Over the past decade, approximately 1.5 million New Yorkers have fled the state. In just 12 months, from July 2020 to July 2021, 350,000 did.
On Long Island, the number of people departing elsewhere in the United States, relative to the number of arrivals, has increased each year in both counties since 2012.
A Zogby poll in March found that 39% of 1,000 people polled planned to leave New York, and taxes were the main reason at 37%, far outweighing any other criticism. Only 8% mentioned the weather, a favorite excuse among high-tax apologists.
But unlike businesses threatening to leave or saying they can’t afford to open their business here if they have to pay their full share to support schools and governments, no one has offered these residents a cut of property tax or sales tax reduction or mortgage registration tax exemption to stay.
When residents say they’re leaving because they can’t afford to stay, you can believe them. They have no incentive to exaggerate. When companies tell industrial development authorities empowered to foster local economic development by approving tax breaks that they must be tax-exempt to do business on the island, that is not necessarily the case. Often tax breaks simply increase profits.
And particularly with facilities like Amazon’s “last mile” fulfillment centers and large-scale warehouses, which often need to be built precisely near major thoroughfares or communities where businesses need them, claims according to that these companies will go elsewhere often ring false. Long Island is difficult to get to and doing business here is very expensive. If companies build warehouses or distribution centers here, it’s usually because that’s where they’re needed.
Amazon should pay
Amazon plans to have at least 10 fulfillment centers on Long Island to make last-mile deliveries to customers’ doors (though it won’t seek tax breaks for many). Expensive warehousing projects are springing up across the island because demand is high.
These are the conditions under which companies should be able to pay all taxes. It is also important to remember that these companies are taxed largely because they use services. They clog traffic routes, require police and fire cover, and when they get breaks, they also starve school districts of taxes.
It’s not that IDAs shouldn’t exist, even though Long Island would be better served by just one or two than the eight — representing counties, cities, towns, and villages — it has. Large employers have a tax burden all over the country; When a new business comes along that would help the economic trajectory of a Long Island community, romanticizing tax breaks can make sense.
It’s not like all taxes are justifiable. The mortgage registration fee on the Amazon site where Syosset’s Cerro Wire was located would have been $537,750 had it not been waived. The levy for this deposit is a ridiculous 1.05% of the mortgage amount. But this tax is also punitive for homeowners, for whom the charge on a $500,000 loan would be $5,250 even if refinanced, or rather “stay in the community.” Where is their exemption?
Chords have conflicts
Syosett and his Amazon installation highlight many of the conflicts surrounding the IDA deals. The Syosset School District opposed the breaks, saying they let residents pay the tax tab for one of the world’s most valuable businesses. Nassau County IDA President Richard Kessel argued that the island needed jobs and that the site had been vacant for 30 years and needed a cleanup.
The decades-long inability to build there, however, was largely caused by disputes and unrest between multi-billion dollar mall companies. Sanitation needs, when known, as on this site, are updated in land sale negotiations. And a school district, with deep contacts in the community, should not be ignored.
In Suffolk County, Amazon’s Westhampton Beach ‘last mile’ facility, owned by Rechler Equity, got $2.3 million in breaks in a quiet process, then had to face several county legislators demanding their removal.
What did the Westhampton Beach and Syosset IDA apps for Amazon “last mile” installs have in common?
In both cases, the applicants played fast and loose with county IDAs by stating in aid applications that Amazon would use an out-of-state warehouse if tax breaks were not granted. Oh good? They would have delivered LED bulbs overnight free of charge from Stroudsburg, PA?
Critics say IDAs generally do a poor job of transparency and notice, especially when giving school districts time to analyze complex agreements. By law, IDAs do not even have to notify the relevant tax jurisdictions before approving tax breaks. A bill passed in the state Assembly and Senate to address the issue is expected to be signed by Governor Kathy Hochul, but it also needs to be expanded. These jurisdictions need a lot of time and detail to decide if each pause makes sense.
Many school districts also vigorously oppose renewals of IDA agreements, in which established businesses claim they will leave or close if they are forced, once an initial abatement is exhausted, to pay their full taxes. It is too often false and it is an abuse of the system.
In New York, giving IDA tax breaks to retailers is illegal and should be. This makes it even harder to understand the huge irony of granting such breaks to Amazon, which is somehow both the largest retailer in the world and the biggest challenge for local retailers on Long Island.
Faced with their tax bills, many New Yorkers are fleeing because they can’t pay. One reason is that so many companies don’t pay.
EDITORIAL BOARD MEMBERS are experienced journalists who offer reasoned, fact-based opinions to encourage informed debate on the issues facing our community.