ALBANY’S annual kabuki dance typically includes demands from employers for cuts in New York’s sky-high business taxes – followed by claims from labor and the bureaucracy that state government needs the revenues, that cutting business taxes would undermine essential services.
The “necessity” argument nearly always carries the day. But New York’s Legislature this session has trimmed taxes for two industries – video-lottery terminals (that is, slot machines) at racetracks around the state (racinos), and movie and TV production.
In these select instances, our state leaders determined, high taxes so impede investment and job creation that the state would realize more revenue with a lower tax rate.
In February, the Legislature approved a substantial tax cut in racino tax payments to the state totaling about $125 million a year. Reaping the windfall are racinos near bankruptcy (in Yonkers, for example) as well as flush ones (Saratoga’s).
The Spitzer administration advocated this policy in light of the universal belief that the state tax rate on racinos – the nation’s highest – was discouraging further investment in them, including at the planned, state-owned parlor at Aqueduct in Queens. The Legislature responded and lowered the racino tax, believing it would encourage further racino investment and ultimately result in higher earnings for racino owners and the state, the largest beneficiary of betting by customers at these facilities.
A month later, the Legislature cut taxes on in-state movie and TV production – a cause favored by media companies, studio owners, producers and movie labor. Gov. Paterson signed into law a tripling of the film-production costs covered by the state tax credit and extended the program for two years.
Advocates of the cut pointed out that Connecticut, Louisiana and other states had lowered taxes on movie production and were stealing business from the Empire State. Leading Hollywood types explained that, while they love New York State, movie production is a business and they have to focus on the bottom line
I don’t begrudge any over-taxed industry whatever tax relief it can squeeze out of our dysfunctional Legislature. But here’s the question for Gov. Paterson, Assembly Speaker Sheldon Silver and Majority Leader Joe Bruno:
Why stop at slot machines and movie production?
New York’s taxes are among the very highest in the country. The state economy is deeply troubled, lagging the nation in job creation and income growth. And what may be a national recession could lurch into a New York depression – given our continued reliance on an ailing Wall Street and the turbo-charged costs of doing business here.
If tax cuts are good enough for slot-machine operators and moviemakers, what about upstate manufacturers, downstate banks and everybody in between?
Having established the principle that the level of state taxes matters, with impact on investment and jobs to revive New York’s economy, let’s extend the matter and grant all state businesses tax relief.
George J. Marlin’s latest book is “Squandered Opportunities: New York’s Pataki Years.”