
Charlie Munger: Driving rich people out is pretty dumb for states or cities - onetimemanytime
https://markets.businessinsider.com/news/stocks/amazon-hq2-charlie-munger-says-driving-rich-people-out-is-pretty-dumb-2019-2-1027957443
======
listenallyall
It's insane how some loud politicians were able to rile up opposition by
framing the AMZN deal in isolation, as if this was the first and only time New
York offered financial incentives to massive, profitable companies.

Atlantic Yards, Hudson Yards, 1WTC, MetroTech, Yankee Stadium... all of these
projects, and many more, were negotiated and ultimately included large
financial incentives or subsidies by various governments to the developers and
to the big business tenants.

Virtually every big bank has, at some point, threatened to move out of NYC, or
at least large quantities of back-office, technology and operations staff.
It's all to get tax benefits and concessions from the city and state
governments.

The idea that every other NYC business is paying their "fair share" and Amazon
was expecting, or getting, special treatment, is ludicrous.

~~~
m_ke
Amazon did it to themselves by turning this HQ2 search into a circus. It's
pretty clear that they knew where they wanted to go from the start and tried
to use this as leverage to squeeze out as much out of NYC and DC as possible.

It's also obvious that they're using HQ2 to build up political leverage in
Seattle.

As a software engineer who lives and grew up in Queens it would have been nice
to have amazon in new york but we don't really need them. LIC is growing fast
and we'll have no problem getting someone else to come in and take the space
that amazon would have occupied.

~~~
listenallyall
>> LIC is growing fast

Don't you realize much (most?) of LIC's growth is from businesses attracted to
the area by various _pre-existing_ government incentives, such as:

Commerical Expansion Program (tax abatements), Accelerated Sales Tax Exemption
Program, Commercial Revitalization Program (property tax abatements),
Commercial Rent Tax Special Reduction, Energy Cost Savings Program, Industrial
& Commercial Abatement Program, Industrial Business Zone Relocation Tax
Credit, NYCIDA Commercial Office Space Incentives, Open Industrial Uses Sales
Tax Exemption Program, Qualified Emerging Technology Company Incentives (tax
reductions), Relocation and Employment Assistance Program (tax credits), Sales
Tax Exemption for Manufacturers

[https://www.nycedc.com/service/financing-
incentives](https://www.nycedc.com/service/financing-incentives)

Whatever arrangements or incentives were made to build Cornell Tech, keep in
mind that in addition, all donations to Cornell's $7 billion endowment are
tax-deductible. I will take a wild guess that it is almost exclusively very
rich people who benefit the most from this deduction.

~~~
lkrubner
None of the incentives that you mention are in any way relevant to Amazon
story since the incentives you mention are available to all businesses and
thus are fair and just in exactly the way the Amazon deal was unfair and
corrupt.

~~~
listenallyall
1200 million - NYS Excelsior Jobs Program

[https://esd.ny.gov/excelsior-jobs-program](https://esd.ny.gov/excelsior-jobs-
program)

897 million - Relocation and Employment Assistance Program (REAP)

[https://www1.nyc.gov/site/finance/benefits/business-
reap.pag...](https://www1.nyc.gov/site/finance/benefits/business-reap.page)

386 million - Industrial & Commercial Abatement Program (ICAP)

[https://www1.nyc.gov/site/finance/benefits/benefits-
industri...](https://www1.nyc.gov/site/finance/benefits/benefits-industrial-
and-commercial-abatement-program-icap.page)

All of the above were available prior to Amazon's HQ2 search, and remain
currently available for any company that fulfills the requirements. Go ahead
and complain about the $500 million "capital grant" if you want, but $2.5
billion was taking advantage of existing, established, programs anyone can
participate in. The only thing "corrupt" are the politicians who managed to
convince people like yourself, who seem unable to perform a Google search,
that LIC would be better off without this project.

source for figures: [https://ny.curbed.com/2018/11/16/18098589/amazon-hq2-nyc-
que...](https://ny.curbed.com/2018/11/16/18098589/amazon-hq2-nyc-queens-long-
island-city-explained)

------
deogeo
Giving insufficient tax breaks, that other people don't have access to, is
"driving rich people out"?

You know what I think is pretty dumb for states and cities? Letting the rich
play them against each other in a race to the bottom.

But I do find it puzzling how such deals are even legal. Isn't the law
supposed to be the same for everyone - including tax law?

~~~
onetimemanytime
_But I do find it puzzling how such deals are even legal. Isn 't the law
supposed to be the same for everyone - including tax law?_

The same for everyone....do you mean _everyone_ paying 0% taxes, or the max,
close to 50% (state + federal) ?

>> _In New York, California, Connecticut, Maryland and New Jersey, the top 1
percent pay a third or more of total income taxes. Now a handful of
billionaires or even a single individual like Mr. Tepper can have a noticeable
impact on state revenues and budgets._
[https://www.nytimes.com/2016/05/01/business/one-top-
taxpayer...](https://www.nytimes.com/2016/05/01/business/one-top-taxpayer-
moved-and-new-jersey-shuddered.html)

~~~
deogeo
> the top 1 percent pay a third or more of total income taxes.

The richer they get and the poorer everyone else gets, the more this statistic
makes it look like they're shouldering the entire tax burden.

------
m_ke
NYC is full of rich people. Giving the richest man in the world a tax break
and access to a prime location in the largest city in the country to drive out
middle class people would be dumb.

~~~
listenallyall
Except that's already SOP in New York. You're familiar with One57, the
skyscraper with $100 million apartments? It received over $60 million in tax
abatements. And the first $100 million apartment's owner paid less than
$20,000 in property tax in 2014.

[https://www.6sqft.com/one57-received-66m-in-tax-breaks-in-
ex...](https://www.6sqft.com/one57-received-66m-in-tax-breaks-in-exchange-for-
just-66-units-of-affordable-housing/)

~~~
m_ke
I know that it is and understand that amazon got a pretty standard package.
Just because it happens all the time doesn't mean that it's right.

------
kevin_b_er
> They don't burden your schools, the police department, your prisons.

They do. They tend to campaign to eliminate having tax money funding the
schools, since they don't use them or only want private schools.

------
strict9
Is it bad at any scale?

What if Amazon were promised an even more ridiculous amount in taxpayer money,
like $50 billion or $100 billion? Would his opinion be the same?

There has to be a limit to corporate giveaways in the form of tax breaks and
subsidies. The reward system shouldn't keep tilting toward larger and larger
companies.

~~~
onetimemanytime
Rich Person A decides to live in NJ. Taxes and all, NJ gets from him $22
million a year. They are y rich people in NJ. State gets cute and says, if we
raised their taxes by 10%, we'll have $294 million more and they will not feel
it. In reality, NJ stands to lose them all, because eventually they will move,
not to Cuba or Russia, but to a US state, like Florida.

So NJ /NY would have a lot less to spend on highways, schools, cops etc
because a handful of rich people were taxed out.

NYC /NY stood to make billions from Amazon. Now they get zilch.

~~~
existencebox
Your argument implies a race to the bottom in which the only way to "win" is
not to play, since otherwise you drive taxes for megarich as near 0 as you can
bear.

I prefer the approach where if we lose them, "tough nuts." Revenue should be
robust and diversified, and losing no individual source should be a death
blow. Similarly, good services and local effects should be the goal to draw
people in, not handouts, as this aligns incentives _far_ better while still
maintaining workable bases of revenue. This is not to say "ONLY tax the rich",
the parent post seemed to me to be making the wise argument that there's a
line here, but the fact that the focus is so much on these few individuals
makes me think we're already off in left field, and bowing to them further
isn't the direction I want to move in, even if it may cause a temporary
revenue hit.

So yes, "they (NY) get zilch." But they've also made a strong statement about
corporate handouts (my own opinions aside about whether it was a smart choice
or not) and will not stop being NY and will not stop being desirable because
of this; FLA is not going to supplant them even if amazon decides to go there
alongside whatever megarich actually care enough about the taxes to _not be in
NY_. (Now, NY's inability to develop infrastructure within reasonable cost may
do that over the next hundred years or so, but that's to be seen, and I don't
think losing a few billionaires is going to make or break that)

~~~
KevinEldon
It would have been a strong statement about corporate handouts if they had
refused to play up front or even better cited the philosophy you’ve outline
and how they’ve enshrined it in the law. What I pick up on is the elected
officials are disconnected from a vocal wing of their own party and NY has
significant political uncertainty and a growing tax income problem that is
impacting g their ability to address infrastructure needs. Maybe businesses
don’t care or maybe they think Dallas or Atlanta is a friendly place to do
business we’ll grow there.

------
BXLE_1-1-BitIs1
A region can accommodate only so many rich people. Once the cops, teachers and
plumbers are crowded out by real estate prices, you're overcapacity

