$7 billion to bring Amazon to Newark. Its not a deal I would want to see. What do you think?

I don't think Amazon will make this decision entirely on taxes, and to the extent it does depend on taxes, I think what matters to Amazon isn't the size of the tax incentive package itself, but what leftover taxes it still has to pay.

Since NJ's taxes are the country's highest (according to the Tax Foundation), any package that NJ offers is going to have to be very high just for us to be competitive. 

Most other cities and states could not make a $7 billion offer even if they wanted to.

Let's look at Boston and Massachusetts, which isn't even the lowest-tax competitor here.

Newark's property tax rate is over 3%. Boston's is 1.2%. 

Newark has a 1% wage tax (nominally paid by the employer). Boston doesn't have an equivalent.

NJ's personal income taxes on income $40,000-$75,000+ a year are 5.53%.  NJ's income tax is 6.37% for income between $75,000-$500,000.  It is 8.97% for income above $500,000.  Amazon probably knows that after Phil Murphy is elected there will be at least a 10.75% income tax for income above $1 million.

Massachusetts' income tax is 5.1%. 

NJ's sales tax is 6.875% (it is set to drop). Massachusetts' is 6.25%.

NJ's taxes are so extreme that it has to offer a bigger package than other states just to be get to the same starting line.

apple44 said:

Of course the challenge is this situation is a competition with many other cities. Perhaps $7B is too high relative to other offers, perhaps it is far too low. I thought it was odd to reveal the number before the actual application deadline, which is tomorrow. Why show your hand?

This article from the Trib makes the case that Amazon's benefits are greater than whatever tax incentives a city & state have to offer.

For the right city, winning Amazon's second headquarters could help it attain the rarefied status of “tech hub,” with the prospect of highly skilled, well-paid workers by the thousands spending freely, upgrading a city's urban core and fueling job growth beyond Amazon itself.

Other companies would likely move, over time, to that city, including employers that partner with Amazon in such cutting-edge fields as virtual reality and artificial intelligence. Some Amazon employees would also likely leave the company to launch their own startups, thereby producing additional job growth.

In theory at least, those trends could help attract more highly educated residents in a virtuous cycle that helps increase salaries and home values.

“This definitely beats other deals that I have seen, to be sure,” said Enrico Moretti, an economist at the University of California, Berkeley and author of “The New Geography of Jobs. “It would certainly increase the attractiveness of that city for other well-paying high-tech jobs.”

http://www.chicagotribune.com/business/ct-biz-amazon-cities-investment-20171018-story.html

apple44 said:

Of course the challenge is this situation is a competition with many other cities. Perhaps $7B is too high relative to other offers, perhaps it is far too low. I thought it was odd to reveal the number before the actual application deadline, which is tomorrow. Why show your hand?

I wonder if they feel they have virtually no shot to get Amazon to come here so they wanted to show the public their efforts.  If people are outraged about a 7 billion dollar tax break what would happen if they made this a 10 billion dollar package.  

this really is no different than when a city or state pours hundred of millions into  a stadium to keep a sports team.  Hard to say for sure if it is worth it but it happens.  

But can Newark top this?

https://www.fastcompany.com/40483002/nyc-is-going-amazon-orange-tonight-in-an-embarrassing-attempt-to-win-hq2

Newark in theory can beat NYC.  It has easy train, bus, and PATH access to the City.  It has an excellent internet infrastructure, and less expensive real estate.  They could join Prudential in having a major say in how development proceeds downtown.  

https://www.yahoo.com/finance/news/austin-texas-most-likely-amazon-183600468.html

Last month rumors came out that Amazon's executives favored Boston.

Amazon denied the rumors and said that all cities were on equal footing, but that could have just been an attempt to wring more tax givebacks from what was already Amazon's first choice city.

https://www.bloomberg.com/news/articles/2017-09-12/amazon-is-said-to-weigh-boston-in-search-for-second-headquarters

mikescott said:

this really is no different than when a city or state pours hundred of millions into  a stadium to keep a sports team.

Pouring money into vs. forgoing money out of.

DaveSchmidt said:

mikescott said:

this really is no different than when a city or state pours hundred of millions into  a stadium to keep a sports team.

Pouring money into vs. forgoing money out of.

All employees will make a living wage vs handful of millionaires and 2000 minimum wage part-timers

Other than that thing and your thing, really no different. 

Runner_Guy said:

This article from the Trib makes the case that Amazon's benefits are greater than whatever tax incentives a city & state have to offer.

For the right city, winning Amazon's second headquarters could help it attain the rarefied status of “tech hub,” with the prospect of highly skilled, well-paid workers by the thousands spending freely, upgrading a city's urban core and fueling job growth beyond Amazon itself.

Other companies would likely move, over time, to that city, including employers that partner with Amazon in such cutting-edge fields as virtual reality and artificial intelligence. Some Amazon employees would also likely leave the company to launch their own startups, thereby producing additional job growth.

In theory at least, those trends could help attract more highly educated residents in a virtuous cycle that helps increase salaries and home values.

“This definitely beats other deals that I have seen, to be sure,” said Enrico Moretti, an economist at the University of California, Berkeley and author of “The New Geography of Jobs. “It would certainly increase the attractiveness of that city for other well-paying high-tech jobs.”

http://www.chicagotribune.com/business/ct-biz-amazon-cities-investment-20171018-story.html

Jackson_Fusion said:

Runner_Guy said:

This article from the Trib makes the case that Amazon's benefits are greater than whatever tax incentives a city & state have to offer.

For the right city, winning Amazon's second headquarters could help it attain the rarefied status of “tech hub,” with the prospect of highly skilled, well-paid workers by the thousands spending freely, upgrading a city's urban core and fueling job growth beyond Amazon itself.

Other companies would likely move, over time, to that city, including employers that partner with Amazon in such cutting-edge fields as virtual reality and artificial intelligence. Some Amazon employees would also likely leave the company to launch their own startups, thereby producing additional job growth.

In theory at least, those trends could help attract more highly educated residents in a virtuous cycle that helps increase salaries and home values.

“This definitely beats other deals that I have seen, to be sure,” said Enrico Moretti, an economist at the University of California, Berkeley and author of “The New Geography of Jobs. “It would certainly increase the attractiveness of that city for other well-paying high-tech jobs.”

http://www.chicagotribune.com/business/ct-biz-amazon-cities-investment-20171018-story.html

a lefty oasis in a sea of red. Makes sense for them- culturally left without blue state upkeep cost.

Are you talking about Austin? (not what is quoted...)

TX may be red now, and the GOP desperately trying to keep it that way, but nearly all its cities (not just Austin) are 'blue'.  And, with ever-increasing Hispanic population, the trend is toward purple state-wide.

It's a great deal for Newark if the bulk of those 50,000 jobs go to locals. Amazon is known for bringing in talent. I'd like to see their plan for prioritizing jobs for locals, workplace training, local high school investment, etc to ensure that people from the area have a shot at these $100K jobs. Otherwise, what you'll see in Newark will resemble what's happened in other tech hub cities. Young, wealthy urbanites driving up the cost of housing and regentrifying existing neighborhoods.

Heck, just look at Hoboken or Jersey City.

Hahaha said:

It's a great deal for Newark if the bulk of those 50,000 jobs go to locals. Amazon is known for bringing in talent. I'd like to see their plan for prioritizing jobs for locals, workplace training, local high school investment, etc to ensure that people from the area have a shot at these $100K jobs. Otherwise, what you'll see in Newark will resemble what's happened in other tech hub cities. Young, wealthy urbanites driving up the cost of housing and regentrifying existing neighborhoods.



Heck, just look at Hoboken or Jersey City.

Ras Baraka launched an initiative in June to have companies located in Newark hire local and buy local. My guess is that Baraka will include this as part of its negotiations with Amazon, if it gets that far. This news story appeared in June, before Amazon announced in September that it was going to have a second headquarters. Even if Newark doesn't get Amazon, it's a great initiative and has a lot of support.

"Baraka has convened a new coalition of public, nonprofit and private employers with the goals of hiring 2,020 local residents by 2020 and increasing the percentage of goods and services that local employers buy from local businesses to 10 percent. Colleges, hospitals and several national companies headquartered in Newark -- including Prudential Financial, Audible and Panasonic -- have committed to the initiative.

"We need some kind of local strategy to fight unemployment and poverty in a very systemic way," Baraka says, "and I think this is a step for us to get that done."

http://www.governing.com/topics/mgmt/gov-newark-mayor-ras-barakas-local-economic-development.html 

Newark also adoped an inclusionary zoning ordinance this year which requires all residential developments of more than 30 units to set aside 20% of the units as affordable housing. 

http://www.nj.com/essex/index.ssf/2017/10/newark_approves_inclusionary_zoning_ordinance.html

Seems one powerful talking point which Newark has is proximity to research universities like Rutgers, NJIT, Columbia, NYU, Cornell Tech and Princeton (which Bezos attended) for talent and collaborations. Of course the challenge is that most metro areas have or are close to an impressive array of schools.

House values in MSO would soar. 

I don't think its a serious contender, but it'd be good for Newark, even if a lot of people are being imported. I can't see any way something like that doesn't create a lot of local jobs.

Who knows whether it would be a positive for Maplewood/South Orange? Property values (and taxes) would go through the roof here and in neighboring towns. There'd probably be a lot more development.

mem said:

House values in MSO would soar. 

And unfortunately, the trains would become more crowded.

wedjet said:

mem said:

House values in MSO would soar. 

And unfortunately, the trains would become more crowded.

Amazon could have a shuttle from SOMA to Newark.  Seriously. 

There could be a shuttle to the shuttle. 

wedjet said:

mem said:

House values in MSO would soar. 

And unfortunately, the trains would become more crowded.

Hoboken trains are not crowded and those are the ones that stop in Newark.  

Very few midtown direct trains in rush hour stop at newark.  A lot of trains from Montclair do stop at newark.  

Unfortunately, I think it will take more than what is on the table to get Amazon to newark.  

As for my stadium analogy, much of the money for yankee stadium did come in the form of tax breaks.  

mikescott said:

wedjet said:

mem said:

House values in MSO would soar. 

And unfortunately, the trains would become more crowded.

Hoboken trains are not crowded and those are the ones that stop in Newark.  

Very few midtown direct trains in rush hour stop at newark.  A lot of trains from Montclair do stop at newark.  

Unfortunately, I think it will take more than what is on the table to get Amazon to newark.  

As for my stadium analogy, much of the money for yankee stadium did come in the form of tax breaks.  

Most Penn Station trains also stop in Newark, but I think people going to Newark might gravitate to the less crowded trains since they would have a lot of choices.

wedjet said:

mem said:

House values in MSO would soar. 

And unfortunately, the trains would become more crowded.

this is why it's short-sighted for people to focus so much on taxes with regard to the attractiveness of a location.  Corporations like Amazon are also going to look at infrastructure and transportation before choosing a location.  Austin might look like a great choice on paper, and it's a terrific city.  But I've been there many times, and rush hour traffic is already pretty bad there without adding 50,000 more employees.  Same with Atlanta.  If NJT could ever get it's act together, Newark has a lot to offer with regard to transportation.  Employees wouldn't need to all travel through one hub.  It has access via both I-78 and I-280.  It has two different train lines leading into different train stations.  It has light rail, PATH and buses.  It's an easy commute from much of suburban Essex, Union, Middlesex and Morris Counties, as well as Hoboken, Jersey City, and NYC.

It's why we need to get our infrastructure act together, whether or not Amazon chooses Newark.  The potential for transport in and out of Newark exceeds that of most cities.  

mikescott said:

As for my stadium analogy, much of the money for yankee stadium did come in the form of tax breaks.  

At least Riverfront Stadium is going to be demolished. Newark and Essex County issued $36 million in bonds to construct the stadium. It was costing Newark and the county $2 million/year in debt costs.  The $23.5 million received from the developer will go to pay off the $18.3 in bonded debt and the surplus will be split between Newark and the county. 

cramer said:

mikescott said:

As for my stadium analogy, much of the money for yankee stadium did come in the form of tax breaks.  

At least Riverfront Stadium is going to be demolished. Newark and Essex County issued $36 million in bonds to construct the stadium. It was costing Newark and the county $2 million/year in debt costs.  The $23.5 million received from the developer will go to pay off the $18.3 in bonded debt and the surplus will be split between Newark and the county. 

I am not sure I am in favor of demolishing the stadium ---- If Newark ever does come back, a minor league team might reconsider the location.  I was always hoping SHU would consider using that stadium for their baseball teak.  

and somehow even if the debt is paid off, I do not think it will have an impact on my property tax bill.

unless the Mets and the Yankees waive their territorial rights, Newark will never get a AA or AAA team.  And if the team isn't at that level, it's unlikely to generate much interest among fans.  More than anything else, the level of play of the Newark Bears and the independent league they played in was what doomed them to failure.

mikescott said:

cramer said:

mikescott said:

As for my stadium analogy, much of the money for yankee stadium did come in the form of tax breaks.  

At least Riverfront Stadium is going to be demolished. Newark and Essex County issued $36 million in bonds to construct the stadium. It was costing Newark and the county $2 million/year in debt costs.  The $23.5 million received from the developer will go to pay off the $18.3 in bonded debt and the surplus will be split between Newark and the county. 

I am not sure I am in favor of demolishing the stadium ---- If Newark ever does come back, a minor league team might reconsider the location.  I was always hoping SHU would consider using that stadium for their baseball teak.  

and somehow even if the debt is paid off, I do not think it will have an impact on my property tax bill.

Princeton U. president wrote a letter to Bezos and another top Amazon exec, both Princeton engineering alumni, supporting an NJ bid. Probably not hugely meaningful, but a nice addition to the proposal. Also, it does not specify Newark.

https://www.princeton.edu/news/2017/10/18/eisgruber-describes-princeton-synergies-letter-amazon-leaders

I thought the yankees did waive their rights and it was the Mets who would not?  

I agree that has to happen and there would need to be pressure from the fans to make it happen.  

guess it does not matter now, but I liked having minor league baseball nearby and enjoyed going to the games.  

The Mets refused first, and then the Yankees returned the favor.   I'm a Mets fan, and I was disgusted by their action.

The City of Boston made its bid public today. No tax incentives offered up front. Look forward to future discussions based on the level of hiring and investment. 

Apparently Amazon will go through the proposals and come up with a short list. Boston has been considered a front-runner, if they don’t make the short list I guess we’ll know how Amazon really feels about those tax breaks.

http://www.wbur.org/bostonomix/2017/10/20/boston-amazon-bid