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HQ2's Amazon deal with New York may be at risk – and this may mean that the state and the city lose $ 27.5 billion in tax revenues (AMZN)



  • The Amazon announced its decision to form part of its second headquarters, also known as HQ2, in the Queens borough of New York City.
  • Some New York lawmakers have complained that HQ2 does not cost nearly $ 3 billion in incentives promised by the state and the city on Amazon.
  • According to a study commissioned by the office of the New York Gov. Andrew Cuomo, the Amazon presence in New York City will generate a $ 27.5 billion tax revenue for the state and city, more than incentives
  • But there are some caveats in the rosy picture painted by study .

The huge transfer of the Amazon to New York City is suddenly looking like this at risk, and billions of dollars of tax revenue may be in balance. [ReportedlywithWashingtonPostangpushbackmulasaNewYorkCityatgreatesthealthyappealedAmazoninnamedownheartheatheartheathethreeQueensborough

One of the biggest problems with lawmakers opposed to development is nearly $ 3 billion in tax incentives offered by the city and state on the Amazon.

On the other hand, New York Gov. Andrew Cuomo and New York City Mayor Bill de Blasio are enthusiastic supporters of HQ2 because this project expresses, will generate more tax revenue than the government's incentives, as well as increased growth of the economy.

RELATIONS: New York's opposition to the Amazon (WARNING: The Gallery contains explicit language)

18 PHOTOS

Transition on the Amazon in New York (Gallery contains explicit language )

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Demonstrators have signs during protests against the Amazon outside the City Hall in New York, US Wednesday, January 30, 2019. The New York city council holds a hearing today to discuss tax incentives behind Amazon's HQ2 deal and its potential impact on the city. Photographer: Sangsuk Sylvia Kang / Bloomberg by Getty Images

George Miranda, vice president of the International Brotherhood of Teamsters, on the left, and Stuart Appelbaum, president of the Retail Department Store Union Union (RWDU), speaks during protests against the Amazon outside the City Hall in New York, US, on Wednesday, January 30, 2019. The New York city council holds a hearing today to discuss tax incentives behind the HQ2 deal of Amazon and its possible impact on the city. The photographer: Sangsuk Sylvia Kang / Bloomberg by Getty Images

Stuart Appelbaum, Union Retail (RWDU) of the Retail Wholesale Department Store (RWDU), speaks at a protest against the Amazon outside the City Hall at New York, US, on Wednesday, January 30, 2019. New York city council holds a hearing today to discuss tax incentives behind Amazon's HQ2 deal and its possible impact on the city. Photographer: Sangsuk Sylvia Kang / Bloomberg by Getty Images

NEW YORK, NY – JANUARY 30: The New York city council has a second hearing asking the city and state agreement that gave the Amazon three billion dollars to transfer a second headquarters to Long Island City to Queens. City council members criticized Amazon for anti-union policies and suspected cooperation with immigration authorities. (Photo by Andrew Lichtenstein / Corbis via Getty Images)

NEW YORK, NY – JANUARY 30: The New York city council has a second hearing asking the state and state of affairs that gave the Amazon three billion dollars move the second headquarters to Long Island City to Queens. City council members criticized Amazon for anti-union policies and suspected cooperation with immigration authorities. (Photo by Andrew Lichtenstein / Corbis via Getty Images)

NEW YORK, NY – JANUARY 30: The New York city council has a second hearing asking the city and state agreement that gave the Amazon three billion dollars move the second headquarters to Long Island City to Queens. City council members criticized Amazon for anti-union policies and suspected cooperation with immigration authorities. (Photo by Andrew Lichtenstein / Corbis via Getty Images)

NEW YORK, NY – JANUARY 30: The New York city council has a second hearing asking the city and state agreement that gave the Amazon three billion dollars move the second headquarters to Long Island City to Queens. City council members criticized Amazon for anti-union policies and suspected cooperation with immigration authorities. (Photo by Andrew Lichtenstein / Corbis via Getty Images)

NEW YORK, NY – JANUARY 30: The New York city council holds a second hearing asking the city and state agreement that gave the Amazon three billion dollars to move the second headquarters to Long Island City to Queens. City council members criticized Amazon for anti-union policies and suspected cooperation with immigration authorities. (Photo by Andrew Lichtenstein / Corbis by Getty Images)

NEW YORK, NY – JANUARY 30: Protests rally against Amazon and company plans to move their second headquarters to Long Island City neighbors of Queens, at New York City Hall, January 30, 2019 in New York City. Some members of the Queens community and activists have said that moving to Queens in Queens is increasingly growing in neighborhoods and increasingly emphasis on a struggling infrastructure system. (Photo by Drew Angerer / Getty Images)

NEW YORK, NY – JANUARY 30: Protests rally against Amazon and company plans to move their second headquarters to Long Island City neighbors Queens, to New York City Hall, January 30, 2019 in New York City. Some members of the Queens community and activists have said that moving to Queens in Queens is increasingly growing in neighborhoods and increasingly emphasis on a struggling infrastructure system. (Photo by Drew Angerer / Getty Images)

NEW YORK, NY – JANUARY 30: Protests rally against Amazon and company plans to move their second headquarters to Long Island City neighbors Queens, to New York City Hall, January 30, 2019 in New York City. Some members of the Queens community and activists have said that moving to Queens in Queens is increasingly growing in neighborhoods and increasingly emphasis on a struggling infrastructure system. (Photo by Drew Angerer / Getty Images)

Protesters gathered at Lexington Ave, New York, US, on December 19, 2018, who said "No" in the decision of Amazon "HQ2".
Organizers in northern Virginia, Nashville, and New York are planning to protest Amazon's expansion in these week's meetings and call for a community input process that is significantly missing. (Photo by Karla Ann Cote / NurPhoto by Getty Images)

Protesters gathered at Lexington Ave, New York, US, on December 19, 2018, to say "No" to the decision of Amazon "HQ2".
Organizers in northern Virginia, Nashville, and New York are planning to protest Amazon's expansion in these week's meetings and call for a community input process that is significantly missing. Protestants gathered at Lexington Ave, New York, US, on December 19, 2018, who said "No" to Amazon's decision "HQ2".
Organizers in northern Virginia, Nashville, and New York are planning to protest Amazon's expansion in these week's meetings and call for a community input process that is significantly missing. (Photo by Karla Ann Cote / NurPhoto via Getty Images)

Protestants gathered at Lexington Ave, New York, US, on December 19, 2018, who said "No" to the decision of the Amazon "HQ2".
Organizers in northern Virginia, Nashville, and New York are planning to protest Amazon's expansion in these week's meetings and call for a community input process that is significantly missing. (Photo by Karla Ann Cote / NurPhoto via Getty Images)

NEW YORK, NY – DECEMBER 12: Activists, New York City politicians, and union members have a press conference on City Hall steps declare their opposition to a tax break deal given to Amazon, on December 12, 2018 in New York City. The mayor and governor of New York offered Amazon significant economic incentives to build a new location in Long Island City, Queens. (Photo by Andrew Lichtenstein / Corbis via Getty Images)

DOWNTOWN MANHATTAN, NEW YORK, UNITED STATES – 2018/11/30: CUNY's students, staff and allies won a rally outside Siebert Cisneros Shank & Co. in downtown Manhattan, The CUNYs Board of Trustees chair Bill Thompson for endorsement on Amazon HQ2 deals. Students called on Bill Thompson to withdraw his support for the Amazon deal right away and instead support for the $ 2.7 billion investment promised to the company to invest in the CUNY university system and its students. (Photo by Erik McGregor / Pacific Press / LightRocket via Getty Images)

DOWNTOWN MANHATTAN, NEW YORK, UNITED STATES – 2018/11/30: CUNY students, staff and allies performed outside Siebert Cisneros Shank & Co. in downtown Manhattan, protects CUNYs Board of Trustees chair Bill Thompson for endorsement of the deal on Amazon HQ2. Students called on Bill Thompson to withdraw his support for the Amazon deal right away and instead support for the $ 2.7 billion investment promised to the company to invest in the CUNY university system and its students. (Photo by Erik McGregor / Pacific Press / LightRocket by Getty Images)




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In fact, Cuomo's office said the HQ2 project would bring $ 27.5 billion new tax profits for 25 years on two economic impact studies, one commissioned by the governor and another through the city. It will be better than the amount of incentives provided on Amazon. For that amount, $ 14 billion in tax revenue goes to the state of New York and $ 13.5 billion may go to New York City, according to Cuomo's office.

Due to the volume of revenue, Cuomo cites the fact that Amazon's investment will bring $ 9 in tax revenue for every $ 1 of revenue that has been forgiven due to incentives.

" Amazon, through our current tax structure, can produce about $ 1 billion a year in new revenue," Cuomo wrote on an opponent defending the HQ2 decision. "Our proposal is being offered, when and if revenues are realized, the government will reduce their $ 1 billion in payments by about $ 100 million for the net in New York to about $ 900 million New York $ 900 million. "

But, based on the study, benefits may not be as good as what Cuomo did. Inflation will have a bite on the value of future tax dollars built by HQ2. Put another way, $ 1 in tax revenue for 25 years would not be worth $ 1 in 2019.

Since most tax revenues are realized later on the 25- year-frame report, the New York state report estimates that HQ2 will only bring under $ 9 billion in state tax revenue in 2019 dollars compared to the $ 1.4 billion promised state tax incentives. Thus, the report said, "the cost benefit ratio is 6.3," less than Cuomo promised 9: 1.

Read more: evidence of rising Amazon New York The York HQ2 deal is in trouble

Study critics also say estimates are based on the idea that Amazon will bring 40,000 jobs for HQ2 within the 15 years. Instead, Amazon divides its second headquarters between Northern Virginia and New York, so only 25,000 jobs will come to Big Apple for the first 10 years.

The company also said that an additional 15,000 may arrive in Queens for five years

In addition to modeling issues, some experts point out that the study does not consider alternatives for in the area where Amazon puts the HQ2, and recent studies show that investing So far, local businesses can be more economical than reducing new corporations.

Furthermore, the study does not take into account the fact that the rise of workers will have the responsibility for the city beyond the incentives, such as increasing waste collection and education costs. Critics also point out other extras that may be more attractive to New York City residents.

If incentives cost these costs will be the central part of the debate that goes on, but Amazon can not wait for lawmakers to dispel the complexities of profit benefits. According to the Washington Post, the Amazon may decide soon as to whether or not New York City will invest.

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