Buffalo attorney James Ostrowski recently argued a very important case before the New York State Court of Appeals, which if successful will have a huge impact on pay to play politics, and reduce taxes in New York State.
The law suit brought by a Lockport, NY financial planner and others belonging to an anti-tax group seeks to eliminate tax payer subsidies paid to corporations for economic development incentives. New York’s State Constitution states in Article VII, Section 8 — that “the money of the state shall not be given or loaned to or in aid of any private corporation or association, or private undertaking.” Despite this clear constitutional language politicians in exchange for campaign donations have found ways to steer money to connected developers and corporations.
Bill Hammond from the New York Daily News wrote a great article about the billions of dollars that politicians give away to corporations in New York State. As Hammond states:
Year in and year out, politicians in New York and other states shower companies with billions of dollars in grants, low-interest loans, tax breaks and other goodies in the name of economic development.
In fact, what the pols are really doing is bribing those companies to locate within their borders – so that they can attend the ribbon-cuttings and pat themselves on the back for creating jobs that were probably going to be created anyway.
I agree completely with the above point and this one as well:
… elected officials have no business trying to pick winners and losers while gambling with the taxpayers’ money.
Another flaw in economic development programs is that they almost always favor larger companies – which have the wherewithal to win government help – even though it’s small businesses that actually create most new jobs.
Plus, the programs are breeding grounds for public corruption as elected officials and their appointees dole out favors to their pals and political supporters.
In 2006, an incredible $1.4 billion in loans, grants, tax breaks, (including $665 in cash) was provided to GlobalFoundries on a promise of creating some 1,400 permanent jobs in Saratoga County, which works out to about $1 million a job!
Hammond additionally points out:
According to economist Michael LaFaive of Michigan’s Mackinac Center for Public Policy, research consistently shows that the programs are a waste.
“It’s the illusion of job creation,” he says. “That’s why politicians like it. Illusion trumps reality in their industry.” LaFaive says money would be far better spent on improving the state’s overall business climate – by investing in infrastructure or lowering tax rates for all rather than a select few.
New York State is billions of dollars in debt making layoffs and budget cuts necessary. Now is the time to end the insanity of throwing public dollars at corporations, as it simply doesn’t work and we can’t afford it any more.
What do you think?