The Left is Eating Itself Pt. II

[Kriegsspiel]

"In my 23 years in the State Capitol, three as Budget Director, Amazon was the single greatest economic development opportunity we have had.
. . .
"The seventy percent of New Yorkers who supported Amazon and now vent their anger also bear responsibility and must learn that the silent majority should not be silent because they can lose to the vocalminority and self-interested politicians.
. . .
"Make no mistake, at the end of the day we lost $27 billion, 25,000-40,000 jobs and a blow to our reputation of being 'open for business.' The union that opposed the project gained nothing and cost other union members 11,000 good, high-paying jobs. The local politicians that catered to the hyper-political opposition hurt their own government colleagues and the economic interest of every constituent in their district. The true local residents who actually supported the project and its benefits for their community are badly hurt. Nothing was gained and much was lost. This should never happen again."
link

[dualstow]

and must learn that the silent majority should not be silent because they can lose to the vocalminority and self-interested politicians.
. . .

link

Amen.

[Xan]

I'm a bit surprised how unanimous on this board the support for the Amazon deal was. Isn't it pretty naked corporate welfare? Why should behemoths be given tax breaks that small businesses don't get?

[boglerdude]

Should a business be taxed at all if they create jobs/engage in productive behavior?

[sophie]

I'm a bit surprised how unanimous on this board the support for the Amazon deal was. Isn't it pretty naked corporate welfare? Why should behemoths be given tax breaks that small businesses don't get?

That was a major point of contention for the protesters. There was quite a bit of competition for Amazon's HQ2 among several cities, so the tax breaks were part of the negotiation to get them to come to NYC. The expectation was that the net tax benefit to the city would still be enormous, even before you consider the secondary impacts. The tax break frankly was peanuts. Just goes to show most people (and AOC) are really bad at math.

Really a shame. Honestly, if Amazon came here we'd have a fighting chance at fixing the subway, to take just one example. I felt like Amazon's decision was the subway's death knell. Despite NYC's ill-informed war on Uber, Lyft etc, those companies have flat out saved this city from transportation disaster. I don't know what we'd do without them.

[dualstow]

I'm a bit surprised how unanimous on this board the support for the Amazon deal was. Isn't it pretty naked corporate welfare? Why should behemoths be given tax breaks that small businesses don't get?

Agree. This stuff should be illegal. An entities tax structure should stand or fall on its own merits as applied to all.

Oh you guys and your heavy-handed, draconian measures. Don’t you know we’re all libertarians here.

[jacksonM]

I'm a bit surprised how unanimous on this board the support for the Amazon deal was. Isn't it pretty naked corporate welfare? Why should behemoths be given tax breaks that small businesses don't get?

Agree. This stuff should be illegal. An entities tax structure should stand or fall on its own merits as applied to all.

Oh you guys and your heavy-handed, draconian measures. Don’t you know we’re all libertarians here.

If I'm a libertarian who believes all taxation is theft then why should I be upset when NYC offers to steal 3 billion dollars less from a company in exchange for moving there?

Not saying that I'm that sort of libertarian ideologue but I still don't equate a tax break given for the overall benefit of a city with corporate welfare.

[Xan]

Agree. This stuff should be illegal. An entities tax structure should stand or fall on its own merits as applied to all.

Oh you guys and your heavy-handed, draconian measures. Don’t you know we’re all libertarians here.

If I'm a libertarian who believes all taxation is theft then why should I be upset when NYC offers to steal 3 billion dollars less from a company in exchange for moving there?

Not saying that I'm that sort of libertarian ideologue but I still don't equate a tax break given for the overall benefit of a city with corporate welfare.

Individually picking who must pay taxes and who is not required to do so is an additional power that government is assuming in this situation, on top of the overall power to tax.

I'm honestly surprised to hear the point of view that tax breaks aren't corporate welfare. Can you elaborate on that? I thought that was the case almost by definition.

[jacksonM]

Oh you guys and your heavy-handed, draconian measures. Don’t you know we’re all libertarians here.

If I'm a libertarian who believes all taxation is theft then why should I be upset when NYC offers to steal 3 billion dollars less from a company in exchange for moving there?

Not saying that I'm that sort of libertarian ideologue but I still don't equate a tax break given for the overall benefit of a city with corporate welfare.

Individually picking who must pay taxes and who is not required to do so is an additional power that government is assuming in this situation, on top of the overall power to tax.

I'm honestly surprised to hear the point of view that tax breaks aren't corporate welfare. Can you elaborate on that? I thought that was the case almost by definition.

Are personal tax deductions a form of welfare? Before the home mortgage deduction was greatly limited that was certainly a tax break that favored homeowners and especially those with big mortgages. You still have things like the child tax deduction however. Is it a form of welfare for families to take advantage of this tax break not afforded to those with no children? I once got a tax break for adopting a child - was that welfare?

I guess I'm just not as anti-big business as some other folks and I don't see anything libertarian about it. AOC stated in one of her interviews that she opposed Amazon because she wanted the city to be preserved for "small businesses". Of course she does. As a totalitarian socialist she's probably not big on the idea of private business at all but inasmuch as she has to tolerate it she would obviously prefer it to be small and thus more easily controlled.

And as for the small businesses already existing in the city, I'd be willing to bet they aren't so happy with Amazon being driven away.

[Kriegsspiel]

As Craig Fugate said in Lights Out, "[the tools of the government] are extortion and bribes. Either I give you grant dollars to get you to do something you would not otherwise do, or I tax you to change behavior for what you will not otherwise do."

Since the federal government does not regulate state tax policy to make a level playing field, states have the means to incentivize business to set up in their locale.

If they don't play the game, they risk losing to locales that will give a tax break, all else being equal (it isn't). Some states don't need to woo anyone due to gorgeousness (California). Some do need to, because they're so isolated and sparsely populated (South Dakota, Wyoming). Some states, like NY, have some momentum from business that's been there for generations (eg, Wall Street), cultural agglomeration, and geographic & associated infrastructure traits (port access, rail). So they have lots of business that's kinda captive and they've been able to raise taxes (and spending) for a long time.

But the Amazon HQ2 is location independent. Like, the opposite of a steel company that needed to locate in Pittsburgh or the Ruhr due to its river + coal attributes. Its resource requirement is talent, so the RFP was geared to seek places that could provide talent. They were basically looking for population centers that could provide or attract tech workers. The only thing those places had to differentiate themselves was tax policy. New York City has very high taxes (and, it turns out, other detrimental factors), and seems undifferentiated towards a bunch of other lower-tax places, in terms of providing tech workers. So, as Fugate put it, NYC has to bribe them to get them to locate there, which otherwise they wouldn't have. It seems the bribe just wasn't high enough to tip the scales.

[Xan]

Are personal tax deductions a form of welfare? Before the home mortgage deduction was greatly limited that was certainly a tax break that favored homeowners and especially those with big mortgages. You still have things like the child tax deduction however. Is it a form of welfare for families to take advantage of this tax break not afforded to those with no children? I once got a tax break for adopting a child - was that welfare?

Well, yes and no, but certainly not in the way this is.

The tax law says that everybody who has children (and makes less than $X) gets to deduct $Y from their taxes. Agree or not, that policy applies to everyone.

These "tax breaks" for big businesses say "The law says, Amazon, that you would owe $X in taxes if you moved here. But we like you because (XYZ), so we'll only charge you $Y. That $X will apply to everybody else, though."

[jacksonM]

Are personal tax deductions a form of welfare? Before the home mortgage deduction was greatly limited that was certainly a tax break that favored homeowners and especially those with big mortgages. You still have things like the child tax deduction however. Is it a form of welfare for families to take advantage of this tax break not afforded to those with no children? I once got a tax break for adopting a child - was that welfare?

Well, yes and no, but certainly not in the way this is.

The tax law says that everybody who has children (and makes less than $X) gets to deduct $Y from their taxes. Agree or not, that policy applies to everyone.

These "tax breaks" for big businesses say "The law says, Amazon, that you would owe $X in taxes if you moved here. But we like you because (XYZ), so we'll only charge you $Y. That $X will apply to everybody else, though."

I think we're just arguing over semantics now. The way I see it, calling a tax break for a company "welfare" is the same as calling an individual tax break a "subsidy". I don't think either term is applicable to a situation where the government is letting you keep more of your money. I would prefer to just call them "tax breaks" and be done with it. if you want to argue that tax breaks to entice big business into your state aren't fair, that's a debatable proposition. I would agree in principle but then again life isn't fair and never has been.

[Xan]

Are personal tax deductions a form of welfare? Before the home mortgage deduction was greatly limited that was certainly a tax break that favored homeowners and especially those with big mortgages. You still have things like the child tax deduction however. Is it a form of welfare for families to take advantage of this tax break not afforded to those with no children? I once got a tax break for adopting a child - was that welfare?

Well, yes and no, but certainly not in the way this is.

The tax law says that everybody who has children (and makes less than $X) gets to deduct $Y from their taxes. Agree or not, that policy applies to everyone.

These "tax breaks" for big businesses say "The law says, Amazon, that you would owe $X in taxes if you moved here. But we like you because (XYZ), so we'll only charge you $Y. That $X will apply to everybody else, though."

I think we're just arguing over semantics now. The way I see it, calling a tax break for a company "welfare" is the same as calling an individual tax break a "subsidy". I don't think either term is applicable to a situation where the government is letting you keep more of your money. I would prefer to just call them "tax breaks" and be done with it. if you want to argue that tax breaks to entice big business into your state isn't fair, that's a debatable proposition. I would agree in principle but then again life isn't fair and never has been.

It's a giveaway to an individual entity, not a law that applies to everyone. That's the big difference for me, I suppose.

[dualstow]

So, as Fugate put it, NYC has to bribe them to get them to locate there, which otherwise they wouldn't have. It seems the bribe just wasn't high enough to tip the scales.

That was a great post and it all makes sense to me, up until the line above. What I read in the news and heard on the radio was that Amazon was used to having its ring kissed and was totally unprepared for protests, or anything other than ring-kissing. And Bill DiBlasio, who accused Amazon of "taking their ball and going home", didn't try hard enough to promote Amazon to the city. It's a little a bit of everyone's fault. Ok, it's mostly AOC's fault , but there's plenty of blame to go around.

[jacksonM]

Well, yes and no, but certainly not in the way this is.

The tax law says that everybody who has children (and makes less than $X) gets to deduct $Y from their taxes. Agree or not, that policy applies to everyone.

These "tax breaks" for big businesses say "The law says, Amazon, that you would owe $X in taxes if you moved here. But we like you because (XYZ), so we'll only charge you $Y. That $X will apply to everybody else, though."

I think we're just arguing over semantics now. The way I see it, calling a tax break for a company "welfare" is the same as calling an individual tax break a "subsidy". I don't think either term is applicable to a situation where the government is letting you keep more of your money. I would prefer to just call them "tax breaks" and be done with it. if you want to argue that tax breaks to entice big business into your state isn't fair, that's a debatable proposition. I would agree in principle but then again life isn't fair and never has been.

It's a giveaway to an individual entity, not a law that applies to everyone. That's the big difference for me, I suppose.

Leaving aside the prevailing political views of the forum I'd be willing to bet that the majority of the members are indirect holders of Amazon stock. if you had your entire stock allocation in VTI for example, Amazon would represent about 2.4% of your total stock holdings.

So as shareholders shouldn't we prefer for Amazon to use the $3 billion dollars it was going to save in taxes to increase shareholder value rather than whatever NYC was going to use it for? And given that states are willing to outbid each other with tax breaks what kind of CEO would Bezos be if he didn't try to take advantage of it?

[Kriegsspiel]

So, as Fugate put it, NYC has to bribe them to get them to locate there, which otherwise they wouldn't have. It seems the bribe just wasn't high enough to tip the scales.

That was a great post and it all makes sense to me, up until the line above. What I read in the news and heard on the radio was that Amazon was used to having its ring kissed and was totally unprepared for protests, or anything other than ring-kissing. And Bill DiBlasio, who accused Amazon of "taking their ball and going home", didn't try hard enough to promote Amazon to the city. It's a little a bit of everyone's fault. Ok, it's mostly AOC's fault , but there's plenty of blame to go around.

That meant, in the Fugate paradigm, Amazon would have plowed through "community demonstrations" or whatever had they gotten a bigger tax break. As it stood it wasn't good enough that Amazon wasn't willing to walk away at token (?) resistance.

[Kriegsspiel]

That was a great post and it all makes sense to me, up until the line above. What I read in the news and heard on the radio was that Amazon was used to having its ring kissed and was totally unprepared for protests, or anything other than ring-kissing. And Bill DiBlasio, who accused Amazon of "taking their ball and going home", didn't try hard enough to promote Amazon to the city. It's a little a bit of everyone's fault. Ok, it's mostly AOC's fault , but there's plenty of blame to go around.

That meant, in the Fugate paradigm, Amazon would have plowed through "community demonstrations" or whatever had they gotten a bigger tax break. As it stood it wasn't good enough that Amazon wasn't willing to walk away at token (?) resistance.

Except NYC wasn't the highest bidder. There were other factors that made them choose that locale vs more money. I don't blame them; who wants to deal with all the current and future headaches? It's not a friendly enough business environment to begin with.

Right, but I'm saying in the end Amazon walked away after choosing it pretty easily, so it can't have been a far and away favorite. So the way I imagine it going down is Amazon is like, "Ok nerds, it's NYC, so as far as the RFP criteria, it's the top of the heap; biggest population center in America, near a highway, international airport, boom. It's got a few universities, but fuck it, who wouldn't want to relocate to NYC (ok, Queens) anyways? Yea they didn't offer us the best tax incentives, and it'll be expensive to deal with construction and other stuff... it's a close call, but NYC edged it out."

Then the O-C contingent started getting raucous and Amazon is like "nah, fuck it, the straw met the camel's back; let's go to #2. Sure it might not have the cachet of NYC, but they gave us a bigger tax break and other projected costs are lower. And even though it's not NYC, we can still get like 95% of the relocatable techies. It's not like we're picking Jackson, Mississippi! MWAHAHAHAHA"

[Xan]

Leaving aside the prevailing political views of the forum I'd be willing to bet that the majority of the members are indirect holders of Amazon stock. if you had your entire stock allocation in VTI for example, Amazon would represent about 2.4% of your total stock holdings.

So as shareholders shouldn't we prefer for Amazon to use the $3 billion dollars it was going to save in taxes to increase shareholder value rather than whatever NYC was going to use it for? And given that states are willing to outbid each other with tax breaks what kind of CEO would Bezos be if he didn't try to take advantage of it?

Sure, Amazon should take advantage of whatever it can. I don't think anybody's blaming Amazon here. But I really thought the story, until everybody started talking about it here, was about how Amazon played everybody for fools dangling this "HQ2" (which turned out to be two different "HQ2"s, which actually means none), and totally took NYC to the cleaners on the tax breaks. It was $48K per job!

[moda0306]

Leaving aside the prevailing political views of the forum I'd be willing to bet that the majority of the members are indirect holders of Amazon stock. if you had your entire stock allocation in VTI for example, Amazon would represent about 2.4% of your total stock holdings.

So as shareholders shouldn't we prefer for Amazon to use the $3 billion dollars it was going to save in taxes to increase shareholder value rather than whatever NYC was going to use it for? And given that states are willing to outbid each other with tax breaks what kind of CEO would Bezos be if he didn't try to take advantage of it?

Sure, Amazon should take advantage of whatever it can. I don't think anybody's blaming Amazon here. But I really thought the story, until everybody started talking about it here, was about how Amazon played everybody for fools dangling this "HQ2" (which turned out to be two different "HQ2"s, which actually means none), and totally took NYC to the cleaners on the tax breaks. It was $48K per job!

(Watching Xan slowly radicalize on behalf of the proletariat... thinking we should change thread to "The Right is Eating Itself")

[jacksonM]

Well, yes and no, but certainly not in the way this is.

The tax law says that everybody who has children (and makes less than $X) gets to deduct $Y from their taxes. Agree or not, that policy applies to everyone.

These "tax breaks" for big businesses say "The law says, Amazon, that you would owe $X in taxes if you moved here. But we like you because (XYZ), so we'll only charge you $Y. That $X will apply to everybody else, though."

I think we're just arguing over semantics now. The way I see it, calling a tax break for a company "welfare" is the same as calling an individual tax break a "subsidy". I don't think either term is applicable to a situation where the government is letting you keep more of your money. I would prefer to just call them "tax breaks" and be done with it. if you want to argue that tax breaks to entice big business into your state aren't fair, that's a debatable proposition. I would agree in principle but then again life isn't fair and never has been.

Xan makes the point...as applied to all. Creating tax niches is favoring one form of business or individual over another. I've always been a flat or graduated tax structure with zero deductions fan. And...equalization between non-business owning citizens and business owning citizens in terms of how they are taxed. For example...depreciating a delivery truck/expensing it's mileage...legit. Deducting the corporate jet and chauffeured personal car not legit (unless I get to deduct my daily commute mileage, then fine).

Equality and fairness in the tax laws is a fine ideal. So lets elect 535 representatives to go to congress and hammer out all the details of what's fair and see how it all turns out.

In the case of states offering tax breaks to entice big corporations how would you actually solve this problem? If a Federal law was passed to prohibit it, would it be constitutional?

[Kriegsspiel]

I don't think anybody's blaming Amazon here. But I really thought the story, until everybody started talking about it here, was about how Amazon played everybody for fools dangling this "HQ2" (which turned out to be two different "HQ2"s, which actually means none), and totally took NYC to the cleaners on the tax breaks. It was $48K per job!

You're still making Amazon out to be the bad guy (playing people for fools). The reality seems to be that cities are so desperate for corporations and jobs to tax that they'll debase themselves to get them. It goes back to the Strong Towns growth ponzi scheme thing.

"the city’s budget continues to grow and debt service is one key factor, rising from about $6.7 billion this year to nearly $9 billion by 2023. And this increase doesn’t reflect the additional capital spending that would be needed to build four proposed new jails or meet the major repair needs of the city’s subways and public housing.”
- Doug Turetsky, NYC Independent Budget Office’s Chief of Staff

[Xan]

All I'm really saying is if you want your state to be business-friendly, then create a business-friendly environment, not for one or two businesses that you like, but for everybody.

You don't have to squint too hard to see major first amendment issues here. Would NYC give a "tax break" for a Chick'Fil'A headquarters? What about a Ben & Jerry's headquarters?

I agree that NYC should have had Amazon. But they should do it by actually making NYC a place people want to do business, not by bribing Amazon to move there even though it isn't.

[sophie]

I agree that NYC should have had Amazon. But they should do it by actually making NYC a place people want to do business, not by bribing Amazon to move there even though it isn't.

Nice idea, but the reality is that there was a bidding war for Amazon. There's only one way to win a bidding war: you have to outbid the competition. We're not privy to the details of the negotiation, but I'm guessing there was good reason for including a tax incentive in the deal.

And as I said above...it's peanuts. The estimate was that Amazon would bring $27 billion in direct tax revenue to the city - not counting the taxes paid by the new high-skilled workers and the new businesses that would spring up as an indirect result, which some thought might end up in the hundreds of billions. Why not think of it as an investment with an 8000%+ return? Frankly, given the high taxes around here, I thought NYC got away for cheap.

[Libertarian666]

Oh you guys and your heavy-handed, draconian measures. Don’t you know we’re all libertarians here.

If I'm a libertarian who believes all taxation is theft then why should I be upset when NYC offers to steal 3 billion dollars less from a company in exchange for moving there?

Not saying that I'm that sort of libertarian ideologue but I still don't equate a tax break given for the overall benefit of a city with corporate welfare.

Individually picking who must pay taxes and who is not required to do so is an additional power that government is assuming in this situation, on top of the overall power to tax.

As Chief Justice Marshall famously said "The power to tax is the power to destroy". See https://fee.org/articles/the-power-to-t ... o-destroy/ for a detailed discussion of this.

So there is no new power being assumed by selecting who must pay taxes; that is implied in the power to tax, because the government doesn't destroy everyone (at the moment, anyway).

[Libertarian666]

All I'm really saying is if you want your state to be business-friendly, then create a business-friendly environment, not for one or two businesses that you like, but for everybody.

You don't have to squint too hard to see major first amendment issues here. Would NYC give a "tax break" for a Chick'Fil'A headquarters? What about a Ben & Jerry's headquarters?

I agree that NYC should have had Amazon. But they should do it by actually making NYC a place people want to do business, not by bribing Amazon to move there even though it isn't.

The problem with your suggested approach is that it would require scrapping most of NYC's and NYS's government. They are both hideously anti-business (and anti-individual too, if that matters). It's much easier to say to a specific company, "We promise not to punish you as much as we would a captive company, at least until you get enough hostages here that we can tighten the screws".

By the way, where are the 1st Amendment issues you refer to? I don't see them at all.