Let's be clear about something - this is very much NYC's loss and not Amazon's. Amazon is a juggernaut of a company with strangleholds on multiple commercial arenas - retail and Amazon Web Services probably being the top two that pop into people's minds.
Amazon was not being offered $3 Billion by NYC. NYC did not have $3B in cash to give Amazon. NYC was going to let Amazon not pay NYC $3B in taxes over some period of time. Think about to pay $3B in taxes Amazon would have to generate a lot more in taxable income. This income would have gone to its employees, service providers and whatever is left over goes to its shareholders as an increase in equity or as dividends. Terrible right?
In exchange for the $3B in tax breaks - Amazon was going to build a massive campus in Queens and create 25,000 new jobs. Let that sink in. In Queens. When was the last time an investment like this happened in Queens?
I do not believe Amazon was building out a warehouse business in Queens - more likely they were building out Corporate Governance, Amazon Web Services (AWS) etc. mostly well paying white collar jobs. Someone with AWS skills makes on average $120k a year - this is a very conservative estimation. The average salary in NYC is $69k per www.payscale.com. Let's assume the average NYC wage for the 25,000 jobs that NYC just lost - that Queens lost. That's $1.7B a year in income. All of which is taxable. All told this would be approximately $690 Million every year in tax revenue assuming a 40% total tax rate. Lets say its 30% instead its still over half a Billion in tax revenue lost.
If you assume an average corporate tax rate of 12.6% and that was equal to the $3,000,000,000 in savings offered to Amazon. This is the amount of taxable income that Amazon would have to generate to get $3B in tax saves $23,809,523,809.52. That's $23B.
The situation is actually worse for NY than the loss of $23B. Because $23B would be taxable income. Before income is taxable you get to deduct expenses - all the money Amazon would have paid to other service providers - UPS, Janitorial staff, Cafeteria services etc. Wages to employees all this would be on top of the $23B in income. Granted there is no indication or guarantee that any of the $23B would be plowed back into the local economy. Still there would be $23B after paying everyone. Eventually after the tax incentives wore out NY would have had a shot at all this money. Now NY gets nothing. No 25,000 jobs, no new campus, no $23B after expenses business to call its own.
It gets worse. This work that 25,000 people were going to do didn't disappear. This work needs to get done. These jobs will go somewhere else. Per www.Howmoneywalks.com, NY is already losing $99.49B a year in adjusted gross income to other states. That's about $25k per every 2 minutes.
Worse still - the workers who would have had a choice to work at Amazon or not. Will now have no choice - because that choice was made for them by Amazon based on the shenanigans of their elected political leaders.
By any estimation this is a miserable failure wrestled from the arms of success at the eleventh hour. Instead of 25,000 new employed people making money, paying bills and taking care of their families, NYC and Queens have gotten zero new jobs and zero investment.
Amazon was not being offered $3 Billion by NYC. NYC did not have $3B in cash to give Amazon. NYC was going to let Amazon not pay NYC $3B in taxes over some period of time. Think about to pay $3B in taxes Amazon would have to generate a lot more in taxable income. This income would have gone to its employees, service providers and whatever is left over goes to its shareholders as an increase in equity or as dividends. Terrible right?
In exchange for the $3B in tax breaks - Amazon was going to build a massive campus in Queens and create 25,000 new jobs. Let that sink in. In Queens. When was the last time an investment like this happened in Queens?
If you assume an average corporate tax rate of 12.6% and that was equal to the $3,000,000,000 in savings offered to Amazon. This is the amount of taxable income that Amazon would have to generate to get $3B in tax saves $23,809,523,809.52. That's $23B.
The situation is actually worse for NY than the loss of $23B. Because $23B would be taxable income. Before income is taxable you get to deduct expenses - all the money Amazon would have paid to other service providers - UPS, Janitorial staff, Cafeteria services etc. Wages to employees all this would be on top of the $23B in income. Granted there is no indication or guarantee that any of the $23B would be plowed back into the local economy. Still there would be $23B after paying everyone. Eventually after the tax incentives wore out NY would have had a shot at all this money. Now NY gets nothing. No 25,000 jobs, no new campus, no $23B after expenses business to call its own.
It gets worse. This work that 25,000 people were going to do didn't disappear. This work needs to get done. These jobs will go somewhere else. Per www.Howmoneywalks.com, NY is already losing $99.49B a year in adjusted gross income to other states. That's about $25k per every 2 minutes.
Worse still - the workers who would have had a choice to work at Amazon or not. Will now have no choice - because that choice was made for them by Amazon based on the shenanigans of their elected political leaders.
By any estimation this is a miserable failure wrestled from the arms of success at the eleventh hour. Instead of 25,000 new employed people making money, paying bills and taking care of their families, NYC and Queens have gotten zero new jobs and zero investment.
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