Albany Problems: NYC's Perpetual Corporate Tax Break Machine
New Yorkers lose billions in tax revenue every year to massive corporations and real estate developers. It doesn't have to be this way.
The tax break for developers that has cost billions of dollars and helped spawn some of the most offensive skyscrapers in town is set to expire in several weeks. But Governor Kathy Hochul told the Post over the weekend that 421-a is not dead yet, and that she hoped Mayor Eric Adams would lobby the state legislature to renew the controversial initiative in some form before they break for the summer.
The 421-a program has undergone revisions since its inception in the 1970s and developers benefitting from the break now must also create some affordable housing.
"Some" and "affordable" are two key words. City Comptroller Brad Lander is among those who contend that 421-a, which will cost the city nearly $1.8 billion in forgone tax revenue this year, hardly generates enough truly affordable apartments to be worth the cost.
The luxury high-rise One57, where a penthouse sold for $100 million, received a tax break worth $66 million a year for 10 years under the program, based on an estimate by the Independent Budget Office (full disclosure: I worked at IBO until last summer and helped edit the report).
Adams, our avowedly pro-business mayor, has signaled his support for renewing 421-a. But while he's talking to Albany about the fate of this tax break, he might want to bring up some of the others.
Altogether, these sorts of tax expenditures, or tax dollars the City forgoes, make up a sizable hunk of the City's budget—about $7 billion this year. Some tax expenditures seem intuitive, like forgoing property tax from the city's public housing authority or another that helps exempt many seniors with limited incomes from rent hikes. Others, like ones given to corporations owned by millionaires and billionaires, are far more questionable. All of them are ultimately controlled by the state.