Op-Ed originally posted in Crain’s
by John Kaehny, Executive Director and Elizabeth Marcello, Senior Research Analyst
New York is essentially a one-party state. Democrats have every statewide office and supermajorities in both houses of the Legislature.
Because they run the show, it matters what New York Democrats think. Their legislation, budgets and campaign language show they aspire to be champions for working families and the vulnerable, willing to tax the rich and take on big fights for social justice.
Reinvent Albany works closely with Democrats in the Legislature and statewide offices. We support many of their initiatives to strengthen everyday democracy and improve government accountability and transparency.
New York Democrats have passed some of the most progressive state tax codes and ask the wealthy to pay their fair share. But looking closer, they are not the “tax the rich” party. They are the “tax some of the rich—the rest we subsidize” party.
If you doubt it, take a look at the massive amount of existing corporate giveaways and the proposed $7 billion in taxpayer-provided reimbursable grants that the governor and Legislature are about to give to Hollywood TV and film producers in the next decade. Under this program, we calculate New York taxpayers will pay producers $66,000 a year for each full-time job they create or $660,000 per job in the course of the deal.
Unfortunately, New York Democrats seem to have fallen in love with massive corporate giveaways that are utterly at odds with their basic values. New York’s state and local governments spend an astonishing $10 billion of taxpayer money a year on corporate giveaways that do not work and are rooted in trickle-down economics. Dozens of state and local programs provide grants and tax abatements to business owners so they will ostensibly hire more people.
Yet research in the past 40 years by independent scholars has definitively refuted the claim that corporate giveaways are a good use of taxpayer funds. Take a look at some of the 25 major studies highlighted in our March report, “Debunked,” all written by reputable scholars who are not paid by subsidized businesses or economic development officials. They show corporate giveaways have little effect on the number of new firms established, job growth, firm location decisions and overall economic growth. In fact, corporate giveaways have the opposite effect: They contribute to inequality and poor fiscal health.
The problem for taxpayers is that such facts and independent analyses do not stand a chance when pitted against the political reality that governors and legislators—and judging by the budget, New York Democrats—love corporate giveaways.
Politicians like corporate giveaways so much because the taxpayer-subsidized businesses and industries—as well as labor unions—have armies of consultants, lobbyists and media firms spinning narratives that these programs create jobs that benefit the average person. We have all seen the ribbon-cuttings, the hard hats, the shovels in the ground, the supportive statements from management and labor, and the backdrops of cheering workers.
Campaign contributions are the icing on this cake. Our “Debunked” report includes studies showing businesses that make campaign contributions are four times more likely to receive a subsidy, and that subsidy is 63% larger than those who do not contribute.
Corporate handouts don’t stand up to basic scrutiny: They exist solely because of politics, not because they are a cost-effective investment of tax dollars. It’s time to freeze corporate giveaways—not expand them.
The obvious questions to ask New York Democrats: Why are New York taxpayers paying business owners to employ people to make lawn furniture and sitcoms? Why not use New York’s public funds to buy goods and services that create jobs and cleaner water, better transit, nicer parks, and more child and elder care?