Economy

Amazon Illuminates the Democrat Party Divide

High-tax cronyists on one side, socialist "purists" on the other. Neither is good for business.

Arnold Ahlert · Feb. 21, 2019

If one likes a salad of ignorance, arrogance, hypocrisy, cronyism, and the burgeoning divide between Democrat Party radicals and uber radicals, Amazon’s decision to abandon New York City is just the ticket.

We begin with ignorance and arrogance. America is now enduring at least two generations poisoned by an education system whose primary mission has been to convince them to hold their own nation — and the economic system that produced more wealth than any other in the history of mankind — in contempt.

Their poster child is Alexandria Ocasio-Cortez, the freshman representative and media darling now in approximately the 14th minute of her 15 minutes of fame. No one is happier that Amazon decamped, and she took to Twitter to let her 2.7 million followers know exactly where she stood. “Anything is possible: today was the day a group of dedicated, everyday New Yorkers & their neighbors defeated Amazon’s corporate greed, its worker exploitation, and the power of the richest man in the world,” she tweeted.

A couple of “inconvenient” realities intrude. First, according to a Siena College Research Institute poll, state voters backed the project by a 56% to 36% margin. As for worker “exploitation,” Amazon noted in November that salaries for those workers would have averaged over $150,000. For perspective’s sake, it should be noted that median household income hit a record high in 2017 — reaching $61,372. Moreover, there would have been a lot of jobs: Amazon promised to create 25,000 of them.

So what was the problem? This is where hypocrisy gets added to the mix. Despite the corporate giant’s promise to generate $27.5 billion in tax revenue over the next 25 years, Gov. Andrew Cuomo, heartily supported by Mayor Bill de Blasio, promised Amazon $3 billion in taxpayer-funded subsidies to move to Long Island City in Queens. The original deal was for $2.5 billion in subsidies, with an additional $505 million if Amazon increased its job-creation count to 40,000 by 2034.

Tax subsidies for the richest man in the world? In a city and state where “soak the rich” is tantamount to gospel, the utter hypocrisy of using corporate welfare as an enticement is impossible to ignore. If lower-tax climates are attractive sometimes, why aren’t they attractive at all times — and for all businesses?

Government “picking winners and losers” is also the essence of crony capitalism, and no one illuminates it better than Nancy Bass-Wyden. She owns Strand Books, a business that has served New Yorkers since 1927. The same city that bent over backwards to help her giant competitor is poised to designate her bookstore a New York City landmark, a move Bass-Wyden insists could kill her business due to the restrictions and regulations attached to the designation. “Unlike Amazon, we have never asked for taxpayer-funded subsidies, tax breaks or special favors,” Wyden said. “All we want to do is to be left alone!”

Yet while hypocrisy is front and center, and provides Ocasio-Cortez and her fan base with a legitimate argument, ignorance remains the order of the day. “If we were willing to give away $3 billion for this deal, we could invest $3 billion in our district ourselves if we want to,” AOC asserted. “We could hire more teachers.”

Uh, no. As columnist Allan Golombek is forced to explain, AOC and her followers believe “they have suddenly happened upon a stash of money, as though they found $3 billion under the couch cushion — miracle money that can now be spent on hospitals, schools and decaying subway lines.” The reality? “Rather than handing over a direct grant, [New York state and city] governments would simply forgive some taxes that otherwise wouldn’t be owed to them by anyone,” Golombek adds. “The end of the Amazon deal does not free up a horde of cash for the state and local governments, because they have no extra cash to free up.”

That’s an understatement. As New Yorkers learned recently, the state is facing a $2.3 billion budget deficit. Why? Gov. Cuomo insists the 2017 GOP tax cut, placing a $10,000 cap on state and local taxes one can deduct from one’s federal tax burden, is the culprit. In other words, while ordinary New Yorkers were getting a tax break, the rich have been saddled with higher taxes. The very same higher taxes on the rich that Democrats all over the nation insist is the cure for all of our fiscal woes.

Unfortunately, reality bites. “Tax the rich, tax the rich, tax the rich. The rich leave, and now what do you do?” Cuomo wonders.

The one thing blue states absolutely refuse to do: lower the overall tax rate — by lowering obscene levels of government spending.

How obscene? Last year New York state spent $153.1 billion to serve a population of 19.5 million people. By contrast, Florida — a state with no income tax — passed an $88.7 billion budget for fiscal year 2018-19 to serve 21.3 million people.

How can New York afford to spend 42% more money to service a population of 1.8 million fewer people? By treating wealthy New Yorkers like ATM machines. Hence, the rich leave New York — and, unsurprisingly, many of them go to Florida.

Nonetheless, the true believers remain unfazed by Amazon’s departure. “For decades, local politicians have felt pressure on only one side of this issue: To do whatever it takes to attract companies,” asserts New York Times columnist David Leonhardt. “As a result, those politicians have contributed, often unwittingly, to the radical rise in economic inequality. Amazon’s messy departure from New York is a victory for the other side.”

Which side is that? “The city has the country’s second-highest income tax, and Mr. de Blasio last month proposed that all private employers be required to provide workers two weeks of paid vacation each year,” The Wall Street Journal reports. “That’s on top of paid family leave. Animus toward business represses the organic investment and job growth that make a dynamic economy.”

Animus toward business is rapidly becoming a central plank of the Democrat Party’s agenda. Job-killing government regulation skyrocketed under the Obama administration, all while Democrats were asserting 2% economic growth was the “new normal.” That a 2014 National Association of Manufacturers report revealed regulatory costs on all businesses exceed $2 trillion — per year? Regulations that disproportionately affect small businesses? Small businesses that create a greater percentage of jobs than big businesses do?

Anyone think that contributes to the radical rise in economic inequality — without an iota of unwittingness attached to it?

Democrats are on the cusp of a civil war between politicians like Cuomo and de Blasio, who see the future returns fueled by incentives as a net plus for their overtaxed state and city, and purists like Ocasio-Cortez and Elizabeth Warren, who will accept nothing less than outright socialist/Marxist-inspired wealth confiscation, even if it kills the economy.

And while that divide is real, it’s only about one thing: how fast Democrats run out of other peoples’ money to spend.

Neither side engendered a business climate Amazon could abide.

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