Tax Breaks Don't Equal Job Creation
May 18th, 2006

Tax breaks for corporations dont always translate into jobs for New Yorkers that is the warning in a report by State Comptroller Alan Hevesi highlighted on the Drum Major Institute blog.

A recent audit by the comptroller found that two-thirds of Industrial Development Agencies, independent public authorities that offer tax breaks to companies in an effort to boost business, did not meet job creation goals.

“It’s simply not enough to say that with an investment of public capital, jobs will be created,” writes Adrianne Shropshire. “For poor and working-class communities the quality of those jobs will mean the difference between being able to afford to live in your community and being gentrified out.”

By on May 18, 2006, 6:02 am
In category: Community Development,Gotham City | 4 Comments »

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4 Responses to “Tax Breaks Don't Equal Job Creation”

  1. Larry Littlefield Says:
    May 18th, 2006 at 6:46 am

    Just looking at the firms that receive tax breaks is an underestiamte of the damage.

    Just because some firms are getting breaks does not mean the total business tax burden is low. New York’s state and local taxes are the highest in the country as a share of income; the burden is greater in NYC than elsewhere. So if some businesses are getting breaks, others are paying even more.

  2. Larry Littlefield Says:
    May 18th, 2006 at 6:49 am

    Who are those others? They are, by and large, new entreprenurial companies. Businesses that don’t exist yet, or are still small, don’t have the clout to lobby for special treatment. So they are a special target.

    For example, NYC entreprenuers pay two local income taxes, not just one, with the unincoropated business tax the second. Why should someone who starts a firm pay more on the exact same income as someone who works for a non-profit, or a large corporation, or a public agency? Because in New York, they matter less.

    So they go elsewhere — and when they grow, they grow elsewhere. According to business turnover data one-third of the jobs at any momment are in places of business that did not exist five years prior. Fail to attract new businesses, and new types of businesses, and your economy dies.

  3. Elana Says:
    May 18th, 2006 at 2:32 pm

    You’re take on how this shifts the tax burden is very well put Larry.

  4. Larry Littlefield Says:
    May 19th, 2006 at 6:59 am

    Professional experience has taught me humility and cynicism on this issue.

    Humility that even the most knowledable policy analysts can correctly identify the firms and industries worthy of special benefits. Both Pataki and Cuomo pushed these special industry centers and breaks upstate, with little effect. Meanwhile, Golisano built Paychex into a major employer. Did anyone identify payroll processing as a strategic growth industry?

    Cynicism that even if policy analysts could figure out who to subsidize, politicians wouldn’t hand out tax breaks to whoever donated the most funds. That’s how everything else works. The policy analysts are charged with coming up with the rationalizations after the fact.

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