The hot topic in the news right now is that Amazon decided not to open an office in NYC. The big complaint of the politicians involved is that Amazon would have reaped a $3 billion tax break. Forget the fact that Amazon is not profitable and doesn’t have an obligation to pay taxes on losses. The whole point of the temporary tax break was to entice Amazon to open offices in NYC.

On the other side of that coin, though, is all the lost jobs for New Yorkers. There was supposed to be 25,000 jobs in the offices paying an average of $150,000 a year.  Now, if you look beyond the jobs that Amazon was supposed to bring to the office, what about all the construction workers who would have been employed for 2-3 years while the building was under construction?  What about all the local businesses that would have been able to open or expand, thereby hiring an estimated 50,000+ more workers? And what about Amazon itself…recent history suggests that if Amazon thinks they’ll hire 25,000 new workers, that would likely turn out to be closer to 50,000.

And what about NYC itself? Just on the 25,000 jobs that Amazon suggested there would be about $1 billion in tax revenue to the federal government and another $140 million to New York City in annual tax revenue (2018 tax rates).  Not to mention all the sales tax from local businesses, income taxes from employees of those businesses, and business taxes from all those other businesses.

This turned out to be a great loss for New York City, all because a few politicians don’t understand basic economics principles that even my 9 year old understands, and a simple accounting idea or two was lost on them as well.

That’s it for now, please leave your comments and questions below. Thanks for reading Volume 54 of The Macro Market Wrap Up With The Mad Genius.  Until next time remember there’s always a bull market somewhere in the world, and on the opposite side of every crisis lies opportunity.

#economics #investing #jobs #socialismsucks #freemarketsrule