC proper) or indeed anything (4% tax on NY state, 4.5% within the city). It also assumes that their wages stay the same and that the tax rate will not change.

NY letting HQ2 go was a baaaad call for them, and it will cost the city and state a lot of potential revenue.
 

GRtak

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Gaasc, your assumptions on my assumptions are completely wrong.

The $3 billion was just a start, what else was promised that would be an additional cost on top of that? What deal were they given for water and electricity? What other infrastructure improvements did they want?

Here is an interesting read on this exact subject.

https://www.washingtonpost.com/business/economy/google-reaped-millions-of-tax-breaks-as-it-secretly-expanded-its-real-estate-footprint-across-the-us/2019/02/15/7912e10e-3136-11e9-813a-0ab2f17e305b_story.html?noredirect=on&utm_term=.81010e03637d
 

LeVeL

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a) a tax break isn't a "cost"
b) you're making wild assumptions
c) still might be worth 25k jobs and everything that goes along with that
 

GRtak

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A tax break is a cost. Whether or not the funds are physically handed directly to the company doesn't matter, it is the governmental entities funding the business. Why are you for this corporate welfare?

You are still ignoring what else they get that they kept hidden by the NDAs. What sweethart deal would they be extracting from the city and state?

From the article I posted above.

Amazon’s year-long search for a second headquarters was criticized for its use of confidentiality agreements that were so restrictive that officials couldn’t comment on their existence, and for playing cities against one another in a quest for government incentives. Even after pulling out of New York, the Seattle-based company is slated to take in hundreds of millions of dollars in tax breaks when it builds its second headquarters in Northern Virginia. (Amazon founder and CEO Jeffrey P. Bezos owns The Washington Post.)

Some New York lawmakers were so outraged by the secrecy of Amazon’s process that they have introduced bills that would ban nondisclosure agreements for development projects in the city and state.
If the deal was so good for the city and the state, why not give all the details so that it can be scrutinized?
 

gaasc

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What I am getting from that article is that Amazon shopped for a location like you would shop from a car "I have this deal, can you match or make it better?". As for the assumptions of what they got hiding under the NDA...

The $3 billion was just a start, what else was promised that would be an additional cost on top of that?
I dunno, you don't either. It's probably less than what you think and more than I do, if I may appeal to mediocrity here. Or it could be WAAAAY worse than you and I think. Or they asked for a packet of saltines and a diet coke per employee. Rather nonsensical to speculate on it as it can be moved to suit both our arguments.

Some New York lawmakers were so outraged by the secrecy of Amazon’s process that they have introduced bills that would ban nondisclosure agreements for development projects in the city and state.
if they go through it will be quite easy to dismiss NY from future negotiations, nobody likes showing their hand. OTOH, it could prove an asset, inflate the proposal there and have other states fall back into what you actually want under cover of secrets.
 

LeVeL

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A tax break is a cost. Whether or not the funds are physically handed directly to the company doesn't matter, it is the governmental entities funding the business.
They're not funding the business. That money, for lack of a better way to describe it, doesn't exist - NY wasn't going to lose what they never had. They simply wouldn't gain that money through corporate tax, although they would get more revenue through other means than they will now that Amazon has pulled out. In the short term they would've gained 25k jobs, revitalization of a neighborhood, new businesses to support that many new employees in one small area, income tax revenue, property tax revenue, etc.


Why are you for this corporate welfare?
It's not corporate welfare. It's not "oh poor Amazon can't build a new HQ for the poor and underprivileged employees so we need to help this mismanaged company" - not the case at all. NY was doing this as incentive or encouragement to get Amazon to build in their city instead of elsewhere because NY realized how beneficial HQ2 would be for the city overall. In other words, they thought it was worth it to give the tax break.


You are still ignoring what else they get that they kept hidden by the NDAs. What sweethart deal would they be extracting from the city and state?
You have no idea what was in it so why speculate?


If the deal was so good for the city and the state, why not give all the details so that it can be scrutinized?
There's a million reasons to have an NDA, they're pretty standard practice. Maybe there was company proprietary information that amazing didn't want leaked. Maybe NY did include some additional incentives that it didn't want other (smaller) companies to start asking for. Who knows? You and I certainly don't.
 

prizrak

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That is a long time to expect them to stick around. Which there is no guarantee of them doing.
It was going to be HQ2, you don't put in the money to build an HQ2 if you aren't keeping it around for a good long while. As far as what would make them stay - ability to hire a ton of high level engineers. What's called the tri-state area (the part of NY, NJ and CT that are all near the city) has a metric shit ton of highly skilled labor. Between the start ups, the financials and the big houses like say Google IT job market here is massive.
One other thing I have not seen mentioned anywhere, is NY's terrible internet problems. Good internet is needed by an internet company. They maybe able to sidestep the problem by getting their own fiber connection, but that is still a not small, or inexpensive problem.
I could send you over to the speed test thread so you can see my "terrible" internet but instead I would point out that home internet and business internet are two completely different things. There are a metric ton of both IT and non IT companies in this city that make heavy use of the internet and do just fine. Facebook, Google and LinkedIn all have massive offices in NYC.

@gaasc Don't feel too bad dude, while those numbers sound impressive once you factor in all the expenses the numbers look way less impressive.

On topic, I'm not sure if HQ2 would be a net positive or negative to the city, aside from all the jobs and tax revenue there is the fact that even the plans to build one was already raising the cost of living in the nearby areas.
 
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LeVeL

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The whole internet speed thing is a weak grasp at a little straw and I can't even take it seriously. JP Morgan and Citi each have over 200k employees in the city and they seem to all be online. NYSE seems to get by, as do all the other huge banks, financial institutions, insurance companies, hospitals, communications companies, etc.
 

prizrak

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The whole internet speed thing is a weak grasp at a little straw and I can't even take it seriously. JP Morgan and Citi each have over 200k employees in the city and they seem to all be online. NYSE seems to get by, as do all the other huge banks, financial institutions, insurance companies, hospitals, communications companies, etc.
As someone who worked in fintech for a good number of years, it's all leased lines, all our trading workstations were running over a completely private network. We are talking my company provided the data over leased lines that terminated at client site with a router and server that we owned and operated. These things didn't even touch the internet.
 

GRtak

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It's not corporate welfare. It's not "oh poor Amazon can't build new HQ for the poor and underprivileged employees so we need to help this mismanaged company" - not the case at all. NY was doing this as incentive or encouragement to get Amazon to build in their city instead of elsewhere because NY realized how beneficial HQ2 would be for the city overall. In other words, they thought it was worth it to give the tax break.

This is the definition of corporate welfare. The company just made record profits, so they don't need any handouts.

Also, this is not the HQ2 that was promised. Remember that the site was cut roughly in half, with the other half going to Virginia.
 

gaasc

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No, they don't need any handouts. However, the state sees it more as a zero-cost investment (without them agreeing to move to the state there is no actual money moving in either direction) to persuade the company to move in with the hopes that they will bring a positive change to the community through investment.

This generally has the advantage of being more efficient thanks to the reduced bureaucracy of the money being directly used by the firm instead of being run through the government first. Private enterprise is less likely to have money "disappear" or sit quietly while some random contractor suddenly begins to charge $4000/bolt. Not to mention all the direct and indirect jobs created by construction, organization and the final company beginning operations. More people working means more people getting wages, which means more people spending money and paying taxes. So at a cost of $0 (in actual existing non "potential" money), the state has suddenly more people paying taxes and increasing their coffers. if they are smart, that "potential money" has been calculated and compared to the amount they would make without a deal. In this particular case, no deal = $0 in additional funds from increased employment.

I am not one to advocate for the state to write a check for three billion dollars to a corporation (or the other way around for that matter). But in this case the losses were potential and the winnings would have been real. We're arguing over whether you would've preferred the state to make a lot more money or a LOT more money.

NY chose No money.
 

narf

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I doubt synthetic fuels could be made to not have any CO2 output, though perhaps some sort of cat 2.0 could be made to deal with it. I like the idea of lab grown meat though, being able to synthesize food would be an amazing achievement.
You can make liquid fuel from electricity (simplified, but basically "add water, carbon dioxide, electricity, and keep stirring with a magic chemistry spoon until ready"), and you can make hydrogen from electricity (at home, right now, no magic chemistry spoon needed).
The liquid carbon-based fuels will emit CO2 of course, but you've taken that from somewhere before. These days it's still cheaper to take that carbon from coal, but that will eventually change. An already-running example: https://www.chemicals-technology.com/projects/george-olah-renewable-methanol-plant-iceland/
Hydrogen, whether used in ICEs or fuel cells, will only emit water.

You just need plenty of green electricity.
 

prizrak

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This is the definition of corporate welfare. The company just made record profits, so they don't need any handouts.

Also, this is not the HQ2 that was promised. Remember that the site was cut roughly in half, with the other half going to Virginia.
The government is there to take care of people. If the numbers add up in favor of the people, and they did seem to in this case, there is nothing wrong with a tax break. Government spends money on a lot of things that ultimately end up benefiting private enterprises. MRI, GPS, internet, microwaves were all directly created by the government and used by private enterprise to make money. That is not even going into all the basic research that is funded by various grants that end up in our pockets/cars/homes.
 
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