Supporters of Corporate Welfare Unite to Defend Giving Your Money Away
by Paul Wolf - posted 11:49 pm, May 18, 2014
Apparently Rob Astorino said a terrible thing when he stated that the Cuomo Buffalo Billion program was “just throwing around tax dollars”. Twenty three elected officials from federal, state, county, and city offices from Buffalo and Niagara Falls were so offended by Astorino’s statement that they came together to express their outrage. You can probably bet that press conference was orchestrated by Governor Cuomo, who has taken campaign fundraising and corporate welfare to an unprecedented level.
It is amazing that it is impossible to get such a group of elected officials together to work together on any other common goals or objectives. Handing out your tax dollars is so ingrained in the lifeblood of politicians that any criticism of corporate welfare demands a swift and united response.
There are a lot of reasons why corporate welfare is bad policy, for the sake of time and space I will explain three reasons below.
1) The New York State Constitution actually prohibits giving tax dollars to corporations. The state Constitution clearly states: “[t]he money of the state shall not be given or loaned to or in aid of any private corporation or association, or private undertaking;”. Politicians have found creative ways around this by using public authorities to pass tax dollars to politically connected wealthy business owners. Buffalo attorney Jim Ostrowski filed an interesting lawsuit challenging the use of tax dollars for private businesses. Ostrowski lost his case in a 5 to 2 decision. Two judges had the courage to rule against the outrageous use of tax dollars, with Justice Smith stating “It is an illusion — one that seems to have the persistence of original sin — that prosperity can be attained by taking money from taxpayers and handing it to favored businesses.”
Justice Eugene Pigott from Buffalo stated in his opinion “There seems to me no fundamental difference between the State directly giving monies to such private enterprises and the State creating a public corporation with the express intention of doing so”. “…the majority errs in holding that the Legislature may do indirectly, through a public corporation conduit, what the Constitution forbids it to do directly.”
2) Directing tax dollars to private corporations benefits a select few and rarely produces the number of jobs promised. Study after study shows that providing grants and tax breaks to corporations for the purpose of creating jobs rarely works. It’s all smoke and mirrors.
In 2012 alone, New York State handed out $1.8 billion in tax credits to businesses, a figure that has doubled since 2010, according to a tax reform commission appointed by Governor Cuomo.
A recent study by Donald Boyd of the Rockefeller Institute of Government and Marilyn Marks Rubin of John Jay College found:
• Many of the tax credits are “refundable,” meaning they go beyond merely reducing or eliminating a company’s tax bill to actually cutting a check from the state treasury—sometimes for tens of millions of dollars.
• Only about one percent of companies doing business in New York see any benefit from these tax credits at all. Many are highly profitable real estate developers and film and TV production companies.
Other studies that prove this point are:
3) Follow the money, this is all about “pay to play” politics. Politicians need campaign cash for re-election campaigns. Wealthy people have direct access to politicians and they donate money with an expectation that the businesses they own will benefit. How does Andrew Cuomo raise $33 million in campaign contributions? How does Byron Brown in one of the poorest cities in the nation raise $1.3 million for his re-election campaign? Without corporate welfare, campaign contributions would dry up significantly and politicians would lose a lot of ribbon cutting opportunities.
4) NY gives away $7 billion per year for corporate welfare. It is estimated that New York State gives away $7 billion per year on corporate welfare. This money is directed to only one percent of all businesses. It is completely unfair that 99 percent of businesses pay their full share of taxes and a few politically connected companies get a complete or partial free ride. Why not reduce taxes for all businesses by $7 billion statewide? As stated above campaign cash comes with IOU’s and corporate welfare provides a lot of free publicity for ribbon cuttings and the illusion of creating jobs.
As I stated in a previous post, the two items that seem to unite politicians more than anything is patronage and corporate welfare. When you connect the dots the big picture as to what is going on here becomes clear.