Public Employee Press

Editorials
Stop Corporate Welfare

Each year, the City of New York spends a total of about $4 billion on what it calls "economic development."

We think much of it—alas, too much of it—should be called corporate welfare. The New York City Industrial Development Agency, for example, gives out tens of millions of dollars annually in tax exemptions to companies that promise to retain and create jobs.

The problem is, they don't fulfill their promises. A mere 20 percent of IDA's projects actually met their job creation goals, according to a report by the Alliance for a Greater New York, which examines the state's multi-billion dollar subsidy system

Even more troubling, the report found that while only seven of the 35 projects ending in 2011 exceeded their job creation targets, 12 businesses actually lost more than 10,600 jobs. Merrill Lynch had 9,000 employees and promised to employ an additional 2,000 workers when it began to receive its tax break. Instead, 15 years later, Merrill Lynch's payroll dropped to 5,000.

According to the Fiscal Policy Institute, the three largest tax breaks provided by the City total $2.2 billion in foregone revenue taxes. Incredibly, in a world where, according to the head of the world's biggest asset manager, Manhattan apartments now top gold as the best instrument for storing wealth, these breaks include giveaways to developers of exorbitantly priced luxury apartments and disproportionately benefit high-income neighborhoods.

Kristi Barnes, deputy director of ALIGN, a community and labor advocacy organization, says eliminating and reforming subsidies and tax breaks would provide enough to pay for free tuition at CUNY-and more, whether it's additional government services or infrastructure work.

More than 40 years ago, the city teetered on the brink of fiscal collapse and needed to cajole businesses into staying put. Those days are long gone. And so is the need to give millions to millionaires.