Tax Break Shakedown

Delaware North, one of Buffalo’s oldest and most successful private corporations, feels that they have outgrown their current headquarters in Key Tower. They are looking to move a few blocks west, to a new corporate headquarters built by Uniland. And the two of them are asking for a whole bunch of tax breaks to make the numbers work. In particular, they really need an extra ten million to build a parking ramp on a street with bike lanes, which is a couple of blocks from the Metro Rail stop.

Because, you see, the taxes in this state are so high that there’s no way to compete with other cities to land these big corporations. So if you’re big enough to have leverage, you get to offload your tax burden onto all of the citizens and smaller businesses instead. Of course, this means that they’ll have to pay more in taxes… but that’s okay, we can just give even bigger tax cuts to the big fish the next time someone threatens to leave.

This is all insane.

10 Responses to “Tax Break Shakedown”

  1. BrianN says:

    I think you need to think of it more as two parties negotiating the best deal. If you get all whiny, “it’s not fair, and you should force your employees to ride unicycles to work while wearing leotards” you’ll just end up with nothing.

  2. BrianN says:

    Unless you city is worth it, that is.

  3. matt says:

    I don’t mind that it’s two parties negotiating, but I think that sticking smaller businesses with a higher tax burden discourages growth. It’s great that we’re trying to hang on to a company that’s been in Buffalo for a hundred years — but we’re smothering other companies before they can grow.

  4. matt says:

    As for whether the city is “worth it”, I suppose that depends on what your business needs. As a GEICO executive is alleged to have said, “Of course we’re expanding in Buffalo. Where else can I get my pick of college graduates for $30k a year?”

  5. Pitt says:

    So, Buffalo is the next New Delhi?

    The problem with these “negotiations” is that it is inherently biased towards larger corporations. But, of course, the larger a corporation is, the more supposed benefit there will be to the community- if I came in to Buffalo and said, “Hey BFLO, I want to open a Volvo Amazon parts warehouse, that will gross nearly a thousand dollars a year and employ myself and my wife, part time, how about a tax break?” they’d look at me and…well, they probably wouldn’t even look at me. But if GM wanted to open up a stamping plant there and employ 2,000 Buffalonians, then Genesee Street would be paved with gold for them.

    Still, we libertarian-minded individuals denounce social programmes that supposedly “benefit” society; why should tax breaks be treated any differently? Isn’t that a unnatural deformation of the free-market forces? To look at it another way, if you were a state/municipality attempting to attract business, what would be better: to have a uniformly low tax burden, minimal regulations, and equal treatment of all businesses, or to selectively attract only those businesses you deem “desirable”, based on popular consensus (idealized democracy) or the will of those in power (more like reality). And then, how does one define “desirable”?

  6. matt says:

    You might be onto something with the Amazon warehouse. This is a county that hands out tax breaks to liquor stores and donut shops for moving to the next town over.

  7. BrianN says:

    why does giving a tax break to one company mean others have a higher tax burden? If they don’t come you have nothing, if they do come and you have to give them a 90% tax break, you still get 10% of a large number. Also now you have more people coming into the city, who presumable use those small businesses.

  8. matt says:

    Hey, if it’s that simple, let’s just cut everybody’s taxes by 90% and have the best economy in the country.

    This isn’t a matter of attracting a new corporation — this is a corporation that’s already in Buffalo, and is already hugely profitable, demanding breaks to build a new headquarters and stay here.

  9. Pitt says:

    It’s worked out great for Walmart, which has demonstrated they’ll build and then shutter and leave vacant a massive warehouse because the next town 1000 feet down the street gave them a tax break to build a new store there.

    Meanwhile, NY taxpayers spent 6.3 million dollars to build a non-functioning gas station. Think of all the jobs that will be created for guys to not pump gas and not do oil changes!

    (Thanks, Matt)

  10. BrianN says:

    If my property tax continues to rise, I may also move. Take that mayor Joe.

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