Article by @bencasselman of @nytimes on size of Amazon incentives. I spent some time last night going over numbers of NY and VA agreements, and have some estimates on size. nytimes.com/2018/11/13/bus…
Amazon NY incentives are about twice national average incentives. Amazon VA incentives are about one-third national average. Both are in line with these states' past practices. In contrast WI Foxconn offer was about 12 times national average, and 12 times its past offers.
In numbers: Present value of incentives as % of present value of wage bill of incented firm over 20 years: NY Amazon, 6.4%; VA Amazon, 1.0%; U.S. avg: 3.1%; Usual NY, 7.6%; Usual VA, 0.6%; Foxconn, 38.2%; Usual WI, 3.3%.
This translates my calculations in my 2017 incentives database into a percentage of wage bill, which is more intuitive to most people than the % of value-added that I use in that report. upjohn.org/research-highl…
But as % of present value of value-added over 20 years, which I think is slightly better way to gauge size, we have: NY Amazon, 2.9%; VA Amazon, 0.5%; U.S. avg: 1.4%; NY usual, 3.5%; VA usual, 0.3%; Foxconn 16.4%; Usual WI, 1.5%.
Both VA and NY incentives emphasize a wage subsidy for new jobs. VA actually uses a HIGHER % of the wage bill than NY, an average of 13.5% compared to 5.5%. But VA only applies incentives to each year's INCREMENT to wage bill, whereas NY incentives same jobs for up to 10 yrs.
Should say NY "incentivizes" same jobs for up to 10 years. In any event, this raises issue of design of incentives. Should you provide wage subsidy for new jobs for 10 years (NY), or only subsidize new jobs for 1 year (VA). It makes a big difference to dollar costs!
And it may make difference to business behavior. However, I would argue that the 10th year of the tax incentive has little effect on decision to add jobs. Even the 5th year probably has little effects. Effectively, NY's incentives are far more generous in long-term than VA's.
I should add that it also looksas if some other states' offers to Amazon were higher than NY's, although it is hard to be sure, as most states did not release details. But the bottom line is: Amazon did not choose highest incentive offers.
