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Amazon HQ Deal Sours on NY Community's Outcry

By Phil Butler | February 11, 2019

News that is reconsidering putting a second headquarters in New York City has dealmakers wobbling their heads. According to the news, a wave of public outcry and political maneuvering may well force the company to look elsewhere.

Alexandria Ocasio-Cortez - DonkeyHotey
Alexandria Ocasio-Cortez - Caricature by DonkeyHotey

Amazon's highly publicized search for a second headquarters appeared to be over as billionaire Jeff Bezos' company seemed all set to create 25,000 jobs at a new campus in New York City. Real estate professionals close to the potential deal were anticipating new life being breathed into the stagnant NY market. Then a 29-year old congresswoman named Alexandria Ocasio-Cortez (above) pointed out what should have been obvious from the start. The subsidies and sweet offers New York offered Amazon were just too sweet. A political firestorm ensued, and the community lashed out at local politicians and dealmakers.

Governor Andrew M. Cuomo (D) and Mayor Bill de Blasio (D) have been singing the praises of the Amazon deal, calling it an economic triumph. At the end of the day, citizens of the state do not feel like giving giant subsidies to the world’s most valuable company at this moment in time is a good idea. Amazon has now hired an independent PR firm to try and sooth the deal over, but Ocasio-Cortez's support base is solid. Sen. Michael N. Gianaris (D-Queens), appointed recently to the Public Authorities Control Board that will decide on the deal, has accused Amazon of extortion the past. The deputy senior majority leader was cited by the Washington Post commenting:

“Amazon has extorted New York from the start, and this seems to be their next effort to do just that. If their view is, ‘We won’t come unless we get three billion of your dollars,’ then they shouldn’t come.”

Many see this Amazon-NY struggle as one of populism versus the corporate elites, some calling the deal a "tipping point" in a kind of class struggle.
Back in November Amazon dangled a huge carrot in front of New Yorkers and Long Island City residents by promising salaries of $150,000 a year to as many as 50,000 workers. The Jeff Bezos run company had originally planned a single headquarters but instead split the new development in two in between New York and Long Island. Now Amazon is threatening to pull out.

Map of potential Amazon HQ 2 cities -

At the end of the day Amazon and supporters of the new HQ deal are claiming a $3 billion dollar subsidies package taxpayers will have to deal with. However, an Intercept report recently shows the actual amount of the subsidies is closer to $5 billion. And this does not include a Federal tax loophole that will save Amazon and cost truckloads of revenue. It turns out the Amazon location in Long Island City, in the New York City borough of Queens, puts the new Amazon HQ in a tax zone that lets the company defer income tax until many residents are dead or in old folks homes. The so-called "Tax Landing" zones let companies defer their taxes until 2026.
Under the tax overhaul signed into effect by President Donald Trump last year, investors in opportunity zones can defer payments of capital gains taxes until 2026, and exclude 15 percent of the gains from taxation if they hold them for 7 years.

A city campaign in a distressed environment for Amazon HQ 2 - SounderBruce - CC 2.0

Alexandria Ocasio-Cortez and her constituents are bringing to light much of the hyperbole the Amazon PR teams have set in motion to create this deal. This Good Jobs First report also reveals Amazon PR people shorting potential workers by almost $40,000 a year. The "rabbit hole" of Amazon's deal seems endless now that Freedom of Information Act disclosures show the under the table maneuvers of Amazon. One big question opponents of the deal have is, "What else is underneath?" Not much publicity has been given to the fact that the cities making the biggest known subsidy offers did not win the deal. Few people realize that Montgomery County, Maryland offered an $8.5 billion subsidies package or the St. Louis wagered $7.3 billion. Some say Amazon owner Jeff Bezos wants the HQs close to his three listed residences, and other experts contend the Virginia HQ is close to the Pentagon, a big customer for Bezos' company. Whatever the case is, odds seem good the New York deal will turn sour fast as more revelations are brought into the limelight.

In conclusion, big companies taking huge subsidies for dangling the carrot of more jobs has cost Americans untold billions in potential revenue. Companies like Apple, Amazon, Facebook, Google, and Foxconn promise jobs, but those jobs end up costing taxpayers more than they are worth. This The Guardian story peels back the veil on this aspect of corporate dealmaking. The companies typically overstate the positive impacts like the number of jobs and the overall community aspects, and they end up paying little or no tax at all. The Guardian report shows that local schools and other infrastructure in need of financial help, suffer an inestimable loss on account of the long tail of corporate subsidies. No wonder some experts are calling this high profile Amazon case a battle between populism and the corporate elites.

Phil Butler is a former engineer, contractor, and telecommunications professional who is editor of several influential online media outlets including part owner of Pamil Visions with wife Mihaela. Phil began his digital ramblings via several of the world’s most noted tech blogs, at the advent of blogging as a form of journalistic license. Phil is currently top interviewer, and journalist at Realty Biz News.
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