Today, as cities compete to lure multi-billion dollarcorporations woth tax breaks, its time to reflect on the true costs of these tax breaks and incentives.
Seth Sandronsky, a California-based investigative journalist, digs down and finds that public schools pay the bill.
“Public schools are losing. Private interests are winning. Here are the numbers. US public schools lost a total of $1.8 billion due to economic development tax incentives for corporations in 2017, according to a new report from Good Jobs First, a watchdog group in Washington, D.C. (goodjobsfirst.org/newmath).
“In this case, the term economic development conceals more than it reveals. At the end of the day, who wins and who loses when governments shift public tax dollars to corporate pockets comes into sharper focus with Good Jobs First unpacking the financial reports of 5,600 of America’s 13,500 independent public school districts across 28 states.
“Did somebody say the miracle of the marketplace? Well, government hands are all over this story, contrary to nonsense about the efficiency of market forces. The recent announcement of Amazon receiving billions of public tax dollars for its “HQ2” is a case in point.”
Diane Ravitch's blog 
Schools suffer when states or cities offer companies “tax abatements” to corporations. Abatements are a form of legalized bribery to entice companies to relocate or open in a particular region. The public schools have no say over the loss; yet they will be obliged to serve the new families that move to the area to work in the company. If a charter school competes for new students in the same area, it can be a double loss for public schools.
Cuomo is suddenly a supporter of recreational marijuana. I am sure he is smelling all the tax dollars that will flow from it. Maybe he hopes to offset the loss the state will have to absorb from the Amazon deal in Long Island City by legalizing marijuana.
I still don’t understand why NYC and other sites had to offer multi-billion dollar incentives to lure some of the wealthiest corporations in America.
The housing, schools, and public transportation they expect will be very costly.
Amazon decided to set up in Arlington VA, and the VA government offered very little in the way of incentives. When a firm is deciding on where to set up an operation, they consider many things.
Some states/municipalities offer incentives and tax breaks, in hopes that the revenue generated by the new industry, will offset the financial lures that have been offered.
New York City and State offered Amazon more than $3 billion in incentives. Amazon is moving into a semi-industrial area with poor subway services and limited housing and overcrowded schools. The city will have to spend a lot of money to provide for its new industry.
Arlington VA (and the entire commonwealth of VA) will have to spend a substantial sum to accommodate 25,000 more jobs. The state government obviously decided that accepting Amazon’s move to Arlington will be a net benefit.
I tend to believe that the combined governments of New York City, and NY state, decided that the relocation of so many high-paying jobs would also serve as a net benefit to the city/state.
Cities and states generally act to encourage economic growth, and then make the necessary decisions to implement.
Of course, there will be a strain to provide services for such an influx of population. Rents and property values in Northern VA are going to skyrocket.
Charles,
You certainly don’t know how much it will cost Arlington and NYC to meet the demands of Amazon. You don’t know whether the 25,000 jobs will be real or make believe. You don’t know whether they mean to hire locals or import their own staff. NYC has not begun to determine what it will cost to supply new schools, transportation and housing.
And plenty of articles published showing Amazon chose based on other factors. Hard to know precisely, but facts suggest fin incentives were a minor part of their analysis.
I read that both locations are in areas where Bezos has a home.
You certainly don’t know how much it will cost Arlington and NYC to meet the demands of Amazon.
-I do not know the exact dollar cost that the respective governments are going to bear, to facilitate these relocations. There will be costs incurred. Obviously, the cities have determined that the move will be a net benefit. Many other localities scrambled hard to get consideration for these two sub-headquarters, obviously they believed that a net benefit would occur, if they got them.
You don’t know whether the 25,000 jobs will be real or make believe.
-Amazon did not get to be the corporation it is, with “make believe” jobs. The jobs that will be performed at these two locations will be real.
You don’t know whether they mean to hire locals or import their own staff. NYC has not begun to determine what it will cost to supply new schools, transportation and housing.
-I have no idea about who will be hired for these positions. Northern VA/DC Metro already has nearly full employment. I would guess that there will be a mixture of transfers (from other Amazon locations), and local hires. Amazon will most likely, seek applicants, nationally. The universities here in Northern VA, are already gearing up to offer additional courses, to train local people for the new jobs.
I would venture to guess, that NYC and the state governments are already planning to deal with the infrastructure problems, and support systems, that this influx of new people will involve.
I do know the cost of the incentives, Charles.
$3 billion
That’s $3 billion no longer available to improve public services.
You said that there was no cost to Arlington. Lucky you.
Q I do know the cost of the incentives, Charles.
$3 billion
That’s $3 billion no longer available to improve public services.
You said that there was no cost to Arlington. Lucky you.
END Q
-This figure of $3 Billion dollars, is that the cost to New York City, or to Arlington, or both? How did you arrive at this figure? Cite your source.
The commonwealth of Virginia, and Arlington county VA, obviously offered a package, that was acceptable to Amazon. Amazon considered other factors, including the accessibility of two (2) major airports, and the rail/highway system in Northern VA. There is a very high number of college graduates, and advanced-degree holders in Metro WashDC. All of these factors influenced the Amazon decision to locate a sub-headquarters in Crystal City, VA.
The state and county are already spending on certain items like transportation. The Metro subway system is already doing the engineering studies to have additional station entrances/exits, to handle the increased passenger traffic. The local universities are gearing up to provide courses for individuals who will be seeking employment at Amazon.
When the company begin operations, and the payrolls start being spent, and the tax revenue begins to roll in, I am certain that the commonwealth, and Arlington county, will see a solid net return on the investment.
I never claimed that there would be no costs incurred by Arlington nor by the state of VA. There will be many costs, infrastructure, tax breaks, additional social services, public transportation, housing, expansion of water/sewer,etc. and on and on. Having a major corporation with 25,000 new jobs move here, will be an expensive proposition, no doubt.
Over 100 different localities attempted to get the Amazon sub-headquarters to move to their city. Arlington is indeed lucky.
The cost of luring Amazon to NYC and state was “more than $2 billion” in incentives and tax breaks, according to the New York Times. New York City will have to spend hundreds of millions, if not billions, to improve public services, such as transportation and schools. The schools in Long Island City are already overcrowded. If 25,000 people locate near the new headquarters, that is a lot of new schools. And the current subway service is terrible. This is a very expensive gift.
How can a charter school operating under such conditions be a “double loss”? If a non-public school opens in an area where there is an increase in school-age youth, the non-public school will receive the new students, and if there is public financial support, the support will go to the non-public school. The existing public schools are not “robbed”.
Fraud… here is fraud 21 trillion dollars worth
https://www.truthdig.com/articles/the-pentagon-cant-account-for-21-trillion/
$21 trillion that has gone unaccounted for at the Pentagon. That’s right—trillion with a T—an amount of money you can’t possibly come to terms with, so stop trying. Seriously, stop. It’s like trying to comprehend the age of the earth.
Anyway, the $21 trillion includes $6.5 trillion unaccounted for at the Pentagon in 2015 ALONE. When Lee Camp covered all this a few months ago, very few people were talking about it. David Degraw investigated it for his website (which has since been destroyed by hackers), and Mark Skidmore, the economist who discovered the unaccounted adjustments, co-authored a single Forbes article on the subject. And by “discovered,” I it is not that Skidmore found a dusty shoebox in Donald Rumsfeld’s desk underneath the standard pile of baby skeletons –he took a minute to look at the Defense Department’s own inspector general’s report. So really he just bothered to look at the thing that was designed for the public to look at.
Anyway, the Camp column went viral, as did the Forbes article, each garnering hundreds of thousands of views. Yet despite all that, still not a word from Congress, and not a word from the hacks at your mainstream media outlets. But then again, getting important news about the corruption of our military-industrial complex from the mainstream media would be like getting a philosophy lesson from a strip-club dancer (in that it would be most unexpected, and it’s not really why you’re there).
But just a few weeks ago, something significant happened. It took place in a quiet news dump during a Pentagon press conference that TRULY began like this: https://dod.defense.gov/News/Transcripts/Transcript-View/Article/1692090/press-gaggle-by-deputy-secretary-shanahan/
The cabal of the death merchants that run our nation care very deeply about what our people do learn, and what they do NOT know. They own the media and the own the legislature and they will soon own the only road to income equality..the schools.
Great post, Susan!
Your first link is a hair-raiser. I found another good one [when googling “$21 trillion pentagon”] here: https://whowhatwhy.org/2018/12/17/the-real-story-of-the-pentagons-21-trillion-con-game/ The gist: what DoD has really been doing is steadily increasing in size (despite far less engagement), & paying for it by [illegally] “plugging” ledger entries [entering fictitious info] and “nippering” appropriations [sliding unspent appropriations into separate categories to support future spending]– since forever. As revealed in the 2015 “audit”* finally forthcoming after over 25yrs foot-dragging since Congress ordered DoD [in 2003!] to submit to an independent audit.
*as one insider predicted, no audit would be possible; results would be a list of thousands of unauditable entries
The interviewee, investigative journalist Dave Lindorff, notes that taxpayers have plenty to worry about– Pentagon budget is an inauditable fiction, so must cover plenty of waste & corruption– but need not worry that $21trillion extra was actually spent/ is missing:
“The truth is $21 trillion over that period of time [1998-2015] works out to about $1.5 trillion per year… That would be an incredible amount of deficit spending into the economy every year. We’d have a lot of inflation, but we wouldn’t have any recessions. There’s no sign of that money flowing into the economy. It’s not real money.”
Correcyion: Congress ordered various depts incl DoD to produce independent audits in the ’80’s; Defense was the last to ‘comply’ [sort-of] on 2015.
“Roughly speaking, the average state’s incentives might tip the location of six percent of the firms given incentives; the other 94 percent is economic activity that would have occurred anyway. Incentives have a relatively low batting average,” says biz researcher T Bartik, quoted in a 2017 Rochester NY Dem&Chron article [ https://www.democratandchronicle.com/story/news/2017/06/07/tax-breaks-new-business-new-york/101565388/ ]
He notes that altho NYS biz sector is 3rd-biggest (after TX & CA), they spend the 2nd-highest % of econ on biz incentives, trailing only NM. I can’t find the source for that ranking, but “trailing NM” suggests NYS is missing the boat here. (I shuddered throughout 2017 each time they flashed that ad about across-the-board tax cuts for new/ relocating biz, knowing biz savings would likely come right out of pubsch distr budgets.)
To be fair, other articles suggest this is a new field of research, noting lack of info & transparency that would clarify return on investment. Incentives have tripled in 15 yrs, but data on results is scarce. 5 yrs ago, CSG Natl Wkg Group on Econ Devpt reported, “State leaders simply don’t have enough reliable information to make informed decisions regarding how, when or even if certain business incentives should be used. Given the scarcity of state resources and the significant amount of money being spent on incentives, this is a a huge concern”… If I were a state legislator, I’d proceed w/caution; red flags are in place