This is Part Thirty  One of a series showing how inflation expands from extension of tax cuts as investment incentives. Previous parts explained how trade taxes, tariffs, levies or countervailing duties, inflation, deflation, barter, postage, war, counterfeiting, history, economics, ‘free’ trade, famine, dearth, climate, auctions, precious metals, religion, credit, loans and education are a national security matter.

Amazon Prime FAANG moving to New York City?

Part Thirty One. Why study a FAANG $250 billion tax incentives, multiplier effect of money, economics, job creation, capitalization of market, for New York City?

So, it doesn’t get much  funnier than this.   In the last week of February 2019, the national news media had a cover story about a 20 something congresswoman from New York City, who objected to a business deal giving $3 billions in tax incentives to a member of the FAANG, the technology mega giants.  With the negative push back, Amazon withdrew its plan. The Governor of New York Cuomo was calling, begging might be the word, for Amazon to come back.  Amazon had searched around for a second headquarters, and was bringing 25,000 workers with an average of 6 figure salaries. The Congresswoman, AOC (D) , said the 3 billion dollars could be better spent than on a tech giant.  OK.  Perhaps it can be drawn from the Hudson River.  A statement, I later heard on the radio, was that Amazon is owned by the richest man in the United States, and he didn’t need the $3 billion.   So why would a member of the elite FAANG want $3 billion tax break?  Here are the numbers.   The $3 billion goes to the bottom line for Amazon, whose stock price capitalization is a multiple of its earnings.  According to Wells Fargo Trade (March 4th 2019), Amazon’s Price to Earnings ratio is 83.01, and when multiplied by $3 billion means the capitalization of the tax break is worth $249 billion.  Are the rivers of New York flowing with a quarter of a trillion dollars?

So New York has walked away from a fortune, for the principle of  keeping taxes up, and incentives down.

Plus, the value of money put in circulation by the employees is about 7 times the dollars spent by Amazon.  Not just Amazon, but any company.  Meaning if the $2 and a half billion in annual salaries for Amazon Headquarters Two, which is really about two thirds of what was projected to be spent,  the economic impact in the local market is about $17.5 billion a year, or $175 billion in ten years for New York City.  

How does the total of $424 billion for this one company’s choice of New York City compare to the Gross National Products of some countries? The World Bank Group keeps a list of the countries and Economies Gross Domestic Product in US Dollars.  Well, the local impact of one company to NYC,  is larger than most countries, and about the GDP of entire nation of Austria ($416 B),  or Iran ($454 B),  or Norway ($398 B),  or Thailand ($455 B).

Amazon’s  market capitalization of $833 Billion is about the GDP of the nations of  Turkey ($851 B),  Switzerland ($678 B),  Saudia  Arabia  ($686 B),  or  Argentina ($637 B).

Continuing the thought of how the multiplying effect of money in circulation applies to tax cuts. Here are the numbers. The 2017-2018 tax cuts passed by Congress was a $1.5 trillion tax cut bill, or about $190 billion a year. The seven times multiplier means an expansion of $1 and a third trillion each year for the American GDP, or about an 8 percent expansion, per year.   The equivalent of  two hundred sixty billion big MACs (at $5 each), or enough big MACS to feed each of  the attendance of the NFL twelve  big MACS a day for a year.

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