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Presidential Issues: Corporate Welfare

Corporate Welfare

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Don’t Subsidize This

July 8, 2015

By Milton Ezrati

In 2014, New York governor Andrew Cuomo enacted tax reforms that lowered the statutory corporate tax rate, broadened the base, and simplified the code. It was a step in the right direction, but New York, which ranks 46th in economic health among the states in a new Mercatus Center study, remains a high-tax state with complex rules. Real reform would entail ending Albany’s continued embrace of ineffective tax subsidies.

New York is hardly alone in its enthusiasm for tax incentives; every state has at least one. They take various forms—sales-tax relief, direct write-offs, credits on income taxes—but the subsidies all have similar objectives: to attract out-of-state businesses, particularly to depressed regions and neighborhoods. Accompanied by rhetoric about jobs and development, such giveaways seem to have perpetual political appeal. Touting his START-UP NY initiative, which created tax-free business zones for tech start-ups, Cuomo claimed that the zones would “jump-start the upstate economy.”

Reality belies such rhetoric. Take, for example, New York’s biggest subsidy: the $420 million annual tax break for film and television productions, which dwarfs every other handout that Albany offers, including Cuomo’s widely advertised subsidies for his ten regional economic development councils ($220 million) and for venture-capital initiatives ($50 million). Though at least 40 other states offer enticements to the film and television industry, Albany’s version is remarkably generous, providing a fully refundable 30 percent tax credit on qualified production costs and an additional 10 percent credit on productions located in depressed counties...

Read the full article at City Journal: Don’t Subsidize This

Issue Categories : Andrew Cuomo, Corporate Welfare, Taxes