Amazon Cancels Expansion in New York


Last week Amazon, the Seattle-based online eCommerce giant, announced that it had cancelled plans to expand its corporate operations to Long Island City, New York in a stunning about-face after the yearlong beauty pageant-like selection process that considered over 200 locations across the county. 

The company cited the reason being over growing opposition to the $3 billion tax incentive package offered to it by the State and City of New York. The plan promised these incentives over 25 years provided Amazon invested $2.5 in building its new “HQ2” campus. The project was intended to create another hub where the company could recruit more talent, which has been difficult for large companies like Amazon due to intense competition in the tight labor market conditions. 

A poll of New Yorkers before the announcement reported that over 70% of polled residents supported the deal, including New York City mayor Bill de Blasio and New York state governor Andrew Cuomo, both Democrats. Neither specified if they were notified in advance of the announcement. Aides to both men who met with Amazon executives responsible for the expansion planning the morning of the announcement at 8 a.m. said that there was no indication of Amazon pulling out of the deal. By noon, the announcement of the reversal was made public. 

The issue of corporate tax incentives has deeply divided Democrats in the state. Those in favor cite the incentives as giving the state a chance to compete with states that have much lower or no income taxes at all like Tennessee, Texas, and Florida. Those in opposition say that the tax incentives are just corporate welfare for big business at the expense of everyone else. 

In a statement released by Mr. Cuomo after the announcement, he criticized the actions of the state’s more progressive lawmakers for pushing out Amazon, saying that “The New York State Senate has done tremendous damage. They should be held accountable for this lost economic opportunity.”

Other notable politicians from the state heralded Amazon’s decision as a push against corporate greed. In a tweet shortly after the announcement, U.S. Rep. Alexandria Ocasio-Cortez tweeted “Anything is possible: today was the day a group of dedicated, everyday New Yorkers & their neighbors defeated Amazon’s corporate greed, its worker exploitation, and the power of the richest man in the world.”

Amazon had reportedly been reconsidering the planned expansion after months of hearings and opposition from labor unions, community organizers, and activist groups. Many found fault with Amazon’s anti-union stance and felt cheated by the tax deal. 

New York State’s corporate tax rate of 6.5% puts it towards the lower end of the corporate tax rate spectrum when compared to other states, but New York City’s own corporate tax rate of 8.85% and the state’s 8.82% personal income tax rate are bruising for most companies, making the state generally unattractive, especially for startups and small businesses. According to the Tax Foundation, New York hold’s the title for largest tax burden per individual at 12.7%, which has helped encourage a steady outflow of wealthy and well-educated people from the state. According to the U.S. Census Bureau, New York’s net domestic immigration flow was -9.6% in 2017, which was the fourth worst overall.