New York’s bribes to businesses are the worst in the nation
A new study by a respected think tank finds that New York’s vast system of business-tax incentives — a key part of Gov. Cuomo’s economic program — is not only the most expensive of any state, but also the least effective.
No real surprise there: Cuomo’s own New York Tax Reform and Fairness Commission came to the same conclusion four years ago.
And yet the subsidies — totaling as much as the next three states combined — keep growing: In 2015, the last year studied, they totaled $8.25 billion — nearly 20 percent of the national total.
The study, by the nonpartisan W.E. Upjohn Institute for Employment Research, flagged the film and TV production credit as the least effective subsidy of all.
As the Empire Center’s E.J. McMahon recently noted, the new state budget extends this credit to one of America’s most well-heeled (and politically wired) industries by $420 million a year for three years after it was originally set to expire.
But even subsidies to other industries, the Upjohn report concludes, “are not cost-effective,” with “no statistically significant effects.”
Four years ago, the state commission was even more emphatic: It found “no conclusive evidence that business-tax incentives actually increase economic gains . . . above and beyond what would have been attained” without them.
Last month, the left-of-center Investigative Post, ProPublica and other outfits combined for an exhaustive exposé of the waste, noting how billions in outlays have failed to boost the upstate economy — and how development agencies make little effort to see if any of these giveaways are effective.
What keeps it all going? David Friedfel of the Citizens Budget Commission told Gothamist that politicians think “the next benefit will be effective.”
Or they just have too much political capital at stake. Cuomo’s Start-Up NY, now renamed Excelsior Jobs, just got another $38 million in ad money despite creating just 772 jobs in three years — and will no longer require businesses to report annually on how many jobs they’ve actually produced.
Moreover, the Upjohn report concluded, once a benefit goes to one industry or area, others demand their share. Meanwhile, companies dangle the threat of relocating elsewhere to conduct a virtual auction between states with taxpayer dollars.
Business-tax subsidies didn’t start with Cuomo, but he’s made them a cornerstone of his program — with little to show for them and precious little oversight of how the money is spent.
Better to use most of that $8.25 billion to lower tax rates for all New Yorkers.
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