“State and local taxpayers should get their money’s worth from the billions in government subsidies that are given to businesses each year in New York State,” declared the Fair Budget Campaign at a press conference this morning at the Legislative Office Building in Albany. The Fair Budget Campaign is a cooperative project of nine statewide organizations that represent religious, senior citizen, community, environmental and taxpayer perspectives.
The leaders of the campaign’s member organizations were joined at today’s press conference by legislators who are sponsoring a series of bills that would address the issue of corporate responsibility and job creation. According to Frank Mauro of the Fiscal Policy Institute, “It’s about time that New York joined the increasing number of states that are require subsidy-receiving businesses to deliver on their promises of job creation or get off the taxpayer-funded gravy train.”
The Corporate and Financial Accountability Act sponsored by Assembly Majority Leader Michael Bragman and Senator William Stachowski would do just that by requiring firms that do not deliver on their job creation promises to return their “overpayment” to the taxpayers.
Assembly Majority Leader Michael J. Bragman said, “It makes good economic sense to help companies create and retain jobs by providing targeted financial assistance, but such assistance must be well-conceived and closely monitored. The Corporate and Financial Accountability Act will ensure that every dollar the state spends on strengthening the economy will produce a significant return on investment, by requiring companies to document job creation efforts and to repay financial assistance if they fail to meet economic development goals or fail to maintain high safety standards and fair labor practices.” Senator William T. Stachowski said “It’s all very simple: New York’s taxpayers should get what they pay for. If a company accepts public dollars based on a promise to create jobs, either that promise should be kept or the money should be returned.”
“Corporations doing business in the state, particularly those that receive firm-specific subsidies, must do business in an economically, socially and environmentally responsible manner,” said Karen Scharff of Citizen Action of NY. Both the Bragman/Stachowski bill and a measure sponsored by Assemblyman Martin Luster would move the state in this direction. “This package of bills is long over due. We have seen too many examples of corporations taking the taxpayers’ money and giving nothing in return,” commented Assemblyman Luster.
Unfortunately, New York has not fully participated in the recent economic recovery and unemployment remains much higher here than in the rest of the nation. Legislation introduced by Assemblyman Felix Ortiz would change the rules governing the state’s lucrative Investment Tax Credit to increase the credit going to firms that create and retain jobs and to reduce the benefits going to firms that reduce jobs in the state. According to Assemblyman Ortiz, “If we’re going to justify tax breaks like the Investment Tax Credit on the basis of job creation, then it’s only logical that we relate the size of a firm’s break to its job creation record.”
At the same time that New York’s economy sputters along, state and local governments continue to spend billions in taxpayer dollars on grants, loans and tax breaks for corporations.
Many of the same companies that get taxpayer assistance turn around and move jobs out of state, while giving huge raises to their CEOs and other top managers. Assemblyman Bill Magee’s innovative legislation would establish residency requirements for firms receiving government assistance. “Millions of dollars in aid is being lost to companies who show no commitment to the state of our communities,” said Assemblyman Magee. “Businesses that pocket state-aid and disappear do not deserve hard-working taxpayers’ dollars.”
Legislation sponsored by Assemblyman James Brennan would require that corporations disclose the amount of state taxes that they pay. Only in this way will taxpayers be able to tell if corporate loopholes are allowing large profitable corporations to pay little or nothing in state income taxes. “For decades, major corporations have been required to disclose how much they pay in federal income taxes, but the income taxes they pay to each state have been shrouded in secrecy. This legislation will allow a few rays of sunshine onto the amount big New York corporations pay to our state and allow greater public debate about the fairness and equity of our tax law,” said Assemblyman Brennan.
“Taxpayers of New York should not be subsidizing irresponsible corporations, ” said Mark Dunlea of the Hunger Action Network of New York State. “Grants, loans and state contracts should only go to corporations that pay their employees decent wages and benefits and refrain from paying indecent amounts to top executives, provide jobs for New York residents, obey the law, and pay their fair share of state and local taxes.”
The Fair Budget Campaign also issued a Statement of Corporate Responsibility Principles:
- Businesses that get government subsidies and tax breaks should be required to deliver on their promises to create and retain jobs in New York State.
- Businesses that get government subsidies and then fail to live up to their promises to create and retain jobs should be required to refund their “overpayment” to the taxpayers.
- Publicly traded corporations that are currently required to disclose the amount of federal income taxes paid should be required to do the same at the state level.
- No taxpayer subsidies should be given to businesses that violate federal and state laws relating to the environment, safety and health, workers’ rights or civil rights.
- State tax incentives must be designed to support job creation not job elimination.
1999 Corporate Accountability Legislation
Corporate and Financial Accountability Act – A3325 (Bragman) / S1988 (Stachowski) – Would require any state agency which distributes state assistance for the purpose of economic development to develop a financial accountability policy. This would include recovering such assistance if the recipients fails to meet the agreed upon terms (e.g., number of jobs created or retained, or other performance standards), and requiring applicants to provide information regarding history of job creation and retention, OSHA violations, equal employment opportunity credits and environmental standards (does not deny award based on violations). Denies future assistance for five years if subject to recoupment procedures.
The Investment Tax Credit (ITC) Accountability and Job Creation Reform Act – A6736 (Ortiz) – Currently businesses are allowed an investment tax credit equal to 5% of the money that they spend on plant and equipment. Under the proposed legislation, the amount of the original ITC would be reduced from 5% to 1%, but an Employment Incentive Credit would be available for up to 12 years, depending on the firm’s level of employment growth. The proposal would also eliminate the ability to carry unused credits forward to future years. This would base the ITC on job creation and retention.
Job Creation Performance – A1548 (Luster) – Applications to the Urban Development Corporation shall require information related to the applicant’s history of performance in contributing to job creation, economic stability, child care and community revitalization. Approval shall be based on such information.
Corporate Tax Disclosure – A5026 (Brennan) – There are huge, profitable corporations who pay little if any taxes on the income they may in New York. These companies shift their taxes to us while they jobs out of New York. This legislation requires certain publicly traded corporations to file reports on tax payments and finances. Information would include: total gross profit; any deduction or tax credit more than 5% of tax bill; any tax credit carryover or unused credit of more than 5%; and net taxable income.
Residency Requirements for Businesses Receiving Government Subsidies – A6090 (Magee) – Companies that receive corporate economic incentives from New York State need to ensure that those incentives are invested in New York. Establishes a residency requirement for state economic development assistance from the department of economic development, job development authority, science and technology foundation, and urban development corporation. If company receives an economic assistance award of more than $50,000 and moves out within 10 years, would be require to repay with 5% penalty and be prevented from receiving such assistance in the future.