Written on Tuesday, December 2nd, 2008 at 4:35pm by Alan Bedenko | 8 Comments

The Taxpayer Lawsuit Cometh

I wanted to make a joke about hyperbole and Jim Ostrowski, because the two are seldom parted. Ostrowski, the libertarian gadfly, is counsel for a set of plaintiffs who have sued the state of New York over what they term “corporate welfare” – giving tax breaks, incentives, and sometimes outright handouts to private entities to induce them to do business in the state. The plaintiffs in the suit claim that the amount approaches $2 billion. The case is Bordeleau v. State of New York under Albany County Index no. 6258-08.

Tomorrow, Judge Michael Lynch will hear argument on the defendants’ motion to dismiss the lawsuit. Naturally, a rally will be held on the Capitol steps at noon in support of the lawsuit, and people are being encouraged to travel from throughout the state to attend.

The case documents are available online here, and Ostrowski is posting news about the case here. The plaintiffs claim that the use of state money in aid of private enterprise is violative of the state constitution. If they’re right, they claim that the state can save tens of billions of dollars over the next several years, and “pave the way for the outright repeal of the oppressive New York gas tax of 32.4 cents per gallon.”

That’s all well and good, but I would add that the success of this lawsuit:

1. would set New York even further back, as it would be unable to compete with other jurisdictions for whom incentivization is not illegal; and

2. what does the gas tax have to do with it? When people are asked to list the oppressive or excessive taxes and fees that they pay, the gas tax – which is based on actual consumption – isn’t it. Property taxes are the most onerous statewide, and our income taxes and generalized sales tax is nothing to write home about from Charlotte, either.

So, while the merits of the lawsuit are interesting from an esoteric legal standpoint, I’m pretty sure that the court will dismiss the suit regardless. After all, using Ostrowski’s own theory, they’re all part of the political class, and the courts will kill the case rather than permit the state to be embarassed.

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8 Comments

  1. Mike in WNY says:
    December 2, 2008 at 5:16 pm

    would set New York even further back, as it would be unable to compete with other jurisdictions for whom incentivization is not illegal

    That’s the problem with pragmatism, in a broken system everyone must be equally broken.

    Decreasing spending and lowering taxes surely constitutes a move to a more competitive state.

  2. hank says:
    December 2, 2008 at 5:19 pm

    BP knows that although JO and I have been friends since high school, I don’t buy into libertarian populism, or the writings of the moldy Austrian Economists that he can spout chapter and paragraph.

    But this
    1. would set New York even further back, as it would be unable to compete with other jurisdictions for whom incentivization is not illegal;

    Alan, didn’t your parents ever say to you–”if your friends all jump off Niagara Falls, are YOU going to be dead on their heels?”

    If the State Constitution says that what amounts to “Corporate Welfare” is a violation of the Consitution, toss the State Constitution out the window?

    Reminds me of the liberals in Philly and their new gun legislation. One lawmaker was heard to say “who cares if this law is unconsitutional!!”

    That’s change we can believe in, eh? Fuck the Constitution!

    I would think that the only thing Jim’s trying to do is see if the court will ignore the State Constitution. And in liberal loving NYS, Judicial Activism is likely worshipped.

    Let’s just make new law from the bench every day, forget that the purpose of the courts is to interpret the laws (like the state constitution) that the LEGISLATIVE (used to mean LAW MAKING)branch of state government makes.

    Sooner or later, a stand has to be made–Did offering all matter of deals help get the Bass Pro built? Tons of offers and what–5 years have passed, and there’s not one brick on top of another. So why endorse Corporate Welfare?

  3. Timothy Domst says:
    December 2, 2008 at 5:55 pm

    Too many people in NYS don’t understand the simple economic law that high taxes equal low growth or stagnation. Hacks in Albany know this and the fact that people won’t see lower taxes work, but they’ll see a politician give a special break to some entity for a physical manifestation of business, in front of which they will cut a ribbon. If the hack is lucky, he/she will get a few friends hired there. Some politicians would rather have the economy slow, to the detriment of the general population, if it means a few more jobs for which the hack can personally take credit.

    Using 2 billion to lower the gas tax is crazy, it should go to lower a tax like income, property, or sales. Maybe it’s Ostrowski’s way of making the suit more appealing to people like Schumer who always make a lot of noise about gas prices.

  4. Dave A. says:
    December 3, 2008 at 1:55 am

    Tax breaks don’t work. Strings are usually attached, such as a promise to create a certain number of jobs, in exchange for the tax breaks. But (as happens too often) the jobs aren’t created, there’s no gumption to call them on it.

    In addition, the competition between cities for jobs is a myth. Buffalo isn’t competing against Phoenix or Charlotte for Bass Pro. Any competition is between closer regions, such as between Amherst and Clarence. If the infrastructure, population and market forces justify it, it’ll come to the city anyway.

    I’m not fan of the Libertarian party line, but I hope JO wins this one.

  5. hank says:
    December 3, 2008 at 6:48 pm

    There already IS a Bass Pro in the Charlotte area, at the Concord Mills Mall, I’ts the east anchor of the project, about a stone’s throw from the NASCAR Track.

    Then again, when it comes to corporate taxes and a business friendly environment, NY is NOT NC.

  6. Jim Ostrowski says:
    December 4, 2008 at 8:23 am

    The lawsuit is a tactic in a larger political fight.

    As I told the Associated Press yesterday, we know it takes a million dollars to knock out an incumbent state legislator and get a populist voice in Albany but it only takes $305 to file a lawsuit.

    Even if we lose, we win, because we will have educated the public as to the evils of corporate welfare and the failure of constitutions to restrain government. If we win, it will be one of those rare post-New Deal occasions when constitutionalism actually worked to restrain government growth.

    It’s a law of nature that governments grow and their elastic constitutional clothing usually grows with them.

 

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