The fast-increasing use of tax incentives by all 50 states has failed to increase jobs or investment, two respected experts on state tax policy found after reviewing more than 50 years of giveaways.1
This year, state government subsidies to corporations, partnerships, and other businesses in New York state alone will total $1.7 billion, triple the giveaways in 2005, according to the new study. That's $235 taken from the average Empire State household this year and redistributed to business owners on the theory that redistribution will create jobs.
During those years, the number of jobs in New York declined, the state's official jobs data website shows.2 The total number of New Yorkers employed in 2012 was down 175,000, or 2 percent, compared with 2005.
Think of it this way: Over nine years, the state of New York gave businesses roughly $10 billion, or almost $1,400 from each household, in a jobs program that eliminated 175,000 jobs at an average cost of $57,000. And that's just state-level subsidies, not those from industrial development agencies.
The 143-page study by Marilyn M. Rubin of John Jay College and Donald J. Boyd, former director of the Rockefeller Institute of Government State and Local Government Finance research group, was prepared for the New York State Tax Reform and Fairness Commission created by Gov. Andrew Cuomo (D). But its findings apply to all 50 states, where tax incentives have been growing like weeds since the turn of the millennium. However, the commission's final report barely mentions Rubin and Boyd's findings and doesn't even directly reference their study.
Peter G. Peterson, the private equity mogul who was Treasury secretary during the Nixon administration, and the Peter J. Solomon Family Foundation paid for the report by Rubin and Boyd. Peterson funds FiscalTimes.org and promotes reductions in Medicare and Social Security benefits that people pay for with dedicated taxes. Solomon co-chaired the reform commission. Like Peterson, he is a savvy investor wise to the ways of tax avoidance. His family foundation previously hired Rubin to do a comprehensive report on New York state taxes.3
Even before the reform commission's final report was made public, Cuomo named a new commission without Solomon and made no mention of eliminating the tax credits so thoroughly dissected by Rubin and Boyd (the implication being that not having gotten what he wanted, Cuomo is trying again for a report made as instructed -- although only time will tell).
When combined with many previous reports, the Rubin and Boyd study shows that state and local giveaways to corporations simply redistribute wealth upward without increasing jobs. Their continued existence is a testament to the benefits of being politically connected.
Click headline to read more--