Five Subsidy Stories You Might Have Missed This Week


1. In a New York Times op-ed, David Wessel, author of a new book about Opportunity Zones, shows how the program is just another way for the rich not to pay taxes.

Opportunity zone money is funding the revival of downtown Erie, Pa., and affordable housing in south Los Angeles, but a lot more of it is going to projects like a Ritz-Carlton hotel and condo complex in downtown Portland, Ore., and a Virgin Hotel in New Orleans. Self-storage facilities, which create hardly any jobs, are sprouting with opportunity zones money. So is luxury student housing in university towns, which are eligible only because college kids show up as poor in census tallies.

2. The Tonawanda Seneca Nation’s lawsuit against upstate Genesee County Economic Development Center and Plug Power was dismissed (Investigative Post). The Post notes taxpayer-funded subsidies for the new hydrogen fuel plant will exceed $4 million per job.

In his ruling, Zambito determined that the nation filed its initial lawsuit within the four-month window allowed for objecting to the findings of environmental reviews. However, he also determined that the nation’s amended filing failed to add Plug Power as a respondent in a timely fashion and ruled the company was a “necessary party” to allow the nation’s lawsuit to move forward.

3. In the Daily News, Senator James Skoufis and Senator Julia Salazar write an op-ed about the need to change NY’s economic development subsidies after Cuomo.

When LEGOLAND, a $500 million project, put down roots in Orange County, they did so knowing they’d need to improve local infrastructure to accommodate an influx of traffic. They publicly acknowledged this need and admitted they’d pay for the upgrades in full. Why, then, would New York State knowingly pump $10 million in public funds into said improvements? Simple: It gave Cuomo the ability to claim credit for the project. That’s one expensive taxpayer-funded pair of scissors.

4. New York State’s tax breaks for Housing Development Fund Corporation cooperatives (HDFCs) were intended to help low-income tenants, but the beneficiaries are often children of the wealthy(Bloomberg).

In short, because of inadequate rules, poor design, and decades of lax oversight, these low-income tax subsidies are being scooped up by the well-to-do. “They’re just gaming the system,” says Penny Gurstein, an expert on affordable housing who directs the Housing Research Collaborative at the University of British Columbia. “This is now just being used as a playground for the rich.”

5. At Boondoggle, Pat Garofalo explores the cost of tax havens such as South Dakota and Delaware.

There’s been quite a bit of work done on whether being a tax haven is “worth it” from an economic perspective: There’s the obvious negatives of draining tax revenue from other places, but that’s a collective problem, and there’s some argument that being a haven increases revenue from the previous baseline because someone has to manage all that paperwork.

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