On Friday, January 11, the American Booksellers Association wrote to the New York City Council Finance Committee and Council Speaker Corey Johnson to express disappointment that the city’s independent retailers have been excluded from an upcoming Finance Committee hearing on New York’s deal with Amazon.
The announcement in November that Amazon had decided to split its second headquarters, popularly referred to as HQ2, between Long Island City, Queens, and Crystal City, Virginia, concluded a highly publicized search that began in September 2017 with 238 candidate cities and states bidding against each other. The company has said it will split operations evenly between the two chosen sites, with more than 25,000 employees in each city. Amazon could receive up to $3 billion in city and state incentives for the Long Island City site.
After Amazon’s decision was made public, the New York City Council announced that it would hold a series of hearings to discuss the deal made between Amazon, the city, and New York State. During the first hearing, held in December, city councilors on the Economic Development Committee questioned representatives from Amazon and the New York City Economic Development Corporation (NYCEDC). An upcoming hearing held by the Finance Committee will allow committee members to ask Amazon and NYCEDC questions focused on the financial incentives that the city offered to Amazon.
ABA’s letter expresses disappointment that the next hearing will not include testimony from the city’s independent retailers, which, the letter notes, “is crucial to understanding the long-range fiscal impact of the HQ2 deal, both to the city and the state.”
The letter cites both Amazon’s avoidance of state sales tax collection for more than a decade and the Civic Economics study Prime Numbers: Amazon and American Communities, which details the growing loss of millions of dollars to states because of Amazon’s failure to collect sales tax for third-party sales on its marketplace platform. “This data raises the question of why the world’s largest U.S. company by market capitalization is receiving a windfall in taxpayer dollars that could reach $3 billion,” the letter states. “Seen in its totality, New York’s staggering HQ2 subsidy package is a short-sighted, reckless payout to a company that has grown by driving out local competitors — the very businesses that are the job creators and the drivers of the state’s economy.”
ABA encourages New York booksellers with questions or concerns about the Amazon deal to make their voices heard to the City Council. While the council is not taking public testimony at this hearing, it is accepting public comments on social media, using the hashtag #AmazonAnswersNYC, and via its web form. According to the City Council website, the comments “may inform and shape the discussion at the hearing.”
January 11, 2019
Speaker Corey Johnson
Committee on Finance Chairperson Daniel Dromm
Members of the Committee on Finance
New York City Hall
New York, NY 10007
Dear New York City Council Speaker Johnson, Committee on Finance Chairperson Dromm, and Finance Committee members:
On behalf of the American Booksellers Association’s independent bookstore members in both New York City and New York State, I am writing to express our disappointment that the second hearing on Amazon HQ2 will not include public testimony from those that are among the most impacted by the state’s proposed $1.525 billion handout to Amazon: the city’s independent retailers.
We certainly agree with the city council that it is important to closely examine the subsidy package that has been offered to Amazon for locating headquarters operations in Long Island City, and the role played by the New York City Economic Development Corporation (NYCEDC). However, we also believe it is important for the finance committee to hear all relevant testimony and that the committee should fully consider the financial impact that Amazon has had on its local competition, as well as local communities in other cities and states.
Testimony from independent retailers is critical to understanding the long-range fiscal impact of the HQ2 deal, both to the city and the state, since taxpayers across the state are helping to fund the HQ2 subsidy package. Given that books were Amazon’s first product offering more than 20 years ago, we believe that the perspectives and insights of independent bookstores are especially relevant.
Supporters of the massive subsidies being offered to Amazon, which include Governor Cuomo, Mayor De Blasio, and members of the NYCEDC, are touting the purported benefits Amazon will bring to Long Island City, greater New York City, and the state as a whole. In fact, studies show how costly Amazon’s massive growth has been for municipalities across the country.
For more than two decades, Amazon has extracted far more value than it has provided to states, cities, and towns. It is adroit at pitting communities against one another to earn huge tax subsidies, as it did with HQ2, involving 238 municipalities nationwide. Moreover, after over a decade of evading its obligation to collect and remit sales tax to the state, Amazon is once again shirking its responsibility to collect and remit sales tax, this time for its third-party marketplace sales. This is now costing New York State hundreds of millions in lost sales-tax revenue.
The Civic Economics study Prime Numbers: Amazon and American Communities estimates that in New York State, in 2016, Amazon and its third-party marketplace vendors sold $9.9 billion worth of retail goods statewide. These transactions resulted in 3,280 displaced shops and 47,505 displaced retail jobs, and despite collecting sales tax on its own sales, these transactions have still resulted in more than $315.1 million in uncollected sales tax in New York State alone.
Nationally, the numbers Civic Economics cites are just as astounding. In 2016, Amazon and its third-party marketplace vendors sold $133.1 billion worth of retail goods nationally. These transactions resulted in 44,000 displaced shops and 637,000 displaced retail jobs, as well as up to $5 billion in uncollected sales tax.
This data raises the question of why the world’s largest U.S. company by market capitalization is receiving a windfall in taxpayer dollars that could reach $3 billion, funds that could be used to improve the state’s crumbling infrastructure and its struggling public-school systems, just to name two examples.
It’s hard to imagine a scenario where it might make sense to provide an out-of-state mega-corporation with billions of dollars in subsidies. Seen in its totality, New York’s staggering HQ2 subsidy package is a short-sighted, reckless payout to a company that has grown by driving out local competitors — the very businesses that are the job creators and the drivers of the state’s economy.
We urge the Finance Committee to take a hard look at the deal the state has provided Amazon for locating HQ2 here. We urge you to revise the structure of the committee’s hearings to consider testimony from those residents who will be hurt the most from this unconscionable deal: independent business owners.
I look forward to your reply.
David Grogan, Director, ABFE, Advocacy and Public Policy
American Booksellers Association
Gov. Andrew Cuomo
Senators Gillibrand and Schumer
State Senator Gianaris