To Hook Amazon, NJ Lawmakers to OK Over $3 Billion in Tax Breaks
Lawmakers meet Monday to push through their final agenda before the session ends the next day, with plans to vote on giving Amazon perhaps more than $3 billion to build a headquarters in New Jersey.
The e-commerce giant is planning to build a second corporate headquarters to complement its Seattle home, and cities and states quickly mobilized sales pitches and incentive packages to land the company. New Jersey is creating a new, bigger tax credit for what it calls “transformative” projects – tailored specifically to Amazon’s plans, so much so that the offer would expire in 2019.
Amazon already employs more than 13,000 people in New Jersey, but the jobs at the corporate headquarters are expected to have average salaries of $100,000.
“There’s a lot of fulfillment centers, but it would be nice to get the higher-tech jobs that come with it. The future Amazon designs of business,” said Senate President Stephen Sweeney, D-Gloucester, who said the tax credit would put New Jersey in a strong position because no other state has formalized a similar commitment.
Sen. Paul Sarlo, D-Bergen, said none of Amazon’s existing jobs in New Jersey would count toward incentives that could provide the company $100,000 for each new job – $10,000 per job per year for 10 years.
“It is new jobs. It is not moving them from one city to another,” Sarlo said. “This would actually create more jobs than we’ve done in all of our New Jersey Grow tax credits.”
As of July 2017, 229 projects had been approved for $4.4 billion in tax credits through the Grow New Jersey program, creating nearly 29,000 new jobs and retaining more than 30,000 others that had been deemed to be at risk of leaving the state.
The Grow New Jersey tax credits range from $500 to $5,000 per job per year, with bonuses of up to $3,000. But Assembly Speaker Vincent Prieto says it’s worth upping that to $10,000 to land Amazon.
“I have never been one of the biggest fans of tax incentives – for one the reasons is, we want to make sure what we get back. But when we can have so many jobs in the state of New Jersey, it will be great,” he said.
“If we can attract them, it’s important because it’s about jobs, jobs, jobs and more jobs on top of that as they’re phased in,” Prieto said.
A new category would be created for “transformative” projects in which at least $3 billion in capital investment is made and at least 30,000 new jobs created.
Tax credits would be forfeited for a particular year if the number of new workers falls below 80 percent of what’s agreed upon in the incentive package. If the headquarters doesn’t create 30,000 jobs within 20 years, the tax credits would be reduced – to $7,000 per worker per year if it at least 20,000 jobs are created, to $5,000 if there are 10,000 to 19,999 jobs and to $3,000 if 5,000 to 9,999 jobs are created.
Amazon says its HQ2 could create up to 50,000 jobs, but Sweeney said Gov. Chris Christie’s office said to lower the threshold.
“It was communicated that the realistic number was 30,000 anticipated for employment,” Sweeney said.
If 30,000 jobs were created at an Amazon headquarters, the incentive would be $3 billion. If more jobs were created, the incentive would rise accordingly — to $5 billion for 50,000 jobs, or theoretically even higher than that.
The incentive sweetener was approved by Senate and Assembly committees Friday and is likely to get bipartisan support when approved Monday. It is opposed by an array of liberal interest groups who say the economy would benefit more from spending on infrastructure than on corporate subsidies, but Sweeney said the money wouldn’t be available to the state anyway if Amazon doesn’t settle in the state.
“When you do the tax credits, you’re giving away something you don’t have. If they don’t come, then you’re not giving anything,” Sweeney said.
Newark is offering $2 billion in property and payroll tax incentives of its own that would come on top of New Jersey’s offer.
The state has thrown its support to Newark’s bid for Amazon’s second headquarters, but other New Jersey cities also submitted proposals. The state tax incentives would apply at any of the locations.