New York State faces a budget shortfall of $2.3 billion as it plans for the next fiscal year. This is a problem. Problems have causes.
Through Governor Cuomo’s tender mercies, New York’s public colleges offer “free” tuition to students of families earning up to $125,000/year. Of course, the tuition is not free at all. The taxpayers cover it.
Let’s be clear on that.
The Governor has extended the $420 million/year tax credit to studios and TV networks who film in NYS. This is economic development. And it is $420 million that the state does not collect.
New York has the second costliest Medicaid program in the country ($62 billion), exceeded only by California ($88 billion) and considerably ahead of third place Texas ($41 billion). Evaluating New York’s Medicaid benefits is a subject for another essay. For now, let’s just acknowledge the considerable price tag. And that the state shifts a significant portion of that tag to local governments. Approximately 30 percent of your Ontario County tax bill funds the state Medicaid program.
The Governor proudly wooed Amazon to Long Island with tax incentives in excess of $1 billion. He said that the incentives were necessary. NYS was in a bidding war.
Speaking of “war” brings us to the real culprit regarding NY’s revenue shortfall. Apparently, the financial difficulty has little to do with any of the abovementioned programs. The culprit, as if one couldn’t already guess, is none other than President Trump. According to the Governor, the President is waging an “economic civil war” on NY. You see, the 2017 federal tax reform bill capped the tax deductions that one can take for state and local taxes. New York has notoriously high taxes. By capping deductions, the tax bill is forcing the hand of wealthy New Yorkers. Some of them are leaving the state and/or finding tax shelters.
The Governor has happened upon an amazing discovery: People, especially wealthy people, tend to find ways to avoid burdensome taxes. Of course, this is one reason that developers and other businesses are so eager to participate in the Governor’s economic development giveaways. Plain and simple, they want to avoid paying taxes. In fairness, I acknowledge that they do this not for their own profit, but to help the rest of us. This is not war; this is a new kind of philanthropy. For war, we have to cast our eyes toward Washington, D.C.
Ten years ago, a billionaire who resided in New York had this to say: “I love New York.” Nevertheless, Tom Golisano changed his official residence to Florida. The Inquiring Taxpayer defers to the much smarter, and much wealthier, Mr. Golisano: “Politicians like to talk about incentives — incentives for businesses to relocate, incentives to buy local, and incentives to make smart decisions. ... I have identified the most compelling incentive of all: a major tax break immediately available to all New Yorkers. To be eligible, you need only do one thing: move out of New York State.”
The caravans migrating to the USA’s southern border are mirrored by the caravans of middle and upper class wage earners who have been fleeing New York for the last decade. New York’s tax-supported debt is $3,082 per capita. The national median is $987. To make political hay of the Trump card is to ignore a much larger problem.
Many people want to see Donald Trump’s tax returns. The Inquiring Taxpayer is not sure of everything that they might reveal, but one thing I am sure of. They will show that his accountants take advantage of every loophole, every arcane tax dodge, available. He’s admitted as much. In 2017, the President took a $45,000 property tax deduction for his penthouse apartment at Trump Tower. Surely, you’re aware of the condo co-op abatement.
Pretty disgusting, isn’t it? But here’s the thing. Trump took perfectly legal advantage of a tax code always at the ready to serve some special interest. The typical reasoning, a reasoning employed even in the Chosen Spot, goes this way: It (the grant, the tax break) exists. We might as well get our share. This attitude is indeed a war of sorts against justice, honesty, and ethical decision making.
Giveaway programs such as payments in lieu of taxes and block grants that pirate anti-poverty funds are created out of whole cloth to serve various special interests and then used with the ever present rationalization that if we don’t take advantage of them, others will. Admirable!
Public money should never be given to private for-profit interests. With this common sense provision we, in one fell swoop, eliminate the expensive bidding wars for the Amazons of the world, the misdirected grant money, and the special interest tax breaks pawned off as economic development.
When we talk about getting our share, that share should involve public money for needed public projects. The disbursement ought to be through a transparent and clearly defined process.
We have created a taxation labyrinth that sucks the life out of the average citizen, tramples on his freedoms, and is constantly manipulated by those who add to the labyrinth daily. This is the economic civil war that plagues New York.
Speaking of getting one’s share, in 2015 Donald Trump received a STAR tax credit for his penthouse apartment. Think he’s the only one to game that particular tax break?
Shortly thereafter, he took Tom Golisano’s advice. He left New York. Apparently to wage war.
Joe Nacca of Canandaigua is a frequent contributor to the Daily Messenger.