Amazon’s New York HQ2 means it could benefit from millions in Trump tax breaks

Amazon CEO Jeff
Bezos.
Reuters

• Amazon announced it is splitting its second
  headquarters, or “HQ2”, between Virginia and the the Long
  Island City neighborhood of Queens in New York City.
• Long Island City is a designated “opportunity zone,” a
  tax benefit scheme that was rolled out as part of President
  Trump’s tax reforms.
• Opportunity zones are meant to encourage businesses to
  invest in low-income areas, but critics have pointed out that
  Long Island City is not low-income.

Amazon announced on Tuesday that its second headquarters, dubbed
“HQ2,”
will be split
between the Long Island City neighborhood of Queens, New York and
Arlington, Virginia.

Reports emerged on Wednesday that the Long Island City location
could give Amazon and other investors in the area considerable
tax breaks, as it is part of an “opportunity zone.”

Opportunity zones were introduced as part of President Trump’s
tax reforms, and offer tax benefits worth potentially millions of
dollars to companies for investing in low income areas.

Some critics have questioned why Amazon’s new neighborhood is
eligible, as its median income is $130,000. “All you have to do
is look at the skyline from Manhattan. You can see billions of
dollars of private investment there already… Long Island City
doesn’t strike me as high on the list for needing extensive tax
incentives to stimulate economic development,” New York real
estate developer Don Pleebles told
Associated Press.

New York has also offered Amazon incentives upwards of $1.5
billion to settle there, meaning it is effectively subsidizing
each of the 25,000 jobs Amazon plans to create to the tune of
$48,000,
according to Amazon’s HQ2 announcement.

Read more:

New York City has lured Amazon with more than $1.5 billion in
incentives — here’s what else they agreed to

However not all opportunity zones are themselves low-income, but
border on other areas that might be,
as per New York Business Journal.

Using the tax benefits, Amazon may be able to defer tax payments
for years by investing its capital gains into an “opportunity
fund” which can then be used to buy property in opportunity
zones. Amazon will be eligible if it invests in public
infrastructure, which
according to its HQ2 announcement is exactly what it plans on
doing.

Per its statement (emphasis ours):

“The community will benefit from New York City providing funding
through a Payment In Lieu Of Tax (PILOT) program based on
Amazon’s property taxes on a portion of the development site to
fund community infrastructure improvements developed through
input from residents during the planning process. Amazon has
agreed to donate space on its campus for a tech startup incubator
and for use by artists and industrial businesses, and
Amazon will donate a site for a new primary or
intermediary public school. The company will also invest
in infrastructure improvements and new green spaces.”

Amazon did not immediately respond to Business Insider when asked
whether the tax breaks had influenced its decision to settle in
Long Island City.

Read more about Amazon’s HQ2: