A trio of Democratic state senators are looking to reform New York’s tax-incentive system amid reports those programs cost more than what they provide. State Sens. Liz Krueger, James Skoufis and Sean Ryan said many tax-incentive programs don’t fulfill their financial purpose or provide enough benefits for New Yorkers. They said they were spurred on by a recent audit from the state Department of Taxation and Finance that showed the tax benefits result in limited return on investment.
The audit raised concerns about the state’s Film Tax Credit. Subsidies for film projects that choose to shoot in New York and New York City have raised debates over whether the tax incentives are a proper use of taxpayer money or vital to protecting the industry’s significance in the state. The report said that not only is the return on investment low, but New York City in particular is so iconic that it may not be necessary to draw people in with incentives. Lawmakers thought the credit was just one more example of tax incentives not providing enough bang for New York’s buck.
The audit found the Film Tax Credit had a “net-negative” return of 31 cents per dollar awarded to films. The lack of progress in other programs was enough for Skoufis and other lawmakers to consider outright eliminating some tax incentives.
“There are some of us, myself included, that believe that the film tax credits and the associated entertainment tax credits…ought to be repealed, but the politics is the politics in the state Legislature,” Skoufis said at a press conference in the Capitol on Monday.
New York’s entertainment credits extend beyond film into theater, the Empire State Musical and Theatrical Production Tax Credit Program bringing in a 4-cent return on investment while offering $8 million in subsidies.
“We're actually the only state that breaks up all of its entertainment subsidies,” Skoufis said.
Other state-funded tax incentives, like the Life Sciences Tax Credit, are barely used according to the report, and Skoufis also called for its repeal. The report said it could benefit from being reworked, and that its low utilization, never approaching the $10 million cap on awards, was also impacted by the availability of the Excelsior Jobs Program.
“We simply should not be wasting taxpayer money on programs that do not provide a fiscal or other benefit to New Yorkers, or those that make grand promises of jobs but serve only to line the pockets of a small number of individuals,” Krueger said in a statement.
Gov. Kathy Hochul’s office is still reviewing the report but said the tax incentives are vital economic tools.
“New York's tax credits and incentive programs are critical to growing the state's economy, boosting innovation and creating good jobs, which is why the Legislature approved them in the first place, and Governor Hochul will continue working with members to improve the programs to maximize benefits for New Yorkers," Hochul spokesperson Justin Henry said in an email.
Lawmakers said they were interested in retooling programs that were proven to add more employment opportunities in getting rid of those that didn’t but their plans were still in the early stages.
“I think in a perfect world, you have agencies and offices like Empire State Development look at this and they say, ‘Holy smokes… we should do something about this,’ and they voluntarily, without being mandated by the Legislature and the executive, just do the right thing here,” Skoufis said.
This story has been updated with comment from the governor's office.
Correction: James Skoufis' quote has been corrected. He said "entertainment tax credits," not "student tax credits."