Real estate investors who snapped up properties in Long Island City in the aftermath of Amazon’s decision to build half of its new second headquarters (HQ2) in New York are probably kicking themselves now that Amazon has abandoned its plans to build HQ2 there. With significant pressure having been placed on Amazon from local politicians who had largely been cut out of the decision-making process, and with negotiations with those politicians for construction plans looking likely to get bogged down with demands for hiring all-union labor, the company said so long to the Big Apple.
While Amazon said it will not reopen its HQ2 search, the company didn’t formally announce whether Arlington, VA, the other HQ2 site, would now receive the full allotment of HQ2 jobs. Both New York and Arlington were expected to receive 25,000 new jobs each with Amazon’s arrival, at an average salary of well over $100,000 apiece.
The frosty reception Amazon received from both politicians and local political activists highlights just how unfriendly the state of New York can be to businesses, even those with the clout of Amazon. New York Governor Andrew Cuomo bent over backwards to try to lure Amazon to the state, offering up to $3 billion in potential incentives such as tax credits and tax breaks to try to get Amazon to set up shop in New York. In return the state expected at least $27 billion in tax revenue from Amazon, quite the return on investment.
Typical of the local political reaction to Amazon was freshman New York Congressman Alexandria Ocasio-Cortez, who said, “I think it’s incredible. It shows that everyday Americans still have the power to organize and fight for their communities and they can have more say in this country than the richest man in the world.” Ocasio-Cortez took issue with the tax incentives offered to Amazon, stating that, “If we were willing to give away $3 billion for this deal, we could invest those $3 billion in our district, in ourselves, if we wanted to. We could hire out more teachers. We can fix our subways.”
Of course, this wasn’t money that the state has already that it was giving to Amazon. It would have meant a reduction in Amazon’s tax payments to the state, but the payoff would have been in the tax revenue brought by HQ2. Now that Amazon has pulled out the state will have neither that tax revenue nor $3 billion lying around to spend. Yet the economically illiterate who drove Amazon out of the city will continue to pat themselves on the back for their “victory” for a long time to come.