In September 2017, Amazon announced its intention to establish a second corporate headquarters (known as “HQ2”) in North America, and issued a detailed request for proposals from interested cities or regions. The Newark Community Foundation (NCF), a division of the Community Foundation of New Jersey, retained Anderson Economic Group to analyze the total savings to Amazon resulting from these incentives. NCF also requested AEG to review the New Jersey public education system and benchmark the system against those of other states vying for HQ2.
AEG created tax impact models that simulated the gradual construction of and employment at Amazon’s HQ2 in Newark in order to estimate the total savings to Amazon from state and local tax incentives. Our models included Corporation Business Tax credits offered by the State, along with a local payroll tax waiver and property tax abatement offered by Newark.
AEG estimated that the cumulative value of savings from state and local tax incentives for Amazon HQ2 in Newark would total $13.2 billion over the lifetime of the incentives, and would consist of $6.5 billion in property tax abatement savings, $5 billion in Corporation Business Tax Savings, and $1.7 billion in payroll tax waiver savings. The Corporation Business Tax credit program would likely eliminate Amazon’s New Jersey Corporation Business Tax liability for 45 years or longer, while the payroll and property tax waivers would last 42 years.