Subsidy Sheet: Bezos moving on, but millions in NY subsidies here to stay

     

NY State and Local Governments Give $8 to $10 Billion a Year In Corporate Subsidies

Gov’s Commission On Tax Fairness: Corporate Subsidies a Waste of Taxpayer Funds
“No conclusive evidence from research conducted since the mid-1950s shows business tax incentives have an impact on net economic gains to states above that attained absent the incentives… Business tax incentives violate principles of good tax policy and tenets of good budgeting.”

-Governor Cuomo’s Tax Reform and Fairness Commission (McCall/Solomon 2013 report)

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Jeff Bezos is moving on, but millions in NY subsidies means Amazon is here to stay
When Amazon decided not to build a new headquarters in Queens, many thought the war had been won: A trillion-dollar company would not receive several billion dollars in subsidies from New York State and NYC.

But Amazon was already receiving business subsidies before the HQ2 decision and will continue to for the foreseeable future. Here are just some of them:

  • $8.5M through the Excelsior Jobs program, which included a commitment to produce 550 new jobs.
  • $18M in tax incentives for the state’s first Amazon fulfillment center in Staten Island, which included a commitment for 2,250 new jobs and 886 retained in New York.
  • On Long Island, Amazon may receive $3.3M for a warehouse in Nassau County and $2.3M for a warehouse in Suffolk.

These may all seem small potatoes, but they point to a larger problem: A $1.7 trillion company is taking millions that would otherwise go to public services whose funds have been slammed by COVID-19. And new leadership is unlikely to change Amazon’s approach, as Bezos has apparently been grooming new Amazon CEO Andy Jassy as a successor for years.

Plug Power also considering Samsung’s potential semiconductor site in Genesee Co.
Genesee County appears to be a popular place to get corporate subsidies – in addition to Samsung, Plug Power is now considering building a $264M green hydrogen plant at the same business park in the town of Alabama, New York.

According to Democrat and Chronicle, if the project goes through, Plug Power may receive a host of subsidies and other economic development assistance, including:

  • $1.5 million from the New York Power Authority. The Western New York Power Proceeds Allocation Board, which reports to NYPA, has already recommended funding for the project.
  • $2 million from Empire State Development.
  • “A package of sales and tax breaks through the Genesee County Economic Development Center.”

In the Journal News, Mario Marroquin has a great rundown of why a Samsung plant could receive hundreds of millions of dollars in local, state, and federal subsidies: $1.6B was granted to GlobalFoundries in Malta, NY in 2006, and Empire State Development provided $500M to Cree for its Utica plant in 2019. He notes a long-overlooked fact: Under Governor Cuomo, New York grants many times more incentives than most other states – and likely will for a long time.

New York may lose even more tax revenue to real estate Opportunity Zones
More Opportunity Zone investments are always bad news for New York’s tax base: A recent report found that the Zones received an additional $3B from September to December 2020.

In 2019, Citizens Budget Commission estimated that New York is losing up to $63M in NYS taxes and $31M in NYC taxes from the Zones. However, these numbers are likely to go up, as Opportunity Zones’ investment deadline has been repeatedly pushed back by the Internal Revenue Service, supposedly due to the pandemic.

New York stands to lose a great deal from Opportunity Zones, as the state has more capital gains income than most other states, and investors receive a tax break when investing capital gains in Opportunity Zones anywhere in the country. This means that NY effectively subsidizes investments in other statesthrough the program.

Other subsidy news

  • Governor Cuomo announced an additional $2M in incentives for manufacturers to produce COVID-19 supplies. The Governor’s website said that $20M has been spent to date, creating or retaining 3,500 jobs, but there is not yet any database to verify these claims.

What we’re reading

If you got this from a friend, sign up here. Subsidy Sheet is written by Tom Speaker, Policy Analyst at Reinvent Albany. Please send questions and tips to tom [at] reinventalbany.org. We look forward to hearing from you!