June 9, 2013

Sidebar: Tax Free? Not Me

New York is notorious for coming up with economic development programs that are meant to do great things for our economy, particularly in Upstate NY.  Our politicians are nothing if not creative when it comes to this kind of program, and certainly the Tax-Free NY proposal from  Sonofa Governor Andrew Cuomo is no exception. 

As noted, the main reason I'm not a fan of TFNY is that it codifies a class system: the 'have-to' class  of New Yorkers that have to pay income tax, and the 'don't-have-to' class that, simply by the stroke of a pen, don't have to. They could be working in buildings right next door to each other, making exactly the same salary, doing exactly the same thing, living right next door to each other, going to the same churches and restaurants and grocery stores, their kids attending the same schools -- but for 10 years they are different in the eyes of the government. 

The bottom line is, this program creates not only more corporate welfare, but more personal welfare. And that's wrong.

The other reason why I'm opposed to this is that frankly Albany has a horrible track record of creating corporate welfare programs that actually benefit anyone, other than themselves. We either get promises on which businesses under-deliver (or never deliver), or we get lawyerly fun and games.

Probably the most famous of these programs was the Empire Zone debacle.  This was a lawyer's dream, a program where pretty much all you had to do was change the name of an existing company and get a fistful of tax credits as a result.  You didn't have to create a single new job; you didn't have to build a store or office building that would have put other people to work doing something productive, and where a customer could go to and spend money purchasing goods or services not previously available.

It was literally as easy as changing your shirt or underwear (more apt, I think, since for the most part it was a load of crap).  That's why, in the Tax-Free NY proposal there are supposed to be precautions so that 'shirt-changers' don't pollute the program.

For purposes of illustration, I did some really easy research and found a database of businesses, the jobs they created, and their tax credits for 2010.  Here's the intro to the data:
More than 3,000 businesses were expected to claim Empire Zone tax breaks on their 2010 taxes. The recently released information comes from records the companies filed with state economic development officials at the end of 2011. Search our database to find the companies' tax credits, investments and jobs.
Here are the Top 25 tax credit recipients for Onondaga County and the City of Syracuse.
 
Company Name  (Onondaga County)
Jobs
Tax Credit
Credit/job
Buffalo- Main Street LLC
1
$639,537
$639,537
DestiNY USA Holdings LLC
3
$440,768
$146,923
Syracuse Property Partners LLC
2
$288,335
$144,168
COR Route 5 Company LLC
4
$575,029
$143,757
Peregrine International LLC
1
$100,290
$100,290
Falso Holding Co. LLC
1
$82,362
$82,362
RLB Development LLC
9
$692,616
$76,957
BAR Advertising Co. No. 2 LP
8
$555,832
$69,479
JGB Factoring GMBH LLC
2
$131,740
$65,870
Performance Drive LLC
1
$59,565
$59,565
6580 Weighlock Drive Company LLC
1
$49,666
$49,666
Roth Global Plastics Inc.
1
$45,069
$45,069
344 South Warren Street Corporation
1
$34,586
$34,586
T-L Marketplace LLC
2
$61,699
$30,850
Basin Associates LLC
3
$67,792
$22,597
SRCTec Inc.
219
$4,808,487
$21,957
GALLAGHER ELECTRIC PARK LP
1
$19,418
$19,418
Reagan Realty LLC d/b/a MNR Consulting
3
$52,359
$17,453
The Empire Crane Company LLC
16
$264,511
$16,532
Syracuse Airport Suites LLC
14
$173,330
$12,381
East Taft Distribution LLC
1
$11,891
$11,891
Evening Star LLC
3
$30,466
$10,155
Kevidco LLC
10
$84,597
$8,460
Roth Global Plastics Inc.
2
$16,026
$8,013
Seventh Brook Properties LLC d/b/a Stickley
18
$130,879
$7,271
AVERAGE
13
$376,674
$73,808
 
Company Name (City of Syracuse)
Jobs
Tax Credit
Credit/job
CNYX Properties Inc.
1
$586,085
$586,085
One Park Place LLC
2
$656,245
$328,123
250 South Clinton LLC
3
$926,672
$308,891
XCNY Properties Inc.
2
$609,917
$304,959
Deys Plaza LLC
1
$278,763
$278,763
Carousel Center Company LP
45
$9,254,370
$205,653
Maltbie/Division LLC
1
$157,465
$157,465
300 Washington Street LLC
1
$153,272
$153,272
DestiNY USA Holdings LLC
3
$440,768
$146,923
Autocom Leasing Corp.
1
$141,347
$141,347
Pomcoplus LLC
3
$392,681
$130,894
Atrium Associates LLC
3
$311,278
$103,759
Clinton Street Soma Project LLC
1
$94,227
$94,227
Lakefront Lofts LLC
1
$92,911
$92,911
224 Harrison Associates LLC
2
$164,985
$82,493
Vinlandic LLC
1
$81,898
$81,898
Trespasz & Marquardt LLP
1
$77,483
$77,483
Sycamore Holdings LLC
1
$77,003
$77,003
Boukair Realty LLC
1
$74,110
$74,110
RHS Holdings LLC
1
$72,798
$72,798
Berkley 518 Office LLC
1
$72,768
$72,768
Sewer Sciences Inc.
7
$492,695
$70,385
Onondaga Commons LLC
1
$68,158
$68,158
One Clinton Square Associates LLC
1
$67,735
$67,735
Franklin Lofts LLC
2
$129,250
$64,625
AVERAGE
3.5
$618,995
$153,709


Seem a little suspicious, all these LLCs and LLPs and Associates and Partnerships and street addresses out there creating jobs and getting those healthy tax credits, doesn't it?

And doesn't it seem like it would be pretty easy for another bunch of LLCs and LLPs and Associates and Partnerships and street addresses to find a way to establish "a relationship to the academic mission of the university" and come up with another whole dresser drawer-full of underwear and do it all over again, doesn't it?

One more thing: a while back, David Patterson (our Accidental Governor) tried to take away ill-gotten gains (in the form of prior-year credits) from Empire Zone abusers.  The shirt-changers got mad, sued, and recently won their case against us, the real tax payers of New York.  Additional lawsuits are pending. 

Don't fall for it, again, New York.

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