Amazon HQ2 Will Cost Taxpayers at Least $4.6 Billion, More Than Twice What the Company Claimed, New Study Shows

 

By David Dayen and Rachel M. Cohen

Amazon’s announcement this week that it will open its new headquarters in New York City and northern Virginia came with the mind-boggling revelation that the corporate giant will rake in $2.1 billion in local government subsidies. But an analysis by the nation’s leading tracker of corporate subsidies finds that the government handouts will actually amount to at least $4.6 billion.

But even that figure, which accounts for state and local perks, doesn’t take into account a gift that Amazon will also enjoy from the federal government, a testament to the old adage that in Washington, bad ideas never die.

The Amazon location in Long Island City, in the New York City borough of Queens, is situated in a federal opportunity zone, a Jack Kemp-era concept resurrected in the 2017 tax law that, in theory, is supposed to bring money into poverty-stricken areas. The northern Virginia site, in the Arlington neighborhood of Crystal City (which developers and local officials have rebranded as “National Landing”), is not directly in an opportunity zone but is virtually surrounded by other geographic areas that are.

Under the tax overhaul signed by President Donald Trump last year, investors in opportunity zones can defer payments of capital gains taxes until 2026, and if they hold them for seven years, they can exclude 15 percent of the gains from taxation. If investors carry the opportunity zone investment for 10 years, they eliminate taxes on future appreciation entirely. Investment managers have been salivating at the chance to take advantage of opportunity zones. Special funds have been built to cater to people holding unrealized capital gains — such as Amazon employees with large holdings of company stock.

Not only could Amazon benefit from the opportunity zone directly in Long Island City, but Virginia employees with unrealized capital gains will have an escape valve next door to an Amazon campus. “People who happen to be sitting around with long-term capital gains may now have vehicles for hiding them,” said Greg LeRoy of Good Jobs First, a nonprofit that scrutinizes economic development incentive deals between cities and companies, and has analyzed the Amazon deal.

Amazon did not respond to a request for comment on the opportunity zone or the Good Jobs First estimate of the subsidies it could receive.

Click here for the full article. 

Source: The Intercept_