Balancing Revenues, Expenditures and Human Needs in the 21st Century

February 14, 2000. FPI Executive Director Frank Mauro takes a look at the revenue side of the 2000-2001 Executive Budget.

Governor George Pataki’s first Executive Budget of the new century avoids some of the most counter productive cuts of his previous budgets. The 2000-2001 Executive Budget, for example, does not propose cuts in Tuition Assistance for the neediest of students, and it avoids what had come to bean annual battle over Medicaid.

BUT this latest Pataki budget fails miserably in seizing the opportunities provided by the boom on Wall Street, the Tobacco Settlement monies, and the “Welfare Windfall” that the state is reaping from the federal government’s conversion of AFDC to a block grant (TANF – Temporary Assistance to Needy Families).

So, WHY, when billions of dollars are coming into the State Treasury from these three sources, is the Executive Budget

  • failing to address the state’s many unmet needs, like actually making college more accessible and more affordable for more needy students and investing in the mass transit systems on which so many low and middle-income workers depend, and
  • proposing counter productive cuts in programs from HEOP, EOP, SEEK and College Discovery to early grade intervention (universal pre-K and early grade class size reduction) to various housing and nutrition programs?

The large multi-year tax cuts enacted in recent years are soaking up all new resources.

Under the Governor’s financial plan, billions of dollars of current revenues would be rolled over to future years to “protect” the overly ambitious tax cuts which the state has enacted in the last few years, but which do not take effect until later this year or next year or the year after that. The Governor knows that those tax cuts can not be implemented without deeper service cuts than the public would find acceptable. Rather than addressing this issue head on by proposing the repeal of some of the special-interest corporate tax breaks that are scheduled to take effect over the next several years, the Governor is proposing to delay the state’s day of reckoning for as long as possible by neglecting essential investments, cutting important programs and, most importantly, by rolling over the resulting surpluses to future years in order to “paper over” the gaps that are inherent in those years’ budgets.

All of this is made necessary by the unprecedented series of multi-year, backloaded tax cuts that were enacted in the last six years. Taken together, the tax cuts enacted in Governor Cuomo’s last year in office and in Governor Pataki’s first five years are reducing state revenues by $9.4 billion during the current fiscal year alone. As the Governor proudly points out, the total value of the tax cuts over the last six years has been about $29 billion – growing from about a half billion in 1994-95 to $4.2 billion in 1996-97 to this year’s $9.4 billion. He never mentions the services that were cut and the investments that were not made in order to accommodate that $29 billion revenue loss. Imagine, if the state had cut taxes by half that amount – $14.5 billion – it would have still been the biggest tax cut in history, but could have meant less deferred maintenance of the state’s physical and human infrastructure.

What the Governor also says, which unfortunately is not correct, is that the $29 billion has gone into the pockets of New Yorkers or in to the state’s economy. As much of a third of the tax cuts simply go to the federal treasury (since state personal and corporate income taxes are deductible on taxpayers’ federal tax returns), while large portions go to nonresident individuals and out-of-state and foreign corporations. Thus, the tax cuts actually take more money out of the state’s economy than they pump back in. This helps to explain the stagnancy of those parts of the state that are not being “rescued” by external forces like the boom on Wall Street or the growth of the new Silicon Alley “dot.com” businesses.

These tax cuts are not stimulating the economy, as promised or as claimed.

The Governor defends his strategy for “protecting” the promised future tax cuts by saying these tax cuts are essential to the state’s continued economic revitalization. But the $9.4 billion in tax cuts that have already been implemented have produced no tangible benefit for the state, particularly in light of the growth-supporting investments that could have been made with all or a portion of those resources.

Almost all of the state’s job growth has occurred in the New York City metropolitan area and has been overwhelmingly related to the good times currently being enjoyed by the financial services sector, professional business services, and entertainment and media. The real test of the Pataki tax cuts is that they have done virtually nothing to stimulate growth in the parts of the state that are not benefitting from the strength of these industries. But, like the puppy who repeatedly bangs his head on the coffee table but can’t quite figure it out, Governor Pataki are proposing more tax cuts to solve a problem that $9.4 billion of tax cuts was supposed to solve but did not.

While the boom on Wall Street has allowed New York State to get through the last several years without even deeper service cuts and less investment in the state’s human and physical infrastructure than would have otherwise been require to accommodate the Pataki tax cuts, New York State tax policy has, quite simply, had nothing to do with what is happening in national and international financial markets. If New York State tax policy had anything to do with what is going on in the financial markets, the financial press would be paying a lot more attention to what goes on in Albany and a lot less to the thoughts of Federal Reserve Bank chairman Alan Greenspan.

Wall Street is located in New York State and, as a result, the New York State treasury has been benefitting mightily from the incredible bonuses and capital gains that are being generated by the unprecedented Bull Market of the last several years. The bonuses paid to Wall Street executives and the quadrupling (from $12 billion in 1994 to a projected $55 billion this year) of the amount of capital gains declared on New York State tax revenues, have resulted in two consecutive years of unprecedented increases in personal income tax revenues. But those revenues are going to cover the revenue losses from the previously-enacted multi-year tax cuts that are now taking effect, rather than investing in the state’s human and physical infrastructure in ways that address the huge disparities in socioeconomic well-being that plague our state and .help build a strong and large middle class for the future.

The tax cuts that are now on the books, and scheduled to take effect over the next several years, are even less logically related to boosting the state’s economy than were the tax cuts of the last several years. After all, the Governor’s centerpiece, a classic “supply-side” cut in the state’s personal income tax that is now reducing state revenues by over $5 billion per year, has been fully implemented and it did not come close to generating the number of additional jobs that the Governor and his advisors promised. If those tax cuts had delivered the promised job growth, New York state would now have 100,000 more jobs than it actually has.

$5 billion in additional annual tax cuts are scheduled to take effect over the next 5 years.

The tax cuts that are currently on the books will reduce state revenues by $11.6 billion during the state fiscal year that begins on April 1, 2000, and by more than $14 billion per year when fully implemented. This means that the Executive Budget that Governor Pataki recently submitted (and the budget that the State legislature is charged with adopting over the course of the next several months) had to accommodate $2.2 billion more in tax cuts than did the 1999-2000 budget.

Of the $2.2 billion in additional tax cuts to take effect during 2000, about $700 million is for the implementation of the third step of the STAR school property tax rebate program for owner-occupied dwellings, while almost $500 million is attributable to the full year cost of eliminating the state sales tax on the purchase of clothing items costing less than $110. The remainder of the $2.2 billion involves a virtually endless list of business tax breaks, many of which undercut the corporate tax reforms enacted in 1987. Some do this by weakening safeguards added by that law, like the Alternate Minimum Tax that ensures that profitable corporations can not use loopholes to reduce their tax liability by “too much.” Others simply add new loopholes or preferences for particular industries or even for particular firms.

Wrongly, but not surprisingly, the 2000-2001 Executive Budget, does not propose to repeal or reduce any of the tax cuts that are scheduled to take effect in either 2000 or during any of the subsequent years. In fact, in this year’s Executive Budget, the Governor is asking to enact additional tax cuts, some of which will not take effect until 2005 !!!

At the very least, the Governor and the Legislature should temporarily suspend those tax cuts that are currently on the books but which do not take effect until on or after April 1, 2001. They could leave these tax cuts on the books but eliminate their implementation dates pending a thorough review by a Blue Ribbon commission consisting of representatives of the executive and legislative branches as well as independent experts from outside of government. This review should include an analysis of the overall fiscal and economic implications of the tax cuts implemented over the last six years and of those scheduled to take effect in the future. It should also include a review of the interaction of the increasing number of special economic development credits that have been established in recent years (and those that have been proposed in this year’s Executive Budget) for businesses that are involved in particular types of economic activity and/or that locate in particular parts of the state. Many of these credits are being created for related purposes and with similar but not identical requirements. The result is that some firms, for the same activity, may be eligible for several different credits, all of which may have job creation as their goal, but with no or inconsistent accountability or reporting requirements.

The 2000-2001 Executive Budget proposes a new round of multi-year tax cuts.

The 2000-2001 Executive Budget proposes a new round of multi-year tax cuts to be layered on top of the tax cuts that are already scheduled to take effect over the next several years. This new set of proposed tax cuts would also be backloaded – meaning that its cost starts small but grows rapidly over time. According to the State Comptroller’s recent analysis of the Executive Budget, the new proposed tax cuts would
cost only $60 million in 2000-2001,but their cost would grow to $722 million when fully implemented.

Elimination of the Utility Gross Receipts Tax

Of the $722 million, $517 million is the estimated cost of a plan to eliminate the state’s Gross Receipts Tax on the electric and gas utilities and to make those companies subject to the same corporate net income tax that applies to regular business corporations. The $517 million figure is the Governor’s estimate of the difference between the taxes that the utilities would pay to the state treasury if current law were not changed (3.25% of their gross receipts) and the taxes that they would pay if the Governor’s proposal were to be adopted and fully implemented (7.5% of net income.)

Unlike the other tax cuts proposed in the Executive Budget, the elimination of the gross receipts tax on energy companies makes sense from a tax policy perspective. Since the utilities say that they pass this tax fully on to consumers, it represents a consumption tax and is regressive in nature, meaning that it is not related to the consumer’s “ability to pay.” For small marginally profitable businesses, particularly those in industries that involve high energy usage, a 3.25% increase in utility bills could mean the difference between failing or succeeding. The utilities, in their advertisements promoting the Governor’s proposal , indicate that they will pass the full value of the elimination of the gross receipts tax on to consumers. The legislature should ensure that any bills that would enact the Governor’s plan or a similar proposal into law, include language requiring the full “pass-along” of the savings on to consumers, consistent with the utilities’ advertisements.

It should also be noted that while a 3.25% reduction in the cost of energy (assuming that all of the tax savings are passed on to consumers) will be a welcome break for all consumers, it will not automatically produce any of the economic benefits being attributed to it by the Governor who sees it as a tremendous boom to energy-intensive manufacturing firms. In fact, while the Executive Budget proposes a gradual phase-out of the tax for the utilities (and, therefore, for most consumers), it proposes an immediate program under which manufacturers would be provided with a rebate of the full amount of the gross receipts taxes included in their energy bills during the phase-out period. To ensure that there are economic benefits to the state of such a rebate program, it should only be available firms that, at the very least, agree to maintain their current employment levels in the state.

While the elimination of the gross receipts tax on energy companies makes sense from a tax policy perspective, it should be done in lieu of tax cuts of equal value that are currently scheduled to take effect over the next several years (or some of the special corporate tax breaks that were implemented in the last several years) rather than in addition to those tax cuts, thus requiring even deeper service cuts or even greater deferred investments in future years.

Tax Credits Run Amok

Most of the other tax cuts proposed in the Executive Budget involve efforts to use the tax code to encourage firms to create jobs in areas of New York State where job creation is needed and where it would otherwise not occur. While this goal is obviously laudable, it ignores the experiences of this and other states with such efforts to use the tax code for “social engineering.” The key lesson of these efforts is that these provisions will induce very little, if any, activity that would not have occurred otherwise, and simply provide other taxpayers’ money to those who happen to meet the criteria involved.

None of these provisions should not be enacted into law, particularly at this time when the state has not ha any time to evaluate the effectiveness or ineffectiveness of the many similar provisions that have been enacted into law in the last several years. If serious consideration is given to any of these (or similar provisions), however, it is essential that certain basic “common sense” safeguards be included.

  • Tax credits created in the name of job creation should include accountability mechanisms to ensure that the promised job creation actually materializes. Only one of the Governor’s proposals (a tax credit related to an expansion of the Power for Jobs program),however, includes any kind of even quasi-public reporting on the recipients’ employment levels relative to what those levels had been prior to the receipt of the taxpayers’
  • Tax credits designed to help areas with poorly performing economies should have logical criteria and should not write into permanent law criteria that make permanent some notion of what those underperforming areas may be at a particular point in time. Many of the Governor’s proposals make just this mistake and do it in a particularly ham-handed way, making certain credits available everywhere outside the 12-county MTA region and nowhere within it. This would make tax breaks available for job creation in some areas with vibrant economies while excluding areas, such as the Bronx and Brooklyn, with extremely high unemployment rates and large concentrations of people living in poverty.
  • Tax credits or other government largesse should not be used to encourage or to reward the creation of jobs at or below the poverty level. Doing this only drives more money out of the federal, state and county treasuries in the form of the income supports that our society appropriately provides to the working poor. Only one of the Governor’s proposed tax breaks has any job quality requirement, and that requirement is extremely inadequate – providing double-value tax breaks if an employer’s average wages paid exceed $8 per hour.
  • Subsidies should not go to firms that violate environmental, worker safety, or other laws.
  • In the new information-based economy, investing in K-12 education; ESL, GED, and adult literacy programs; and, training for incumbent workers has greater pay-off than subsidies for low-wage jobs. Education must be protected from corporate welfare.
  • Subsidies don’t create markets. Retail and service businesses that serve local markets should not be subsidized except in extreme cases.
  • Piracy is indefensible in all cases. Even those who feel that New York has to compete with other states, should oppose subsidies for intrastate and intra-region relocations.
Published On: February 14th, 2000|Categories: Blog|

Share on Social Media!

February 14, 2000. FPI Executive Director Frank Mauro takes a look at the revenue side of the 2000-2001 Executive Budget.

Governor George Pataki’s first Executive Budget of the new century avoids some of the most counter productive cuts of his previous budgets. The 2000-2001 Executive Budget, for example, does not propose cuts in Tuition Assistance for the neediest of students, and it avoids what had come to bean annual battle over Medicaid.

BUT this latest Pataki budget fails miserably in seizing the opportunities provided by the boom on Wall Street, the Tobacco Settlement monies, and the “Welfare Windfall” that the state is reaping from the federal government’s conversion of AFDC to a block grant (TANF – Temporary Assistance to Needy Families).

So, WHY, when billions of dollars are coming into the State Treasury from these three sources, is the Executive Budget

  • failing to address the state’s many unmet needs, like actually making college more accessible and more affordable for more needy students and investing in the mass transit systems on which so many low and middle-income workers depend, and
  • proposing counter productive cuts in programs from HEOP, EOP, SEEK and College Discovery to early grade intervention (universal pre-K and early grade class size reduction) to various housing and nutrition programs?

The large multi-year tax cuts enacted in recent years are soaking up all new resources.

Under the Governor’s financial plan, billions of dollars of current revenues would be rolled over to future years to “protect” the overly ambitious tax cuts which the state has enacted in the last few years, but which do not take effect until later this year or next year or the year after that. The Governor knows that those tax cuts can not be implemented without deeper service cuts than the public would find acceptable. Rather than addressing this issue head on by proposing the repeal of some of the special-interest corporate tax breaks that are scheduled to take effect over the next several years, the Governor is proposing to delay the state’s day of reckoning for as long as possible by neglecting essential investments, cutting important programs and, most importantly, by rolling over the resulting surpluses to future years in order to “paper over” the gaps that are inherent in those years’ budgets.

All of this is made necessary by the unprecedented series of multi-year, backloaded tax cuts that were enacted in the last six years. Taken together, the tax cuts enacted in Governor Cuomo’s last year in office and in Governor Pataki’s first five years are reducing state revenues by $9.4 billion during the current fiscal year alone. As the Governor proudly points out, the total value of the tax cuts over the last six years has been about $29 billion – growing from about a half billion in 1994-95 to $4.2 billion in 1996-97 to this year’s $9.4 billion. He never mentions the services that were cut and the investments that were not made in order to accommodate that $29 billion revenue loss. Imagine, if the state had cut taxes by half that amount – $14.5 billion – it would have still been the biggest tax cut in history, but could have meant less deferred maintenance of the state’s physical and human infrastructure.

What the Governor also says, which unfortunately is not correct, is that the $29 billion has gone into the pockets of New Yorkers or in to the state’s economy. As much of a third of the tax cuts simply go to the federal treasury (since state personal and corporate income taxes are deductible on taxpayers’ federal tax returns), while large portions go to nonresident individuals and out-of-state and foreign corporations. Thus, the tax cuts actually take more money out of the state’s economy than they pump back in. This helps to explain the stagnancy of those parts of the state that are not being “rescued” by external forces like the boom on Wall Street or the growth of the new Silicon Alley “dot.com” businesses.

These tax cuts are not stimulating the economy, as promised or as claimed.

The Governor defends his strategy for “protecting” the promised future tax cuts by saying these tax cuts are essential to the state’s continued economic revitalization. But the $9.4 billion in tax cuts that have already been implemented have produced no tangible benefit for the state, particularly in light of the growth-supporting investments that could have been made with all or a portion of those resources.

Almost all of the state’s job growth has occurred in the New York City metropolitan area and has been overwhelmingly related to the good times currently being enjoyed by the financial services sector, professional business services, and entertainment and media. The real test of the Pataki tax cuts is that they have done virtually nothing to stimulate growth in the parts of the state that are not benefitting from the strength of these industries. But, like the puppy who repeatedly bangs his head on the coffee table but can’t quite figure it out, Governor Pataki are proposing more tax cuts to solve a problem that $9.4 billion of tax cuts was supposed to solve but did not.

While the boom on Wall Street has allowed New York State to get through the last several years without even deeper service cuts and less investment in the state’s human and physical infrastructure than would have otherwise been require to accommodate the Pataki tax cuts, New York State tax policy has, quite simply, had nothing to do with what is happening in national and international financial markets. If New York State tax policy had anything to do with what is going on in the financial markets, the financial press would be paying a lot more attention to what goes on in Albany and a lot less to the thoughts of Federal Reserve Bank chairman Alan Greenspan.

Wall Street is located in New York State and, as a result, the New York State treasury has been benefitting mightily from the incredible bonuses and capital gains that are being generated by the unprecedented Bull Market of the last several years. The bonuses paid to Wall Street executives and the quadrupling (from $12 billion in 1994 to a projected $55 billion this year) of the amount of capital gains declared on New York State tax revenues, have resulted in two consecutive years of unprecedented increases in personal income tax revenues. But those revenues are going to cover the revenue losses from the previously-enacted multi-year tax cuts that are now taking effect, rather than investing in the state’s human and physical infrastructure in ways that address the huge disparities in socioeconomic well-being that plague our state and .help build a strong and large middle class for the future.

The tax cuts that are now on the books, and scheduled to take effect over the next several years, are even less logically related to boosting the state’s economy than were the tax cuts of the last several years. After all, the Governor’s centerpiece, a classic “supply-side” cut in the state’s personal income tax that is now reducing state revenues by over $5 billion per year, has been fully implemented and it did not come close to generating the number of additional jobs that the Governor and his advisors promised. If those tax cuts had delivered the promised job growth, New York state would now have 100,000 more jobs than it actually has.

$5 billion in additional annual tax cuts are scheduled to take effect over the next 5 years.

The tax cuts that are currently on the books will reduce state revenues by $11.6 billion during the state fiscal year that begins on April 1, 2000, and by more than $14 billion per year when fully implemented. This means that the Executive Budget that Governor Pataki recently submitted (and the budget that the State legislature is charged with adopting over the course of the next several months) had to accommodate $2.2 billion more in tax cuts than did the 1999-2000 budget.

Of the $2.2 billion in additional tax cuts to take effect during 2000, about $700 million is for the implementation of the third step of the STAR school property tax rebate program for owner-occupied dwellings, while almost $500 million is attributable to the full year cost of eliminating the state sales tax on the purchase of clothing items costing less than $110. The remainder of the $2.2 billion involves a virtually endless list of business tax breaks, many of which undercut the corporate tax reforms enacted in 1987. Some do this by weakening safeguards added by that law, like the Alternate Minimum Tax that ensures that profitable corporations can not use loopholes to reduce their tax liability by “too much.” Others simply add new loopholes or preferences for particular industries or even for particular firms.

Wrongly, but not surprisingly, the 2000-2001 Executive Budget, does not propose to repeal or reduce any of the tax cuts that are scheduled to take effect in either 2000 or during any of the subsequent years. In fact, in this year’s Executive Budget, the Governor is asking to enact additional tax cuts, some of which will not take effect until 2005 !!!

At the very least, the Governor and the Legislature should temporarily suspend those tax cuts that are currently on the books but which do not take effect until on or after April 1, 2001. They could leave these tax cuts on the books but eliminate their implementation dates pending a thorough review by a Blue Ribbon commission consisting of representatives of the executive and legislative branches as well as independent experts from outside of government. This review should include an analysis of the overall fiscal and economic implications of the tax cuts implemented over the last six years and of those scheduled to take effect in the future. It should also include a review of the interaction of the increasing number of special economic development credits that have been established in recent years (and those that have been proposed in this year’s Executive Budget) for businesses that are involved in particular types of economic activity and/or that locate in particular parts of the state. Many of these credits are being created for related purposes and with similar but not identical requirements. The result is that some firms, for the same activity, may be eligible for several different credits, all of which may have job creation as their goal, but with no or inconsistent accountability or reporting requirements.

The 2000-2001 Executive Budget proposes a new round of multi-year tax cuts.

The 2000-2001 Executive Budget proposes a new round of multi-year tax cuts to be layered on top of the tax cuts that are already scheduled to take effect over the next several years. This new set of proposed tax cuts would also be backloaded – meaning that its cost starts small but grows rapidly over time. According to the State Comptroller’s recent analysis of the Executive Budget, the new proposed tax cuts would
cost only $60 million in 2000-2001,but their cost would grow to $722 million when fully implemented.

Elimination of the Utility Gross Receipts Tax

Of the $722 million, $517 million is the estimated cost of a plan to eliminate the state’s Gross Receipts Tax on the electric and gas utilities and to make those companies subject to the same corporate net income tax that applies to regular business corporations. The $517 million figure is the Governor’s estimate of the difference between the taxes that the utilities would pay to the state treasury if current law were not changed (3.25% of their gross receipts) and the taxes that they would pay if the Governor’s proposal were to be adopted and fully implemented (7.5% of net income.)

Unlike the other tax cuts proposed in the Executive Budget, the elimination of the gross receipts tax on energy companies makes sense from a tax policy perspective. Since the utilities say that they pass this tax fully on to consumers, it represents a consumption tax and is regressive in nature, meaning that it is not related to the consumer’s “ability to pay.” For small marginally profitable businesses, particularly those in industries that involve high energy usage, a 3.25% increase in utility bills could mean the difference between failing or succeeding. The utilities, in their advertisements promoting the Governor’s proposal , indicate that they will pass the full value of the elimination of the gross receipts tax on to consumers. The legislature should ensure that any bills that would enact the Governor’s plan or a similar proposal into law, include language requiring the full “pass-along” of the savings on to consumers, consistent with the utilities’ advertisements.

It should also be noted that while a 3.25% reduction in the cost of energy (assuming that all of the tax savings are passed on to consumers) will be a welcome break for all consumers, it will not automatically produce any of the economic benefits being attributed to it by the Governor who sees it as a tremendous boom to energy-intensive manufacturing firms. In fact, while the Executive Budget proposes a gradual phase-out of the tax for the utilities (and, therefore, for most consumers), it proposes an immediate program under which manufacturers would be provided with a rebate of the full amount of the gross receipts taxes included in their energy bills during the phase-out period. To ensure that there are economic benefits to the state of such a rebate program, it should only be available firms that, at the very least, agree to maintain their current employment levels in the state.

While the elimination of the gross receipts tax on energy companies makes sense from a tax policy perspective, it should be done in lieu of tax cuts of equal value that are currently scheduled to take effect over the next several years (or some of the special corporate tax breaks that were implemented in the last several years) rather than in addition to those tax cuts, thus requiring even deeper service cuts or even greater deferred investments in future years.

Tax Credits Run Amok

Most of the other tax cuts proposed in the Executive Budget involve efforts to use the tax code to encourage firms to create jobs in areas of New York State where job creation is needed and where it would otherwise not occur. While this goal is obviously laudable, it ignores the experiences of this and other states with such efforts to use the tax code for “social engineering.” The key lesson of these efforts is that these provisions will induce very little, if any, activity that would not have occurred otherwise, and simply provide other taxpayers’ money to those who happen to meet the criteria involved.

None of these provisions should not be enacted into law, particularly at this time when the state has not ha any time to evaluate the effectiveness or ineffectiveness of the many similar provisions that have been enacted into law in the last several years. If serious consideration is given to any of these (or similar provisions), however, it is essential that certain basic “common sense” safeguards be included.

  • Tax credits created in the name of job creation should include accountability mechanisms to ensure that the promised job creation actually materializes. Only one of the Governor’s proposals (a tax credit related to an expansion of the Power for Jobs program),however, includes any kind of even quasi-public reporting on the recipients’ employment levels relative to what those levels had been prior to the receipt of the taxpayers’
  • Tax credits designed to help areas with poorly performing economies should have logical criteria and should not write into permanent law criteria that make permanent some notion of what those underperforming areas may be at a particular point in time. Many of the Governor’s proposals make just this mistake and do it in a particularly ham-handed way, making certain credits available everywhere outside the 12-county MTA region and nowhere within it. This would make tax breaks available for job creation in some areas with vibrant economies while excluding areas, such as the Bronx and Brooklyn, with extremely high unemployment rates and large concentrations of people living in poverty.
  • Tax credits or other government largesse should not be used to encourage or to reward the creation of jobs at or below the poverty level. Doing this only drives more money out of the federal, state and county treasuries in the form of the income supports that our society appropriately provides to the working poor. Only one of the Governor’s proposed tax breaks has any job quality requirement, and that requirement is extremely inadequate – providing double-value tax breaks if an employer’s average wages paid exceed $8 per hour.
  • Subsidies should not go to firms that violate environmental, worker safety, or other laws.
  • In the new information-based economy, investing in K-12 education; ESL, GED, and adult literacy programs; and, training for incumbent workers has greater pay-off than subsidies for low-wage jobs. Education must be protected from corporate welfare.
  • Subsidies don’t create markets. Retail and service businesses that serve local markets should not be subsidized except in extreme cases.
  • Piracy is indefensible in all cases. Even those who feel that New York has to compete with other states, should oppose subsidies for intrastate and intra-region relocations.
Published On: February 14th, 2000|Categories: Blog|

Share on Social Media!