AMAZON HQ2 WILL COST TAXPAYERS AT LEAST $4.6 BILLION, MORE THAN TWICE WHAT THE COMPANY CLAIMED, NEW STUDY SHOWS

AMAZON’S ANNOUNCEMENT THIS week that it will open its new headquarters in New York City and northern Virginia came with the mind-boggling revelation that the corporate giant will rake in $2.1 billion in local government subsidies. But an analysis by the nation’s leading tracker of corporate subsidies finds that the government handouts will actually amount to at least $4.6 billion.

But even that figure, which accounts for state and local perks, doesn’t take into account a gift that Amazon will also enjoy from the federal government, a testament to the old adage that in Washington, bad ideas never die.

The Amazon location in Long Island City, in the New York City borough of Queens, is situated in a federal opportunity zone, a Jack Kemp-era concept resurrected in the 2017 tax law that, in theory, is supposed to bring money into poverty-stricken areas. The northern Virginia site, in the Arlington neighborhood of Crystal City (which developers and local officials have rebranded as “National Landing”), is not directly in an opportunity zone but is virtually surrounded by other geographic areas that are.

Under the tax overhaul signed by President Donald Trump last year, investors in opportunity zones can defer payments of capital gains taxes until 2026, and if they hold them for seven years, they can exclude 15 percent of the gains from taxation. If investors carry the opportunity zone investment for 10 years, they eliminate taxes on future appreciation entirely. Investment managers have been salivating at the chance to take advantage of opportunity zones. Special funds have been built to cater to people holding unrealized capital gains — such as Amazon employees with large holdings of company stock.

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Amazon’s press release cited two New York state incentives, a $1.2 billion grant over the next decade from the Excelsior Program and a $325 million, 10-year grant from Empire State Development. But Amazon did not quantify proceeds from two other city incentives, the Industrial & Commercial Abatement Program, or ICAP, and the Relocation and Employment Assistance Program, or REAP.

ICAP gives a partial tax abatement for 25 years, and based on the expected $3.6 billion campus in Long Island City, Good Jobs First estimates that value at $386 million. REAP, a per-employee tax credit of $3,000 per year for 12 years, comes out to $897 million if Amazon meets its projection of hiring 25,000 employees.

Those estimates, combined with what Amazon already cited for the Long Island City location, brings the total to $2.808 billion. That results in a cost per job of $112,000, far more than the $48,000 per job Amazon claimed they would get in the Long Island City deal.

The cities that give Amazon these deals should say that it comes with strings attached. A living wage that is in line with what costs of living are as well as full time work and benefits. Why should citizens have to pay for Amazon employee's government funded programs? If not then Amazon should have to pay for those programs.