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Editorial: Don’t dump incentives for luring business

Editorial: Don’t dump incentives for luring business

State would be putting itself at an unfair advantage by refusing to offer tax breaks in the competition for business with other states
Editorial: Don’t dump incentives for luring business
Protests against Amazon's second headquarters took place at an Amazon store in New York, Nov. 26.
Photographer: Jeenah Moon/The New York Times

There’s no question that New York government officials totally bungled their attempt to lure Amazon’s regional headquarters here, along with its 25,000 well-paying jobs and billions in taxes.

Some have since blamed the state’s failure on the lottery-like competition staged by Amazon, which pitted states and cities around the country against one another to see which one could offer the company the most attractive package of tax breaks, grants and regulatory shortcuts.

But while forcing states to compete against one another probably isn’t the best way for states to lure businesses, that’s the way it is.

And New York would be foolish to deliberately take itself out of the competition by making rules against participating.

A new bill (A5249/S3061) being considered in Albany would commit New York to joining a multi-state compact in which participating states agree not to provide any company-specific subsidies for businesses located within individual states or for the purpose of luring outside companies to their respective states.

The idea is that if states all agree not to offer tax incentives, then the companies couldn’t pit them against one other.

It sounds good in theory. But as usual, there are a problems.

First of all, for it to work, all 50 states would have to join in, not just a handful.

Otherwise, the states that are in the compact would be putting themselves at a disadvantage in the competition for business against other states that continue to offer incentives.

Amazon was offered better incentive packages from other states, but selected Long Island City because of its proximity to the New York City metro area, airports and a large pool of educated applicants.

Generous tax breaks might not have been the only factor in the company’s decision to locate here. And certainly New York hasn’t managed its economic incentive program wisely or effectively.  

But if a tax break could be the deciding factor in luring a big company or having it take its jobs elsewhere, why give that up?

Finally, the tax breaks aren’t what killed the Amazon deal for New York. It was the secret deal that was negotiated without input or participation from unions, community leaders, citizens and local politicians. It was the unexpected backlash from those constituencies that ultimately contributed to Amazon pulling out.

Officials in Virginia, by contrast, involved all stakeholders in a very public process, allowing the state to address concerns such as tax breaks without job guarantees and state subsidies for housing and transportation.

If New York wants to better compete for business, it must make itself competitive in other areas by addressing its high taxes, high labor and energy costs, and oppressive regulatory environment.

Until then, it needs every advantage it can get, including tax incentives.

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