New York lawmakers slam tax breaks for movie, TV and Cuomo companies
The $10 billion in annual government grants and tax breaks given to businesses in New York City were branded wasteful and mired in corruption at a state Senate hearing on Friday.
Programs that have been particularly cited for not providing the best value for money include the hefty $420 million tax credit for the film and television industry to shoot projects in New York – and the economic development of the north of former Governor Andrew Cuomo.
“Study after study has demonstrated that there is a fairly low return from states that offer a tax credit and a movie,” said Sen. James Skoufis, chairman of the inquiry committee.
When asked, Empire State Development officials could not cite any studies that found the film and the tax credit to provide a solid return on investment.
Indeed, it was revealed at the hearing that ESD does not provide a rigorous analysis of companies benefiting from tax subsidies.
The Citizens Budget Commission, among other researchers, has called for the phasing out of the tax credit program.
“Business subsidy programs are politicized, scandal-ridden and at massive and ongoing corruption risk,” testified John Kaehny, director of government watchdog group Reinvent Albany.
“They are a waste of public funds, and every independent analysis has found them a hugely inefficient way for the government to create jobs.”
Corporate welfare, Kaehny added, contributes to Albany’s corrupt culture of pay-to-play between recipients of government largesse who then funnel tens of thousands of dollars into the coffers of elected officials who support the programs. .
“There’s a reason the grants are at the center of New York’s biggest corruption scandals of the past decade. The wealthy who control corporations that receive billions in state grants are among the biggest contributors to the campaign,” Kaehny said.
Cuomo’s controversial upstate Buffalo Billion business grant schemes have led to massive kickbacks and bid-rigging corruption scandals that have resulted in convictions for felony arm right of then-governor Joe Percoco and architect of state programs Alain Kaloyeros, as well as bidders who were big donors to the former governor.
Sen. John Liu (D-Queens) said tax breaks for a privileged few and not others create an unfair playing field.
“Most of the jobs created in New York are without state subsidies. This puts companies that don’t receive an incentive at a disadvantage,” Liu said.
Even business advocates said the massive handouts to wealthy corporations provoked a backlash – especially when Cuomo and former mayor Bill de Blasio offered $3 billion in tax subsidies as part of a failed attempt to get online retail giant Amazon to build a headquarters along Queens. seafront.
Amazon pulled the project amid fierce opposition.
Kathy Wylde, CEO of the Partnership for New York City, said people find Amazon’s breakup offensive.
The problem, Wylde said, is that the tax incentives are offered to offset the high cost of doing business in New York, including regulatory costs as well as taxes.
“In New York State, the primary role of economic development incentives has been to offset the high costs of doing business in the state. Our experience with the Amazon HQ2 fiasco illustrates how poorly New York’s approach to economic development has worked,” Wylde said.
She said the Amazon debacle was instructive.
“Virginia won HQ2, including the additional 20,000 jobs originally intended for New York, in a bid that did not require tax subsidies because it is a state with competitive tax rates,” Wylde said.
“Instead, their offer was to set up public funding for new public transit, affordable housing, and a huge fund to prepare thousands of local residents for Amazon jobs. With a similar package, New York would have retained those jobs, but we were stuck with the wrong tools and a cost structure that needed to be mitigated to get in the game.”
Lawmakers who complained about the subsidies last year raised corporation taxes from 6.5% to 7.25% for companies making more than $5 million in revenue.
Agency spokesman Matt Gorton responded, “Empire State Development is focused on creating jobs and expanding economic opportunity for all New Yorkers, and ESD incentive programs are delivering results: Tesla has exceeded its commitment to jobs and investment, and the film production industry contributes more to the Empire State’s economy – especially small businesses – than any investment in it provided.
“As we rebuild our economy after the pandemic, smart and strategic investments to support growing industries are an important tool in New York’s economic development toolbox.”