I’ve constantly seen the number $27 billion as the return New York City and New York state would receive over 20 years from Amazon’s proposed NYC second headquarters. While this number is constantly repeated in every story, none provide a breakdown of how this number is reached. An article in the Seattle Times gives strong indication that the $27 billion is a mirage. Let me grab a pencil and flip my cocktail napkin over for some quick calculations. (Don’t discount the cocktail napkin. It’s how Paul Ryan wrote his healthcare proposal in four days.)
The $27 billion over 20 years breaks down to $1.35 billion per year in tax revenues to NYC and NY. This is incredibly unlikely. According to the Seattle Times’ study of Amazon’s SEC filings, Amazon reported that it paid $957 million in taxes to governments WORLDWIDE in 2017. Does anyone believe that Amazon is willing to more than double its tax burden by building on one site in NYC, or is it likely that Amazon knows it will never approach the $1.35 billion per year claimed in the proposal? It’s been widely reported in the past week that Amazon showed an $11.2 billion profit in 2018 and paid no federal taxes. The Seattle Times’ review of Amazon’s SEC filings showed that in 2017 Amazon received a $137 million federal REFUND! Like most huge companies, Amazon is very good at not paying taxes. Why would its NYC second headquarters be different?
What about the income taxes paid by the 25,000 employees? I found the NYC and New York state tax rates for 2018. I used the single filer category. Based on an average wage of $100,000 per year for the 25,000 employees, a single filer would pay $3,751 in New York City income tax and $6,064 in New York state income tax, or a total of $9,815 in state and local income tax. That $9,815 times 25,000 employees yields $245,375,000. Nothing to sneeze at, but still $1.1 BILLION short of the projected annual $1.35 billion Amazon’s proposal claims to provide. At $245 million per year, it would take more than 12 years to recoup the proposed $3 billion subsidies.
I willingly acknowledge that these numbers are back of a napkin calculations, but I’ve done more work than nearly every news outlet in examining the $27 billion claim. No way in hell is Amazon willfully planning to more than double its worldwide tax payments by building in NYC. The only explanation is that Amazon knows the proposal numbers are phony. The employee income taxes don’t come close to making up the difference. The $27 billion is a mirage.
We’re seeing the same thing in Wisconsin with the Foxconn boondoggle. Ex governor Scott Walker’s gang put together a $4.2 billion package for Foxconn with Foxconn promising 13,000 jobs. Within months, Foxconn has scaled back their big manufacturing plant to an R&D facility that will require a fraction of those jobs. Meanwhile, the interstate highway that was completely rebuilt five years ago at a cost of tens of millions taxpayer dollars is being torn up and rebuilt at a cost of tens of millions more taxpayer dollars to accommodate a phantom 13,000 person workforce driving to work each day to the phantom Foxconn manufacturing plant. We’ve seen our shimmering mirage in Wisconsin. New Yorkers, that shimmering $27 billion in the distance is also a mirage.