
NYC Open Letter to Jeff Bezos - jger15
https://avc.com/2019/03/an-open-letter-to-jeff-bezos
======
temuze
Thank you, Fred.

The amount of misinformation around this issue has been remarkable.

1) No you can't just say "let's spend that $3B on fixing the subway". This
money comes from tax rebates. It means that you only get this $3B to give away
when you get more tax revenue.

2) This wasn't some "backroom deal". The NDAs were a stipulation in Amazon's
competition meant to prevent bidding wars. If cities could react to other
cities, it would have created an escalating race to the bottom. Ironically,
Amazon probably did this to avoid bad press. Go figure.

3) This wouldn't have put more strain on the subway. During rush hour, trains
to Manhattan are packed, but trains to the outer boroughs are empty. This
would have allowed NYC to step away from the high-maintenance hub and spoke
model which strains the MTA.

Source: the New York State Budget Director's statement
[https://www.governor.ny.gov/news/open-letter-new-york-
state-...](https://www.governor.ny.gov/news/open-letter-new-york-state-budget-
director-robert-mujica-regarding-amazon)

\---

Let's do some back of the envelope math. What's 25k (minimum number of jobs) *
150k (the average salary) * 11% (income tax for NY state + NYC)? 412M. That
means that $3B would be paid off from new income taxes alone over ~7 years.

That's not even considering:

\- State / city corporate tax

\- The new taxable income that would go to local businesses

\- The effect it would have on increasing taxable income for other tech
workers in the city

So yes - this was still a _really_ good deal.

~~~
badfrog
The amount of people loudly misunderstanding #1 really frustrates me.

~~~
jhauris
I think calling tax incentives subsidies is really confusing and leads to that
misunderstanding. Maybe that's the purpose of using that language?

~~~
badfrog
Good point. Was it the media who started using the word subsidies for this?

~~~
vonmoltke
"Subsidy" generally implies a third party transferring cash or cash
equivalents to reduce or offset an expenditure. "Discount" or "break"
generally implies that the party issuing the bill is voluntarily reducing the
charge. The boundary between these is fuzzy, but I don't think it's right to
call both "subsidies" and I do think there is a tendency for people to refer
to discounts they don't like as "subsidies".

~~~
TheOperator
I think it's more coming from the perspective that taxation is the cost of
doing business in an area. It pays for the training, infrastructure, security,
etc that businesses rely on. Schools, roads, and police aren't free. Its
coming from the perspective that governments pay the bill for companies
operational expenses, and a company which is not pitching enough in to pay for
these costs is getting subsidized by those that are.

I don't think "subsidy" is precise language but talking about "tax breaks"
doesn't really communicate what a truly cushy deal Amazon is getting at the
expense of others.

------
triplewipeass
The folks who have signed this open letter don't represent average New
Yorkers. I live in New York, yet no one ever asked me how I felt about this
Amazon thing.

This should have been put to a popular referendum. Present the people with
three options:

1\. Invite Amazon to NYC for free. 2\. Invite Amazon to NYC with subsidies.
3\. Do nothing.

My gut tells me most people would have voted (1) as an affirmation that Amazon
is ultimately free to come to NYC or not, with or without the subsidies.

~~~
ballenf
Yes they did. That's what elections are. You voted for representatives who you
believed would exercise similar value judgments as your own to all the
thousands of complicated situations and decisions that the government faces.
Referendums have their place, but imo, this is a terrible situation to have
one.

A resolution asking "should tax breaks be part of the incentive options
allowed to be given to?" would be ok. But I think the resounding "no" that
vote would get is why it won't happen.

~~~
chimeracoder
> Yes they did. That's what elections are. You voted for representatives who
> you believed would exercise similar value judgments as your own to all the
> thousands of complicated situations and decisions that the government faces.

You're assuming New York has democratic elections, which is a reasonable
assumption if you don't live in New York, but is unfortunately very incorrect.

New York government is not a democracy; the ruling parties have constructed a
series of arcane, layered laws which allow the parties to essentially appoint
people to nominally-elected positions, which bypasses the entire spirit of
democracy[0]. The parties are controlled by local private clubs, which have
hefty membership fees (my local club starts at $1000/year, which I could
technically afford if I wanted to, but many of my neighbors could not).

Unlike most states, we don't have the right to have direct ballot initiatives.
We don't even have the right to vote against unopposed candidates if we don't
like them - if a candidate runs unopposed in a primary[1], the primary is
cancelled altogether. So, for example, Kirsten Gillibrand literally did not
have a primary election in 2018 - she won the nomination with a total of zero
votes.

[0] as just one example, just the tip of the iceberg:
[https://www.nytimes.com/2017/09/18/nyregion/new-york-
politic...](https://www.nytimes.com/2017/09/18/nyregion/new-york-politics-
party-bosses.html)

[1] and remember, the party gets to approve whether a candidate receives a
primary challenge in most state races

~~~
MockObject
> and remember, the party gets to approve whether a candidate receives a
> primary challenge in most state races

This makes sense. Primaries are internal party business. It's totally up to
them to decide how they select their candidates.

The general elections are where the citizens get their say.

~~~
chimeracoder
> This makes sense. Primaries are internal party business. It's totally up to
> them to decide how they select their candidates.

New York is the only state which conducts primaries this way.

> The general elections are where the citizens get their say.

No, because general elections are uncontested (due to gentleman's agreements
between the two parties not to run candidates in each others' districts, and
laws making it infeasible for third parties to do anything but cross-endorse
the major parties).

~~~
dragonwriter
> New York is the only state which conducts primaries this way.

That _argumentum ad populum_ does not invalidate the offered justification.

~~~
chimeracoder
> That argumentum ad populum does not invalidate the offered justification.

That "offered justification" doesn't refute the original point, which is that
exists solely as away to have an elite minority subvert or disregard the will
of the people.

The irony in pejoratively using the term _argumentum ad populum_ in a thread
that is literally about popular vote is not lost on me.

------
jgowdy
It's sad that people sit here and beat their chest about how wrong Amazon is
without looking at the other side. Amazon doesn't owe you jobs, tax revenue,
or anything else. The discounts are reductions in the amount of money they
would owe local and state governments IF they moved their location there.

Since they aren't obligated to move their business there, they don't owe you
that money. That's not your tax discount money to spend on other things, it's
their tax discount money that they no longer potentially owe you.

The underlying flaw of all of this is that Amazon should "be a good corporate
citizen" (do what we want with their money), that tax credits are made of
money otherwise spendable by governments (when in fact they're otherwise
spendable by the corporation, because it's their money until they owe the tax
debt), and that we should be able to beat and shame billionaires into giving
us their money and providing these opportunities. Good luck with that
strategy, but I think it's unwise.

So while the college students can proudly stand there and talk about how they
won with their ideals, the people who would actually benefit from it
(families, struggling people who could use additional services paid for by
additional tax revenue) are given not the benefits but the warm and fuzzy
feeling that the collective nose has been cut off to spite the face.

~~~
anth_anm
> Amazon doesn't owe you jobs, tax revenue, or anything else.

They don't owe anyone jobs. They hire people to do work, they make money off
that work. That is how this works. Job creators are not noble or good or
generous merely because they create jobs. It is a self-serving act.

They owe tax revenue on profits earned.

> that we should be able to beat and shame billionaires into giving us their
> money and providing these opportunities

We should be able to do that. Exterminating the billionaire class (by taking
their money) would be a great thing for society.

~~~
jgowdy
> We should be able to do that. Exterminating the billionaire class (by taking
> their money) would be a great thing for society.

Historically, weak private property rights are used to hurt the poor, the
vulnerable, the weak, the unpopular, the racial minorities, and the
immigrants. My fellow members of the left make a grave mistake in assuming
that private property rights are only important to the wealthy.

I will predict that assailing private property rights to accomplish societal
goals will be seen as a major unforced error by this political movement
because it will end up being used to harm non-billionaires FAR more than its
used to rob the rich.

Not to mention that just like wiretapping and anything else, it's a lazy
shortcut to just suspend rights to achieve your ends rather than doing the
proper work within the system and without violating anyone's property rights.
We need to put more thought into things than these kinds of facile solutions.

~~~
anth_anm
> My fellow members of the left make a grave mistake in assuming that private
> property rights are only important to the wealthy.

If you're defending billionaires, you aren't on the left.

~~~
jgowdy
Thanks for the No True Scotsman logical fallacy. Let me say in return that if
you're this irrational, your adherence to the left (and your gatekeeping the
left) is far more of a disservice to the left than a service.

I defend anyone's personal human rights from inappropriate threats, because I
actually understand why we have those rights and why they're important. You
are trying to dehumanize the billionaires so you can deny their fundamental
rights and you're calling that "the left." I'm defending everyone's human
rights, and I'm calling that "the left." I pray that I'm right and the left is
more filled with thoughtful intellectuals who want to improve things rather
than violently irrational people who want to seize other peoples' property and
dehumanize their fellow citizens.

~~~
anth_anm
> Thanks for the No True Scotsman logical fallacy

Not no true Scotsman. gatekeeping, yes.

> I'm defending everyone's human rights, and I'm calling that "the left."

Good for you, but I wouldn't call that left or right wing. Defending private
property rights is more right wing than left wing.

------
Loughla
So that $28 billion in tax revenue they talk about. How does that jive with
all of the statements that Amazon paid $0 in tax through savvy use of the
laws?

Ignorance? Wishful thinking? Marketing? I'm honestly not trying to be
political, just wondering where they're getting that from.

~~~
bobcostas55
Amazon pays $0 corporate income tax. They pay huge amounts of other taxes.

~~~
vonmoltke
Is there a citation for this that does not lead back to that probably-biased
ITEP article?

Edit: clarification, since it seems my question as misinterpreted. Is there a
citation for the $0 in federal income tax?

~~~
gimmeThaBeet
Their financial statements show they provisioned $1.2 B in income taxes
worldwide for 2018, I suppose from that narrow perspective you have to define
'plenty'. Their effective tax rate seems like it's in the 10% range?

I think it'd be difficult to measure their employee tax footprint, I haven't
been able to find good numbers on that, a Fermi estimate makes their numbers
seem plausible if they went according to plan.

[https://ir.aboutamazon.com/static-
files/ce3b13a9-4bf1-4388-8...](https://ir.aboutamazon.com/static-
files/ce3b13a9-4bf1-4388-89a0-e4bd4abd07b8)

------
onetimemanytime
Question: How much is this computer?

Answer: $1186

Question: If I buy 100 of them can you give me an x% discount?

That's what Amazon did with the elected NY leaders. If I bring 25,000+
employees that might generate as much as $28 BILLION in taxes, can we get $3
billion in discounts? If we don't get the $3 Billion in rebates you will NOT
be getting the $28 Billion in taxes.

It was a yes or no.

------
pteredactyl
This is nice. But I don't know why Amazon would want to do business in New
York. Or California, for that matter.

These states' policymakers are hostile to business in the form of taxes and
regulations. Cuomo himself said 'America was never great'.

~~~
krapp
>These states' policymakers are hostile to business in the form of taxes and
regulations.

All states collect taxes and have laws and regulations, so I guess they're all
"hostile to business."

>Cuomo himself said 'America was never great'.

I don't see what relevance that should have to Amazon's tax strategy, but if
you think Amazon should only do business in pro-Trump areas, you should
probably look into Jeff Bezos' politics first.

~~~
pteredactyl
Agreed, all states have taxes. But different states have different policies
and regulations.

For example, with individuals, Washington State does not charge income tax but
has a sales tax. On the other hand, California has a state income tax, along
with a sales tax.

So you can see, tax policy is not binary. Some states are more favorable for
individuals, and by extensions, businesses.

-

As far as the quoted local politicians comments, it is important to understand
their mindset when potentially doing business in their state.

For example, I'd want to know if they sounded entitled, naive, or arrogant
when it comes to business (or anything for that matter)? Do they think
business owes them something for breathing the air, for example? Do they hold
a world view where there are bad guys, good guys, and nothing in between?

I could go on, but personally, Cuomo's comments (and actions) would make me
think twice about doing business in his state.

------
throwawaysea
Let's not forget, that of the $3B in subsidies, only $505M was a capital grant
specific to Amazon, itself tied to Amazon investing $3.6B (see
[https://www.governor.ny.gov/news/governor-cuomo-and-mayor-
de...](https://www.governor.ny.gov/news/governor-cuomo-and-mayor-de-blasio-
announce-amazon-selects-long-island-city-new-corporate)).

The rest of that $3B figure was from _existing_ programs that are also
available to other companies, should they meet the eligibility requirements.
The Excelsior program at the NY state level made up $1.2B. The other bits are
ICAP and REAP, which are NYC programs. The city projected that Amazon would be
eligible for $897M from REAP and $386M from ICAP through 2038. I say
'projected' since AFAIK, these are incrementally granted credits based on what
is incrementally delivered by the employer.

The city/state projected 107,000 total direct and indirect jobs, over $14
billion in new tax revenue for the State and a net of $13.5 billion in City
tax revenue over the next 25 years. And $186 billion in Gross State Product
for the New York State economy over the initial 25 years.

This was a tremendously positive deal for NY/NYC and despite multiple polls
showing majority support among constituents for the deal, it got tanked by a
vocal minority of far-left socialist activists/politicians. Governments and
companies need to develop a stronger spine, ignore the social media outrage
machine, and learn to sift out/ignore loud voices who have the time to engage
in a visible/disruptive manner (which incorrectly skews opinion away from
silently-held opinions that are equally valid).

------
anth_anm
A way that works for everyone?

Sure. Amazon comes in. They don't get any tax breaks. They do business and
make money and pay taxes. NY actually uses those taxes for things people need.

------
joemaller1
Opportunity knocks only once.

------
booleandilemma
Signed, the vocal minority.

~~~
badfrog
Incorrect.

> The result: 56 percent of voters statewide approved, while 36 percent
> didn’t.

> In New York City, 58 percent of registered voters backed the plan, while 35
> percent were opposed.

[https://nypost.com/2019/02/12/majority-of-new-yorkers-
want-a...](https://nypost.com/2019/02/12/majority-of-new-yorkers-want-amazons-
hq2-in-queens-poll/)

------
cagenut
as if this whole processes hasn't been gross enough, do they think this boot-
licking after the fact is going to curry some favor?

~~~
cabaalis
Probably more a message to some politicians than to amazon.

The political divide in this country is insurmountable. Just listen to Ben
Shapiro's opinion on events, and then NPR's. Stark, polar opposites. It is
impossible for the average American to take an informed position on something
in so polarized a climate.

~~~
anth_anm
> Just listen to Ben Shapiro's opinion on events

I'd rather shoot myself

> and then NPR

I'd rather just sit in silence staring at a wall.

------
CzarnyZiutek
NYC > AMAZON

------
shmooth
This shit is gd insane

Fuck amazon

------
chias
This comment is not relevant to the content of the letter, but why on earth am
I reading this letter in a low-res PNG?

~~~
ihuman
Its a little bit easier to read if you hotlink to the image
[https://avc.com/wp-
content/uploads/2019/03/2019-03-01-NYTime...](https://avc.com/wp-
content/uploads/2019/03/2019-03-01-NYTimes-Ad_Final-1126x2048.png)

~~~
a012
It's weird they chose the image format, maybe it's because they want to show
the signatures(?), instead of Portable Document Format.

~~~
chias
But there aren't even any signatures on that page. HTML is perfectly capable
of displaying text with some bolded elements in four columns.

Really all that providing this in image format accomplishes is:

1\. makes it blurry on high-res monitors

2\. makes it so that it can't be zoomed effectively

3\. makes it so that it can't be searched

4\. makes it so that it can't be indexed by search engines

5\. makes it so that it can't be copy/pasted easily

6\. makes it cost exponentially more data to transfer

------
libeclipse
> pplease sir, can i have some more :(

------
ciamac
NYC resident here. If Amazon wants to come to NYC, great, but why do they need
corporate welfare including $500M in cash? We do not need them here, and they
should pay full freight like everyone else (including Google, which is buying
whole city blocks without second thought and with no handouts). This is a
terrible back room deal and crony capitalism.

~~~
temuze
The commentary on this kills me.

This isn't some check to Bezos. This is a rebate off their tax bill. These are
taxes that you will not get unless the business moves to New York.

Taxes incentives are incredibly common, so common that the deals that NY
offered Amazon work within existing programs like Excelsior.

Finally, it's not a backroom deal. Part of Amazon's competition was for each
city to sign an NDA in the process so cities can't see the bids of other
cities. This would have created a bidding war that, surprisingly, Amazon
didn't want.

~~~
chimeracoder
> Finally, it's not a backroom deal. Part of Amazon's competition was for each
> city to sign an NDA in the process so cities can't see the bids of other
> cities.

Who benefits from this information asymmetry?

~~~
temuze
It meant that there wasn't an escalating bidding war between cities. So in
this case, the taxpayer.

~~~
lenticular
That's not necesarily true. The NDA means that Amazon has more information
than the cities as was pointed out, so the cities are absolutely at a
disadvantage. There's really no circumstance where information asymmetry is a
positive thing, since the party with more information could always potentially
exploit it. At best, you are no worse off than under information symmetry.

The NDA would have easily allowed Amazon to give the impression that other
cities are offering more than they actually are willing to offer. This could
have driven up bidding even more than if it were in the open.

You also have to think about incentives here. Why would Amazon want an NDA if
it wasn't for their benefit? Are they just trying to avoid bidding wars out of
the goodness of their heard?

~~~
observer12
>The NDA would have easily allowed Amazon to give the impression that other
cities are offering more than they actually are willing to offer. This could
have driven up bidding even more than if it were in the open.

Have you ever actually participated in an RFP? Its not a two way conversation.
Basically (A) gives a list of requirements and then (B) and (C) submit their
"bids" to (A). (A) reviews the bids and picks one.

And yes the NDA does benefit Amazon, just like any business benefits from RFP.
But non-blind bidding would benefit them a lot more if their desire was to
maximize incentives offered.

Blind Example: (A) sends out a RFP for a service. (B) Bids to do the service
for $5,000. (C) Bids to do the service for $6,000. Neither (B) or (C) know
each others bids so they bid the lowest they can and still turn a profit.

Non-Blind Example: (A) sends out a RFP for a service. (B) Bids to do the
service for $5,000. (C) Bids to do the service for $4,000 since they can see
what (B) bid. (B) then bids $3,000. Both (B) and (C) are in a worse position
than if they couldn't see each others bids.

Having more information isn't always helpful. Looks at what happened when
regulation made CEO compensation in publicly traded companies public
knowledge. CEO compensation rose exponentially.

------
lenticular
If there's one silver lining to this HQ2 spectacle, it seems to have really
soured a lot of folks on handouts to large corporations over often illusory or
exaggerated promises of jobs and investments. We've been through this in
Seattle ad nauseum with both Boeing and Amazon. Wisconsin is currently
learning an even harsher lesson with Foxconn.

Most recently, Amazon threatened to pull out of a large skyscraper project if
the head tax went through[0]. It didn't, and a few days ago they announced
that they would not be moving into the building anyway.

Even if you are a small-government libertarian, you should be opposed to these
policies, as they are blatant handouts to powerful players. Small- and medium-
sized businesses don't get this kind of treatment. This is a race to the
bottom among states and municipalities. It is oligarchical, crony capitalism.

[0] [https://www.geekwire.com/2019/amazon-backs-massive-
seattle-o...](https://www.geekwire.com/2019/amazon-backs-massive-seattle-
office-tower-questions-swirl-growth-plans/)

~~~
anth_anm
> It didn't, and a few days ago they announced that they would not be moving
> into the building anyway.

It did, after months of debate and planning.

Amazon and a few others got it scrapped almost instantly.

> It is oligarchical, crony capitalism.

Our society is built to fuel the interests of the wealthy.

It's just capitalism. No special modifiers required.

------
the_gastropod
This is such gross crony capitalism. It drives me nuts the uncritical
repetition that Amazon's going to "bring 25,000 jobs" to NYC. As if the tech
industry wasn't already hyper-competitive in NYC. Unemployment for tech
workers is nigh non-existent. There are already a surplus of jobs. We don't
need this. Google didn't need this for their workforce expansion in NYC.
Facebook didn't need it. And hell, Amazon didn't need it for their 5,000
employees already in NYC.

------
idbentley
I just don't understand why this conversation seems to be dominated by
financial discussion. The main problem that many NYs had with the Amazon deal
was dilution of our culture. Dumping 25,000 high earning employees into a
complex and vibrant city is following San Francisco into folly.

They probably oversell the economic benefit, and it's pretty foul the way a
corporation can push around politicians. But the bottom line is, these jobs
wouldn't go to existing New Yorkers in large part, and that makes the economic
benefit to New Yorkers thing difficult to reason about.

~~~
jpochtar
Do you... live in New York? I don't mean to be rude but you say "our" culture
can't handle 25,000 high earning employees. 25,000 new high earners would be
utterly unnoticed in the sea of Wall St.-ers. Honestly I think it'd improve
the high-earner culture here if anything...

~~~
idbentley
I live in Brooklyn.

In lower Manhattan they might be unnoticed, but that is not New York. Queens,
is not Manhattan. You're talking about a major gentrification event. Can't
handle is bad wording, but it would seriously exacerbate the wealth
distribution problem here, which is already the worst in the country.

