Home > Uncategorized > Something Positive Emerges from the Ashes of the Amazon Debacle: Public Awareness of Tax Breaks

Something Positive Emerges from the Ashes of the Amazon Debacle: Public Awareness of Tax Breaks

March 9, 2019

The NYTimes today featured an article by Matthew Haug describing the tax breaks developers received in the construction of Hudson Yards, an ambitious project that involved the construction of several multi-millions dollar office towers, infrastructure upgrades, and parks and a new school on the West Side of Manhattan. The article’s title, “Amazon’s Tax Breaks and Incentives Were Big. Hudson Yards’ Were Bigger” seemed to implicitly accuse those who supported Hudson Yards but opposed Amazon as hypocrites. But from my perspective, the article did something more important than pointing out hypocrisy: it pointed out that not all tax credits are money grabs by a singular billionaire, that not all tax credits have an adverse impact on nearby neighborhoods, and ALL tax credits need to be examined in the sunshine before they are agreed upon by politicians.

The Hudson Yards project DID make several billionaires even more wealthy… but since government cannot directly provide capital for major projects like Hudson Yards (or Amazon for that matter), some venture capital is required and that venture capital requires a high rate of return since, in some cases, the venture capitalists make bad decisions by investing in projects that do not pan out at all. But unlike the Amazon project— which benefitted one corporation that has a deserved reputation for undercutting wages, displacing local small businesses, and rewarding shareholders with the profits made on the backs of overworked employees and underfunded local governments— Hudson Yards engaged multiple businesses most of whom will receive tax breaks contingent on the creation of new jobs. Also unlike the Amazon project, Hudson Yards was coordinated and devised in concert with the local government. Finally, Hudson Yards was taking an area of the city that the Times described as:

…a neighborhood that included a stubby collection of brick warehouses, factories and tenements built when the Hudson River docks were busy. In the middle was an unsightly rail yard.

Hudson Yards supporters believe the development, which included an extension of the No. 7 subway extension, parks and other improvements, will make the Far West Side an overall better neighborhood. And as for critics of economic development projects like the Amazon one, the Times concludes its article with this:

Councilman Brad Lander of Brooklyn, a Democrat who is a founder of the Council’s Progressive Caucus, said it was smart to expand the No. 7 subway and create parks on the West Side.

But tax breaks for specific companies are a different story, said Mr. Lander, who was an opponent of the Amazon deal.

We’re giving away tax breaks without paying close attention to what’s a good deal or not a good deal,” he said.

If the failed Amazon deal compels newspapers and politicians across the country to pay closer attention to what’s a good deal or not a good deal, then some good will come out of this debacle. Who knows, maybe voters will want to provide more funds to the government so that they can upgrade infrastructure on their own as a means of luring business. It’s just possible that good roads, high quality public services, beautiful parks, and good schools might entice businesses to locate in a city or region more so that cold cash.
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