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Political hacks in New York City are in the middle of a debate on whether to keep a decades-old tax incentive program in place that critics say unfairly benefits big real estate developers and leaves average New Yorkers out in the cold.
Opponents have blamed the 51-year-old tax incentive, called 421a, for contributing to the city’s affordable housing crisis by “encouraging the construction of luxury buildings” at the expense of affordable housing, The New York Times reported. The debate has divided New Yorkers. Mayor Eric Adams warned that the program is essential for the development of affordable housing in the city—unless the program can be updated.
“New York City cannot tackle the housing shortage at the root of our affordability crisis without an improved successor to the 421a program,” Adams said in a statement.
Under the tax incentive, developers get tax breaks as long as there is a certain amount of affordable housing on their properties for lower-income residents.
But City Limits reported that over the past two years, the majority of units that fell into the category were priced for individuals pulling in a six-figure salary. The incentive also has loopholes that allow developers not to have any affordable housing units on their property, critics say.
The report pointed out that the tax scheme was put into place in 1971 when the city was looking to incentivize new developments during a financial crisis.
The report said the incentive has been modified over the years, but the current framework means developers can essentially set aside 30 percent of units in the new buildings for households that earn 130 percent of area median income. The report said that’s about $109,000 for an individual and $140,000 for a family of three in some locations. (See “HOUSING MARKET: SALES UP, FEWER HOMES FOR SALE.”)
A report from the New York City Comptroller’s Office said the 421a tax incentive program costs the city $1.77 billion in foregone tax revenue. The Commercial Observer, a real estate website, defended the tax incentive and said it adds jobs “in the short term and increases the city’s tax rolls in the long term.”
“Critics of the program either don’t understand how the 421a tax exemption works or are willfully ignoring what is clearly written into the law.”
“The comptroller would be hard-pressed to find an extra $1.77 billion in the city’s budget with the elimination of 421a. Not only would the city realize no increase in taxes, but it would likely see a marked drop in tax revenue,” the website charged.
Brad Lander, the New York City comptroller, called the program “indefensible.”
“It’s a huge giveaway for developers for just a tiny handful of actually affordable units,” he said.
Gov. Kathy Hochul is working on a replacement incentive that she hopes will promote longer-lasting affordability, The Times reported.
TRENDPOST: Mussolini called the merger of state and corporate powers fascism. Today it is called tax breaks and bailouts for the “Too Big to Fail” gang.
For example, name the city or state and there are huge “tax-incentives” for the Bigs under the guise that by them building offices, hotels, factories, warehouses… or whatever, they deserve it because they will be “creating jobs.” But the facts prove they only enrich the rich who are getting them. “Today, nearly all U.S. cities and states use financial incentives to attract companies, even though the bulk of research on the subject shows they are an ineffective waste of taxpayer money,” wrote Richard Florida in an extensive Bloomberg CityLab report.
The same is true for the corporate tax cut scheme. It only enriches the rich.
“Across-the-board corporate tax cuts don’t do much to create jobs. That’s according to a 2017 study by the Institute for Policy Studies. It compared 92 publicly-held corporations who paid less than the 35% corporate tax rate. It found that, between 2008 and 2016, these corporations lost jobs while the overall economy increased jobs by 6%. Instead of paying taxes or hiring, these companies bought back their own stocks. They also increased CEO pay at a higher rate than the average for companies listed on the S&P 500,” according to “the balance.”
And the CEO’s while the Workers of Slaveladia pay hikes are some 2 percent below the inflation rate:
CEO Pay Increases, Heads for a New Record
Pay increases for U.S. chief executives have gained steam, putting compensation on pace to set a record amid a tight labor market that is also driving pay higher for many of their workers.
Median pay rose to $14.2 million last year for the leaders of S&P 500 companies, up from a record $13.4 million for the same companies a year earlier, according to a Wall Street Journal analysis of pay data for more than half the index from MyLogIQ LLC.
Most CEOs received a pay increase of 11% or more, and pay rose by at least 25% for nearly one-third of them. (The Wall Street Journal, 4 April, 2022)
And as we have noted, for the Workers of Slavelandia, 1 in 5 run out of money before payday.