Following months of complaints from the progressive politicos who control local politics in New York City, Amazon CEO Jeff Bezos abruptly canceled plans to open the online retailer's new corporate headquarters branch in Queens.
Amazon had spent more than a year hunting for the location of its new headquarters, baiting cities across the country into falling over themselves and making ridiculous promises in a bid to get Amazon's 50,000 jobs. The tech giant ultimately settled on splitting its new HQ between New York and Crystal City, Va. New York's corporate welfare package was especially large, appallingly so.
No one was as vocal in trying to make the corporate giant go away as socialist superstar Rep. Alexandria Ocasio-Cortez, D-N.Y. She lambasted the company's "creeping overreach." And in a way, she was taking the same side we had. But we had been arguing on behalf of taxpayers all over New York state, who were being held hostage so that Gov. Andrew Cuomo and Mayor Bill de Blasio, both Democrats, could show off for the cameras.
Ocasio-Cortez, on the other hand, was arguing against the economic development of a region of Queens that abuts her congressional district. Along with fellow naysayers such as state Sen. Mike Gianaris, D-Queens, she attacked Amazon for bringing in too many jobs, potentially creating higher standards of living in the area and perhaps also inflating housing costs.
It is odd indeed for the direct beneficiaries of corporate welfare to complain. But that's OK, there are 100 cities out
there ready to welcome Amazon.
"While polls show that 70 percent of New Yorkers support our plans and investment," Amazon explained in a statement on Thursday, "a number of state and local politicians have made it clear that they oppose our presence."
Naturally, Ocasio-Cortez and friends have taken a celebratory lap on Twitter and with the press to gloat. But they are mostly revealing the financial fallacies behind their thinking. Ocasio-Cortez, for example, told the press that if New York was willing to "give away $3 billion for this deal," then those investments could be used to hire teachers or fix the subway.
Except that isn't how refundable tax credits work. The loss of Amazon only saves New York about $325 million in cash grants that had been destined for Amazon. The rest of the incentive package comprised of tax savings that Amazon will not realize, money it would not have had to pay, had it set up shop and paid roughly $10 billion in taxes over the next two decades.
The total package negotiated for Amazon, as unfair as it was to other companies and to hardworking, less affluent taxpayers living upstate and not benefiting from the deal, would have still given New York a net tax revenue increase that could have been spent on a progressive wish list. For the socialists wanting higher wages and more tax revenue to spend on their "green dreams," the Amazon deal could have been enticing. It might have been a political crowd-pleaser as well, as more than 25,000 New Yorkers would have gained employment with an average wage of more than $150,000.
Yet, in the end, the termination of this deal is a win for everyone. The socialists get to crow about keeping their neighborhoods poor. New York's taxpayers don't have to pay Jeff Bezos exorbitant sums to do business in their state.
And Amazon, having learned its lesson about dealing with socialists, might benefit as well if, instead of seeking special handouts, it seeks in the future to create jobs in low-tax states with right-to-work protections and a friendly-but-fair business climate for everyone.