Because Amazon can easily go elsewhere, and most places have lower taxes than NYC. Giving them a ~10% off coupon on an extremely high tax rate is not the same as handing them money.

You can object to the deal on principle, sure, but you're ignoring the fundamental reality of the situation; if NY refuses to give them any incentives, they can just as easily go to some other location that will give them incentives. And if all the states banded together and agreed that nobody would give them incentives, NY still loses, because then they'll just pick a place with lower tax rates.

I can understand the appeal of trying to stand up to big corporations, but in the end, NY isn't screwing Amazon by refusing to negotiate with them on this, they're just screwing themselves. If you want to have high tax rates and not lose business to other states, it's a winning strategy to be open to compromise sometimes.