By Maureen A. Harding
Recently, Texas Gov. Rick Perry came to poach New York State jobs. Gov. Andrew M. Cuomo responded that his own Tax-Free New York is far superior.
In 2012, New York State ranked third for gross domestic product and ranked fourth-highest in per capita income, according to the Bureau of Economic Analysis. The two economic indicators are lost on critics complaining of high taxes in New York.
Comparatively, New York’s tax system has a close-to-flat tax structure overall, accounting for income, property, sales and excise taxes. New York manages to achieve one of the least regressive tax systems in the nation. Yet, still, poor and middle-income families pay a higher share of their income toward taxes than wealthy families do.
States that are revered for their “low” taxes are enormously high tax states for poor and middle-income families. The Institute on Taxation & Economic Policy verifies the 10 states that have the highest taxes on the poor: Arizona, Arkansas, Florida, Hawaii, Illinois, Indiana, Pennsylvania, Rhode Island, Texas and Washington.
In 1936, Mississippi pioneered public subsidization to industrialize the nation’s poorest state. Gov. Hugh White’s proposal involved tax-exempt bond financing backed by tax revenue for building construction and land purchases to attract industries. The pitch included buildings and land leased at sub-market rates along with cheap abundant labor (e.g., ex-sharecroppers).
While the practice was unconstitutional in virtually every state, each created amendments to circumvent the law and the practice spread widely despite low economic growth. When subsidies expired, companies demanded more in order to retain jobs. If demands were not met, then they closed up shop in search of the next big giveaway.
More than five decades of evidence establishes the illegitimacy of this practice. Public subsidies do not generate economic growth or jobs as claimed. What we have learned is simple. Subsidization of business buys a “payroll” through a lien on property. Tax increases are certain for average taxpayers in order to finance Tax-Free NY.
Tax-Free NY is the “decisive” race to the bottom. It does not create new jobs. It moves another state’s jobs to the tax-free zone until the subsidy expires. The College of Nanoscale Science and Engineering is prescriptive. The lack of quaking economic growth in the Albany-Schenectady-Troy Metropolitan Statistical Area does not justify replicating this model throughout the state.
It is incongruous to hype an unfriendly business climate in New York because of high taxes and then increase taxes for the average taxpayer so that a privileged few can pay nothing in a tax-free zone.
Maureen A. Harding, of North Tonawanda, is an urban planner with several years experience with federal, state and local governments.