We’re not sure why Gov. Cuomo’s New York State Tax Reform and Fairness Commission opted not to publish the 137-page addendum on business-tax subsidies. But the deliberate omission sure made us curious to see what was inside.
We weren’t disappointed. Funded by Blackstone’s Peter Peterson and commission co-chairman Peter Solomon, this addendum is a first-rate critique of the system of tax subsidies that favor select businesses over everyone else. Most fundamentally, it points out there is “no conclusive evidence that business-tax incentives actually increase economic gains to the states above and beyond what would have been attained in the absence of the incentives.”
Last week, we wrote about one of the most notorious of these subsidies — the tax credit for the film industry. As this study notes, even calling this a tax credit is a stretch: Those who receive the “credit” get checks even when they pay no taxes. In any honest accounting, that’s a spending program. And it’s a scandal that this special treatment underwrites one of the most lucrative industries in America.
The larger message here isn’t just about the inefficacy of these credits (or the glaring lack of any serious follow-up to measure if they are performing as advertised). It’s also about fairness. When you give some businesses lower rates, you are making higher rates for others. Such special treatment is particularly outrageous in a state that ranks dead last in terms of its business-tax environment.
Far better, as the report suggests, to roll back all such credits and use the revenue to lower taxes all over. By one estimate, New York could slash its business-tax rate by a third with the $1.7 billion in revenue it now doles out in the form of these tax credits.
Playing favorites with tax treatment is the gateway to crony capitalism — and it’s something both the left and right can agree on. The left doesn’t like money going to business. The right doesn’t like distorting the free market. Sounds like a coalition New York could use.