Ever since Amazon’s break-up with New York on Valentine’s Day, dejected Mayor Bill De Blasio is complaining that corporations shouldn’t be able to play off one local government against others for tax breaks. “I don’t think it’s really fair to pit city against city and state against state,” De Blasio whined like a jilted suitor.
Grow up, Mr. Mayor. Localities will always vie to woo companies. The real problem is that New York is pursuing a losing strategy. Winning requires low taxes and deregulation that benefit every company — whether it’s big or small, new to the state or homegrown.
Instead New York pols keep taxes at intolerable heights. Then they boast about negotiating tax breaks with a few big companies like Amazon. These pols aren’t job creators at all. They’re job buyers, willing to bid whatever it takes (with our money) so they can brag about luring in a plum employer.
The whole strategy is unfair to smaller companies that have to do business absent these tax breaks. And to the state’s taxpayers, who have to pay more in taxes to make up for the lost revenue from these deals.
We’re footing the bill for these pols’ phony job-creation theatrics.
Governor Andrew Cuomo and Mayor De Blasio did a victory dance in November, when Amazon said it would build a second headquarters in Long Island City. Give the two credit. At least they were willing to deal with Amazon. Unlike Congresswoman Alexandra Ocasio-Cortez and her anti-capitalist ilk, whose vocal opposition may have been what drove Amazon out.
The Amazon deal aside, New York lost the overall competition for job growth in 2018, coming in below national average. Which states won? Nevada, Texas, Washington, and Florida, which have no income tax, as well as Colorado, Arizona, and Utah.
Cuomo blames bad weather for New York’s mediocre showing, and the exodus of New Yorkers to other states. That’s laughable. Utah, hardly tropical, has a booming economy.
Cuomo’s tailor-made tax breaks are an abysmal failure. Since taking office in 2011, he’s doled out more than $10 billion in costly giveaways. Failures include the $90 million factory in upstate Syracuse for Soraa LED lighting company, which walked away from the deal. New York’s taxpayer-funded corporate handouts are the most expensive in the U.S. and among the least effective, according to the W.E. Upjohn Institute for Employment Research.
In New York and nationwide, the strategy is a flop. Since 1990, states have tripled the amount of tax credits they’re offering companies to set up shop. But the states winning economically are pursuing a wiser strategy: across the board tax cuts and regulatory relief instead.
States that woo big companies with special packages are getting slapped in the face. Three years ago, General Electric moved its corporate headquarters from Connecticut to Massachusetts, sweetened with a $25 million tax break package. Thursday, General Electric canceled plans for an office tower on the Boston waterfront and pared its staffing plan from 800 jobs down to 250.
Lawmakers in several states, including Massachusetts and New York, are acting like embittered suitors. They’re proposing interstate compacts to prevent any future bidding wars. De Blasio says he wants to end “economic warfare.” New York State Assemblyman Ron Kim insists that states “can’t be pitted against each other like this.”
Stopping state politicians from competing for jobs? When pigs fly.
Just minutes after Amazon spurned New York, officials from New Jersey sent the company heart balloons, cupcakes, and a message saying “NJ & NEWARK STILL LOVE U, AMAZON.”
Senator Elizabeth Warren (D-MA), celebrating Amazon’s pull out, suggests that companies shouldn’t be allowed to shop for relocation deals. “How long will we allow giant corporations to hold our democracy hostage?”
Sorry, Senator, but competition is inevitable, and a good thing. It’s part of our capitalist system. New York and other high tax states just need to compete intelligently. That means lowering taxes for all companies and putting out a sign that says “Business Welcome.”
So far extreme leftists would rather bash the system as “rigged” and continue to lose.
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