This is a special bonus episode about the recent Amazon announcement that they were pulling out of the NY second headquarters.
I predicted that Amazon might take this step despite the public announcement back in November.
The major political objection was the tax incentives that were negotiated with Amazon as part of the overall decision to locate in the NY area.
On the surface, you could spin the story to say that the government was caving to the interests of big business and handing the richest man in the world a check for $2.5B dollars.
But there is another narrative that is equally valid.
Before the Amazon announcement, there were no 25,000 jobs and none of those people were paying federal and NY state income tax and NYC property tax.
After the investment of $2.5B by Amazon, getting a $2.5B tax break, the 25,000 employees would pay an estimated $875M a year in taxes each year, every year. When the 2.5B in initial tax breaks are exhausted, then Amazon corporate becomes an even larger contributor to the tax base.
It’s pretty simple math. Before Amazon there was no tax income to the government. After Amazon arrives in NY there would have been $875,000 a year in new tax income, and going up from there.
The handful of very vocal politicians who opposed Amazon coming to town are not business people. How do I know this? Because they cannot do the most basic of grade school arithmetic.
Before Amazon no $875 million in tax. After, $875 million in tax.
It’s pretty simple math. The most vocal opponent has been senator Mike Gianaris.
In this case he decided that jobs coming to his area was a bad idea. He didn’t want more investment coming into the area. He opposed gentrification.
It’s kind of like the person who is in a fight with someone else. But you drink the poison hoping the other person gets sick.
The other nuance to this story is the boom and bust cycle in the area resulting from the boom that never happened. Over $500M of Real estate changed hands since the November announcement. Some of that may have been under contract prior to the Amazon announcement.
The biggest loser is the owner of the Citigroup tower who now needs to find a tenant for close to 1M square feet of space that Citicorp is vacating in 2020.
The big winners will likely be Virginia, Nashville, Austin and Dallas.