Welcome to our press center. The Corporate Tax Dodgers Hall of Shame is a project of the Getting Our Money’s Worth coalition, a broad coalition of public policy experts, government watchdogs, labor unions, community and religious organizations, and concerned small business owners, workers and taxpayers. We aim to reform New York’s $3 billion-a-year corporate subsidies so they create good jobs, revitalize our economy, and give local communities directly impacted by development a voice in decision-making.
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Some definitions of key terms
Economic development is generally considered government intervention to promote private sector economic activity in a particular locale. Intervention can take a variety of forms, from marketing campaigns, to investing in improvements to regional amenities, to the direct purchase of economic activity by subsidizing the construction and operating costs of businesses.
Most economic development programs that grant and administer subsidies are paid for through tax expenditures, or “tax breaks”: tax revenue that the state (or city or county) does not collect as a result of the subsidy. Others are direct expenditures, money that the state government allocates in its budget approved by the legislature every year.
A subsidy is a business incentive meant to encourage job creation and retention. A subsidy can come in the form of tax exemptions, tax credits, in-kind benefits, favorable or tax-free bond financing, discounted property sales, grants or loans.
When a company receives a tax exemption, it often negotiates a PILOT, or payment-in-lieu of taxes agreement, with the agency providing the subsidy. The company pays a defined amount, less than the full taxable amount they would otherwise pay, to the agency. The agency then passes the payment on to the state or local taxing jurisdictions. PILOT agreements typically last between 10 and 20 years.
Net Tax Exemption
A net tax exemption is the total amount of revenue lost to municipal, county and/or state tax rolls. It can be calculated by subtracting a PILOT payment from the total tax exemption.
A taxing jurisdiction is the government, or any division of the government, that has the authority to impose a tax. Examples of taxing jurisdictions include cities, counties, and school districts.
Subsidy recapture mechanisms, or clawbacks, provide the means for an economic development agency to suspend or recapture previously awarded benefits from companies that fail to live up to their agreements. Clawbacks are essentially a “money-back guarantee” on public investments.
Industrial Development Agencies (IDAs)
IDAs are the largest corporate subsidy program, with 114 IDAs operating in New York’s counties, cities, towns, and villages. IDAs were established in 1969 as public authorities with the explicit purpose to “advance the job opportunities, health, general prosperity and economic welfare of the people of the state of New York and to improve their recreation opportunities, prosperity and standard of living.”
Empire State Development (ESD)
Empire State Development (ESD) is New York State’s chief economic development agency and the main source of state-level tax exemptions and corporate subsidies. With several offices throughout the state and dozens of grant, tax credit, and other financial assistance programs, its mission is to “to promote a vigorous and growing economy, encourage the creation of new job and economic opportunities, increase revenues to the State and its municipalities, and achieve stable and diversified local economies.
The Empire Zone tax credit program, administered by ESD, was formerly the largest corporate subsidy program, spending $600 million in 85 Empire Zones in New York State in 2009. The original principles of Empire Zones were clear; formed around census tracts with high poverty and unemployment rates, Empire Zones were aimed at generating economic growth in capital-scarce areas. Expensive and riddled with loopholes and abuse, lawmakers allowed the program to expire on June 30, 2010. Although applications for the program are no longer accepted, hundreds of corporations that were already receiving benefits continue to do so.