20 Major Independent Studies Showing Taxpayer Subsidies to Businesses Don’t Work and Are Vulnerable to Corruption
New York State spends roughly five billion dollars every year subsidizing big businesses. Unfortunately for New Yorkers, there is overwhelming evidence that government subsidies to businesses are a very poor way to create good jobs and local economic growth.
Worse yet, taxpayer handouts to businesses in New York – and elsewhere – are often hidden from public view, highly politicized, and pose a corruption risk.
Reinvent Albany advocates for government decision-making based on facts and good sense. We have compiled 20 of the most important studies done by reputable independent researchers to help our elected officials better understand business subsidies.
Despite the consensus among researchers that business subsidies are not an effective economic development tool and the literature highlighting the myriad issues associated with them, New York and its localities continue to hand out subsidies. Government officials rationalize that subsidies are necessary to keep businesses from moving out of state, rescue failing firms, and attract outside firms and start-up businesses.
Taking into account the research studies presented, state officials should take action now to curb wasteful, corrupt spending. Reinvent Albany recommends:
- Do no harm: Create no new tax abatement programs and stop providing state and local grants to businesses. Freeze or reduce the total tax abatements and direct subsidies provided by the state.
- Create a more robust “Database of Deals” that goes beyond what is mandated in the FY 2023 budget and includes a uniform definition of “job” that applies to all state subsidy programs which would enable apples-to-apples comparisons among different subsidy programs and deals.
- Freeze all state subsidy mega-deals, including the Penn Station Vornado deal until the extent of the subsidy to Vornado and potential loss of NYC tax revenue is made public.