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Dyster should end corporate welfare

Niagara Falls Repoerter

January 10, 2012

By Frank Parlato Jr.

From Holiday Markets and Hard Rock taxpayer-funded concerts, to culinary institutes, Experience Centers, Underground Railroad museums, blues festivals, health spas, low-budget locally made amateur movies, studies for the benefit of private business on revamping old schools into apartments, to the opening of a simple wine bar or a chain restaurant like TGI Fridays, anything related to growth in Niagara Falls seems to require taxpayer-funded boosts from the administration of Mayor Paul Dyster.

Unfortunately, the model doesn't work.

Here's what's happens: High taxes create an incentive for businesses to leave town and a disincentive for new ones to come here.

Because taxes are high and people poor, because there are no jobs, because businesses left town, the only way to lure corporations to start new businesses is to give them tax money.

To pay for it, we have to raise taxes again.

As a suggested alternative, how about lowering our super-high taxes and having the patience to wait a little bit?

The Tax Foundation of Washington, D.C., a think tank founded in 1937 to study tax policies, found that, of all counties in the USA with populations greater than 65,000, in 2009, Niagara County residents paid the second-highest property tax rates in the USA, about 3 percent of the value of their real estate per year. In Niagara Falls, property tax rates are even higher, oftentimes in excess of 5 percent of market value. The national average is about 1.2 percent.

On top of local taxes, according to the U.S. Census Bureau, New York state is first (among all 50 states) in state and local government taxes.

Niagara Falls is arguably one of, if not the highest-taxed city in the United States.

Meanwhile, the Dyster administration took about 500 properties away from Niagara Falls property owners last month at the city tax foreclosure sale. The people who lost their homes were those who could not keep up with high taxes levied in part to pay for Dyster's corporate welfare plans.

Dyster, however, only represents in microcosm what we do as a nation.

We spend and tax.

This spending urge is abetted by a philosophy that somehow believes that government money comes from nowhere, and not from the hard work of the people.

The fool forgets that government cannot give anybody anything that government does not first take by force from somebody else.ÊWhat one person or corporation receives without working for, another person must work for and receive nothing.

We never think of that when we clamor for government to spend.

Consider how ridiculous we are as a nation, an undisciplined nation.

Annually, the U.S. tax revenue is $2.17 trillion.

  • Federal budget: $3.82 trillion
  • New debt: $1.65 trillion
  • National debt: $14.27 trillion
  • Recent budget cuts: $ 38.5 billion

Let's now remove eight zeros and pretend it's a household budget.

  • Annual family income: $21,700
  • Money the family spent: $38,200
  • New debt on the credit card: $16,500
  • Outstanding balance on the credit card: $142,710
  • Total budget cuts: $385

It is obvious this family, like this nation, like Niagara Falls, is headed toward bankruptcy if they don't stop spending.

The proof is in the pudding: For all the corporate welfare to increase jobs, Dyster had to raise taxes twice during his first term. For all the corporate welfare, unemployment rose, according to state Department of Labor statistics, from 6.8 percent in 2007 to 11.8 percent last year, making Niagara Falls' unemployment rate the highest in New York state.

In justifying his administration's foreclosing hundreds of properties in the tax auction, Dyster said everyone has to pay their fair share of taxes.

Will no one say that he must do more to make those taxes fair?

Is it right that one of the poorest cities should pay nearly the highest taxes?

This year (as he has done the last several years) he will use tax money to fund six Hard Rock concert/parties for around $150,000 on the theory that it will boost business and make downtown alive with music.

Hard Rock is a billion-dollar corporation owned by the wealthy Seminole Nation of Indians of Florida. The concept that we should seize people's homes to fund Hard Rock concerts is hard to fathom. The $150,000 we pay Hard Rock could have rescued 50 homes from foreclosure.

Why not let some concert promoter -- say Hard Rock itself, or better yet, a real concert promoter, the owner of the Rapids Theatre, a guy who puts his own money up for his concerts, John Hutchins -- put on concerts. Is it fair to give the mega-billion Florida-based Hard Rock Cafe, Inc. hundreds of thousands to compete with local businessman Hutchins, who operates literally down the street with his own money in the high-risk concert business?

By giving Hard Rock a free ride, it not only unfairly competes with real promoters like Hutchins, it is a disincentive for other potential concert promoters to come and invest here.

As another example, TGI Fridays was given $150,000 of public money to induce it to open a restaurant downtown. Taxpayers, even owners of competing restaurants, were forced to pay taxes or lose their homes or businesses so that a multimillion-dollar chain restaurant could open and compete with locally owned restaurants for the same number of diners who are presently likely to dine in Niagara Falls.

If people go to TGI Fridays, it means they did not go to the Como Restaurant or the Red Coach Inn and other longtime taxpaying restaurants -- all of whom did not get $150,000.

If this city needed a TGI Fridays -- if the business demand was really there -- TGI Fridays would have opened without taxpayers' money.

Or consider Unifrax, a supplier of high-temperature insulation products.ÊThey employ 96 people and had an $8 million annual payroll at their operations in Niagara Falls. Here Dyster was bitten by his own philosophy -- of government that spends and taxes us into prosperity.

The state of Indiana allegedly wanted to spend taxpayers' money and supposedly offered Unifrax a sum to lure them to move to Indiana.

New York, through Empire State Development, offered $700,000 of taxpayer money to get Unifrax to move to Tonawanda. New York taxpayers (including those in Niagara Falls) paid to pirate Unifrax from Niagara Falls.

If you heard of something like this happening in a foreign country, you'd smile and consider them backward or suffering from madness.

On top of that, and much like welfare for the poor, probably less than 20 percent of what is taxed for corporate welfare goes to the actual corporate welfare recipients. In order to give $700,000 to Unifrax, New York taxpayers probably had to pay more than $3 million in taxes.

Consider, first there are tax collectors and their giant bureaucracies, then there are legislators and their clerks and administrators, and the government lawyers who write the actual legislation for spend-and-tax policies. Then there are tax distributers -- the people who, for instance, work at Empire State Development, whose job it is to decide who gets the money and then to monitor it.

A thousand middle men created to take a lot of money from workers and struggling, taxpaying corporations to give a small amount to certain favored corporations.

Even if all the money extracted from taxpayers went directly to corporate welfare recipients, it is an injustice to force working people to pay taxes (or seize their properties), then let politicians decide which politically favored and usually financially able corporations get the money.

A sort of reverse Robin Hood model.

Corporate welfare is simply the redistribution of wealth, taking from middle-class hardworking people and taxpaying corporations who are not on the dole, and giving it to corporations that claim their business model is so flawed that they cannot succeed without taxpayer money.

Instead of having the highest taxes in the USA, if we get out of funding every business project -- bankrupts trying to spend our way to prosperity, giving money to developers and businesses that can afford to do it, and where many projects are singularly unworthy -- if we let people enjoy the fruits of their labor through lower taxes, we could rise again among the vanguard of cities.

Concerts may come and new restaurants and more jobs and bread and circuses too -- on a new model -- at the hands of a new, prosperous and empowered people.



  Copyright © 2008 Frank Parlato Jr.