Remember back when states and cities were prostrating themselves before Amazon in hopes of landing a new headquarters? Lots of people, not all of them Republicans, castigated Alexandria Ocasio-Cortez and other anti-corporatists for passing on the promise of jobs in exchange for multi-billions in tax breaks. Those who were against the giveaway cited all sorts of practical reasons for rejecting it, but let’s keep it simple — one of the world’s richest corporations (one that would never have survived infancy if it hadn’t stiffed the individual states on several billion dollars in sales taxes) didn’t need the public paying for its headquarters.
Guess who was right?
Here’s a hint: Amazon announced it has leased 335,000 square feet of existing office space in the Hudson Yards complex on the west side of Midtown Manhattan, enough for more than 1,500 employees. Jeff Bezos will have to pay for his own helipad, and Long Island City won’t be transformed beyond recognition.
AOC’s critics also decried the supposed message their rejection of Amazon sent to the wider business world — New York City was hostile to business in general.
Wrong again. That same Bloomberg article linked above states that Facebook announced that it was leasing more than 1.5 million square feet at Hudson Yards last month, while Google has kicked off a major expansion in Manhattan.
The lesson: Corporations don’t base these decisions on who promises to tax them the least. They make these decisions based on considerations like geography and the qualify of the work force, then romance politicians in the targeted cities to see how much they can get out of them.
Why do politicians play along? It’s not stupidity. Ask yourself this: What gives a politician better PR — a company coming to town of its own volition, or a company coming to town because said politician was so good at wooing it?
By allowing politicians to give away taxpayer money at their discretion, we are turning them into kingmakers. There’s risk involved — Bloom and Fisker were Jack Markell’s undoing — but in normal economic times these misses, like faulty predictions, swirl down the memory hole.
It’s understandable that a backwater like downstate Delaware hands out such tax breaks — the geography of transportation has always hampered industrial development there, so lures are needed. But New York City is a desirable enough corporate destination that it shouldn’t prostitute itself to attract businesses that already have lots of compelling reasons to locate there.
In short, Alexandria Ocasio-Cortez and progressives were right and the corporate-humping wing of the party was wrong. Again.