Now that Amazon has decided to build its new headquarters in New York and Virginia, which collectively offered the retail giant over $2 billion in tax credits, rebates and other incentives, New York governor Andrew Cuomo has finally admitted the obvious: New York sucks for business, while Texas is gold.
More generous offers than New York’s and Virginia’s were made to Amazon; as The New York Times reports, “Maryland and New Jersey each offered multibillion-dollar incentive packages that dwarfed the ones Amazon accepted.” New York offered Amazon $1.525 billion; Maryland offered $8.5 billion; Virginia offered an incentive package worth $573 million.
Cuomo opined that New York’s exorbitant taxes (its corporate income-tax rate is 6.5%; and it has high business and individual taxes), were the reason the state offered the funds to Amazon. He then admitted what all good businessmen know: “It’s not a level playing field to begin with. All things being equal, if we do nothing, they’re going to Texas.”
Amazon asserted that it wasn’t the subsidies that attracted it to New York, saying in an announcement that “attracting top talent was the leading driver” of its decision. Amazon said financial incentives were “one factor,” but not the primary factor in its decision. Michael Farren, an economist at the Mercatus Center, referring to Maryland and Virginia, echoed, “An additional $7.5 billion in subsidies wasn’t enough to get Amazon to move across the river. That just says that subsidies were never what mattered in the first place.”
As The Times noted, “New York has a history of offering generous incentive packages, including a 2007 deal for subsidized electricity to keep an Alcoa plant that was worth $5.6 billion over 30 years, according to Good Jobs First, which tracks corporate subsidies.”
Timothy J. Bartik, an economist for the Upjohn Institute, said, “New York’s following its usual practices. It hands out a lot of hefty incentives, a lot of long-term incentives.”
According to CNBC, Texas is the top state in the country for businesses; in the 12 years CNBC has ranked states, Texas has finished first four times. CNBC noted in July that one out of every seven jobs created in the United States in the 12 months prior was created in Texas. In the Standard and Poor’s Index, 39 companies hail from Texas.
As Texas governor Greg Abbott wrote in July:
When given the freedom to aspire, Texans risk their own capital and invest in themselves and others by opening businesses large and small. And success is contagious. New business formation in Texas is at a five-year high. Start-ups are growing here right alongside Fortune 500 companies and more than 2.6 million small businesses. It’s no surprise that Texas is ranked by CEOs as the best state for doing business, now for the 14th year in a row. As one Texas entrepreneur puts it: “If you like big ideas ... build your business in Texas.” … Texas remains focused on the formula for success: reforming taxes, removing regulatory barriers, encouraging participation in the sharing economy, improving our education system and securing Texans’ freedom — because liberty is the root of prosperity.