ALBANY—New York's tax rebates for movie and TV studios are so generous that the state is actually paying them to film here, according to an analysis prepared for—but not published by—one of Gov. Andrew Cuomo's tax commissions.
The 137-page addendum to the commission's formal report asserts the Film and Television Tax Credit—which Cuomo has expanded to $420 million a year—now accounts for nearly a quarter of all business tax subsidies the state offers, and should be rolled back.
The analysis was funded by Blackstone founder Peter G. Peterson and commission co-chair Peter Solomon, an investment banker and former deputy to New York City mayor Ed Koch.
Both conservatives and liberals have criticized business tax credits for unfairly picking winners and losers with scarce taxpayer dollars. But the Solomon panel's decision to commission a critical review of their efficacy and recommend the Cuomo administration move in the opposite direction was not in the original script.
Cuomo named the commission late in 2012, a year after he rankled business leaders by renewing most of an expiring income tax surcharge on the wealthy—something the freshman Democrat had pledged not to do. It worked through this year looking for revenue-neutral changes to the state tax code, only to have the governor abruptly convene a second panel to examine ways to cut taxes in October. H. Carl McCall, who chairs the SUNY board of trustees, co-chairs both commissions, which have several members in common. While the governor insisted the commissions would work in parallel, some liberal groups charged he was sidelining Solomon as he scrutinized the tax credits.
“The film production credit, now generally 30 percent of qualifying costs, is large relative to industry profits and tax liability,” the addendum says. “Because the credit exceeds tax liability many times over and is refundable, in effect it is a program of cash payments by the state to credit recipients.”
“It is not clear from our analysis that there is sufficient justification for the size of the film credits. The state should consider scaling back the credits and monitoring the film industry closely to determine the impact on its activities of such a cutback,” the addendum concludes, suggesting a reduction of $50 million per year.
Paying an industry to do business here can be effective, the addendum acknowledges. But why target Hollywood?
The addendum says a similarly tailored credit for manufacturing would offer factories 40 times what they would otherwise owe in state taxes. While film has blossomed in New York—especially since the opening of Steiner Studios in the Brooklyn Navy Yard—the addendum notes that “the industry accounts for less than one percent of the state’s employment” and “many of the film industry jobs are temporary.”
The addendum also questions whether movies or projects, including Steiner Studios, wouldn't have come anyway.
Given how Cuomo handed out million in tax breaks to the real estate industry in return for campaign donations and took a couple of million from the gambling industry in return for legalizing casinos and expanding gambling across the state, it behooves some independent entity not connected to Cuomo to look and see just what Sheriff Andy is getting in return for his Hollywood largesse.