The Curious Case of Andrew Yang

Running for New York City mayor turned a fiery corporate handout critic into something else.

This is Boondoggle, the newsletter about corporations ripping off our states and cities. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!

During the 2020 presidential campaign, businessman Andrew Yang, of all people, was the most explicitly anti-corporate tax incentive candidate in the field. He literally had a policy page on his website calling to “End Bidding Wars for Corporate Relocation.”

But now that Yang has morphed from presidential long shot to front-runner in the New York City mayoral race, he’s gotten weird. His transformation shows how local politics screw up the debate over corporate incentives, and candidates who know what the right policy choices are.

During the 2020 race, Yang pegged his criticism of corporate handouts to the nationally embarrassing effort to win Amazon’s HQ2, rightly noting that Amazon was going to do what it wanted to do, regardless of tax breaks.

“The recent circus surrounding Amazon’s HQ2 project should highlight how damaging the practice of allowing localities to ‘bid’ for investment from corporations can be to our country, and how important it is for us to find a solution to this problem,” he said. “Considering Amazon’s business, DC and NY were likely locations for HQ2 even before they received 238 proposals from cities across the country.”

Share

Yang called, specifically, for company-specific tax benefits to be taxed at 100 percent, rendering them worthless. “No more bribing companies to do something they were already planning to do. The only ones who win are the companies,” he said.

He had a clear articulation of the problem and a straightforward and plausible solution, the only instance I’ve seen of a national candidate directly calling for such a policy intervention.

Now, though, he’s trying to win votes in the place where a coalition of local activists and lawmakers chased HQ2 away, but where there is still a solid base of folks who believe that foregoing gifting hundreds of millions of public dollars to Amazon was a mistake. (I wrote here about why defeating the HQ2 push was the right thing for New York, if folks want a review.)

That’s led Yang to try to split the baby in a strange manner, as evidenced by how he responded to questions about HQ2 during an interview last month with TechCrunch, which I’ve excerpted below. Apologies for the length, but you need to see the full context to figure out what Yang is doing.

You recently said that letting Amazon and its 26,000 jobs walk away from New York City was not a good thing in reference to HQ2. But you, along with other Democratic politicians, have criticized the fact that they don’t pay federal taxes. If a company like Amazon were to relocate or bring a substantial number of jobs in New York City, how would you hold them accountable?

I guess there’s a difference between the local impact and the federal impact. I don’t think it’s a good thing that a trillion-dollar company doesn’t pay any federal taxes, but if you are a locality and someone comes along and it’s going to be good for your community, then you say, “yes.” I want to make the case that New York City loves business. It loves businesses big and small that are based here. And it wants more companies to know that New York City is the best place to build a world-class company and culture. So, that would be my stance as mayor, if a large tech company wanted to come to New York, and if there’s a large tech company that’s reading this right now or a small one or an entrepreneur, come to New York! Early next year, if I’m mayor, I’m going to be doing everything I can to help you.

A lot of the pushback that they were getting were around incentives. Is there a way to bring a company like Amazon into New York without offering that?

I don’t think it’s good when localities end up bidding against each other to try and bring in various companies. One of my proposals when I was running for national office was that we should actually make it impossible to do so by making any benefits that are provided to a company in that manner themselves taxable, at a rate of a 100%.

So, the entire thing becomes a non-starter and companies then would be based where they think it’s most advantageous to their organization to be based, not by pitting cities against each other as to who’s going to bend over backwards the most. I think that would be a better system and people were upset about the level of subsidies that were supposed to be directed to Amazon with HQ2, and that was legitimate concern.

And some of the local impacts were also of legitimate concern. But again, big picture, you cannot let an employer that’s going to create 26,000 high-paying jobs and probably an additional 100,000 or so service jobs walk away. You have to say New York City is the place for you.

Share Boondoggle

These answers, taken together, make no sense. First, Yang tries some sleight of hand, making it seem as if federal tax dodging was the issue with Amazon coming to New York, when it wasn’t. When the interviewer calls him on that, he circles back to his 2020 campaign position, but tries to square it with an assertion that you can’t say no to Amazon. So you have to say yes to Amazon, except the thing Amazon wanted was maybe bad, but you can’t let Amazon walk away, but the local concerns over incentives were legitimate, but in the end, you have to say yes to Amazon.

It’s gibberish.

Instead of this word salad, Yang could have said what is, in fact, true: The incentive package Amazon wanted for HQ2 was wildly expensive and unfair and Amazon is expanding in the city anyway, without it, so everyone’s a winner. He could credibly say he was right all along, and that he wants to work on building up the advantages New York has over other places, rather than resorting to handouts and giveaways.

Alas, that’s not what he did. So why the verbal gymnastics? Here’s my theory: Yang is ahead in polling of the Democratic primary race for mayor so far, and the Democratic nominee will almost certainly win the general election. He has his signature policy that he really cares about — a universal basic income program — and on just about everything else, he’s simply trying to land in the middle and not make anyone too mad, thereby protecting his lead.

He knows there are important constituencies on both sides of the HQ2 debate — Rep. Alexandria Ocasio-Cortez, State Sen. Michael Gianaris, and the activists who beat back Amazon on one side, with Mayor Bill deBlasio, Gov. Andrew Cuomo, and business interests on the other — and he’s trying to keep them all if not happy, then at least not mad enough to come at him over corporate handouts.

This same approach has led him to support other pro-corporate economic development junk, such as a tax credit for forcing workers to stop working remotely and an expansion of casino gambling. He’s placating business interests with a hodge podge of stuff, while trying to not fire up the forces that caused Jeff Bezos to turn tail and run.

Leave a comment

His actions makes sense politically, I guess. He’s ahead and trying not to blow it, and more corporate dealmaking can lead to good local political outcomes for those who engage in it. But it’s leading to nonsensical policy positions.

Which is too bad, because New York City has serious issues with corporate handouts. As John Mozena noted in City Journal recently, New York lost $3.8 billion to tax abatements in 2019, enough to fund the fire department and department of corrections entirely, with a few hundred million dollars left over. There’s no reason for New York — the financial capital of the world! — to shell out that kind of cash to entice corporations to come there.

Yang watering down his position to render it meaningless is a perfect example of how corporate handouts warp our politics. Someone who has thought about the problem and clearly knows better still feels compelled to at least nod in the direction of outsized handouts out of electoral necessity.

That’s why it’s imperative on folks like you, and me, and Odessa Kelly, and everyone working on the interstate compact, and on and on to upend the politics here. Otherwise we’re just going to see an endless parade of folks doing what Yang did: Getting it right until winning an election requires them to get it wrong.

Share


ONE MORE THING: Speaking of mayors, St. Louis Mayor Tishaura Jones took office just a few weeks ago, and is already challenging the city’s over-dependence on corporate handouts to spur development. She vetoed two new tax incentives last week, saying that the developments slated to benefit from them would have happened without tax breaks.

Seeing an elected official cite the “but-for” test — as in, questioning whether a particular project would have happened “but-for” the tax breaks — is great to see. More of this please!


Thanks for reading this edition of Boondoggle. If you liked it, please take a moment to click the little heart under the headline or below. And forward it around to friends, family, or neighbors using the green buttons. Every click and share really helps.

Share

If you don’t subscribe already and you’d like to sign up, just click below.

Finally, if you’d like to pick up a copy of my book, The Billionaire Boondoggle: How Our Politicians Let Corporations and Bigwigs Steal Our Money and Jobs, go here.

Thanks again!

— Pat Garofalo