"The savings ultimately would be astronomical."
That's what William Fitzpatrick said a couple weeks ago about creating a publicly financed elections system, after his Commission had spent months investigating corruption, bribery, and Albany's pay-to-play system.
He's right. New York State's outrageous, broken campaign finance system results in our elected officials giving away billions in taxpayer dollars to the CEO campaign sponsors who fund their campaigns. It's a culture that's ruled by greed, fueled by campaign cash -- and it's going to take systemic reform to fix it.
Those astronomical savings that Fitzpatrick, Onondaga District Attorney and co-chair of the Moreland Commission to Investigate Public Corruption, was talking about -- they come from putting New Yorkers' needs ahead of tax breaks for giant corporations. Ending the pay-to-play legal bribery system that haunts New York's Capitol could easily save taxpayers $1 billion a year, and probably much, much more.
Here's the math: Candidates for elected office need lots of money to run. Now, they get a large portion of that money from big money donors such as lobbyists and CEOs. Not surprisingly, those big money interests usually expect something in return and too often they get it, whether it's killing bills they don't like or passing ones they do that, for example, provide special tax breaks. This is legal bribery. It does not break any laws.
Here is just one shocking example. In 2013, after receiving big campaign contributions, legislators quietly passed tax breaks for five luxury towers in New York City that did not include the affordable units necessary to qualify for those tax benefits. Result: The ultra-rich owners of two $90 million penthouses in just one of those towers will share $2.4 million in tax breaks. Total cost to the taxpayers: Unknown until the hundreds of luxury apartments are sold, but many millions.
Here's a list of just some of the big tax breaks that have gone to big money donors:
- $1.1 billion in 2013 for tax breaks for developers under the 421-a tax exemption. Too often the tax breaks have gone to projects that would have been built without them and that did not include the affordable units that were the main purpose of the program.
- $500 million a year in cable and telecommunications tax breaks. In addition, legislation to regulate those industries and improve consumer services is regularly killed.
- $7 billion in economic development spending and tax breaks with few goals, little monitoring and no consequences for failure to create jobs or other community benefits.
- $2.4 billion in tax breaks from using off shore tax havens.
- At least1 billion given away in corporate tax loopholes.
- $16 billion in state income taxes avoided from 2008 to 2010 by just 37 businesses.
- $1.8 billion in tax credits in 2013 to businesses, mostly very profitable real estate developers and film and TV production companies, according to Gov. Cuomo's tax reform commission. The total is close to double what it was in 2010.
- Untold millions of dollars from higher drug costs due to lack of controls on drug company costs, lack of competition and other measures.
Giving a tax break is effectively giving away our money. It's really no different than spending, if you think about it. A company owed us all a certain amount of taxes under the law, taxes that we all pay for things like roads, bridges, fire and police departments, and schools that benefit all of us, including that company. But because the company made some big campaign contributions, some elected officials decide to give away some or all of the taxes we had coming.
We are told that the state gives these tax breaks to "grow the economy and create jobs." But too often that's just a cover. Really, decisions are not being made to benefit all of us, but rather to take care of big campaign donors, regardless of any public benefit.
The results are real costs to the rest of us. When taxes are cut for some, either services we rely on are cut or the rest of us pay higher taxes. And often some companies get an unfair advantage at the expense of competitors. That's the real cost of the current campaign finance system: billions of dollars every year from our pockets to benefit a few.
While most legislators go to Albany to do the right thing, and to represent their communities, the current campaign system undermines that, and creates a system that benefits the largest campaign donors. The only way to change that is to give candidates an alternative that allows them to rely on average voters for the money they need to campaign. But since average voters can't afford big donations, the solution is to use public funds to match small donations, enabling candidates to run with only small donations plus matching funds. We know this system works because it has been in operation for years in other states and in New York City.
An objective study of public financing found that it would cost about $40 million a year for matching funds and about $20 million a year for enforcement. That's a total of $60 million a year, which comes out to about $3 per New Yorker: a penny a day to keep corruption away.
Opponents of reform focus on that cost. Their argument sounds good at first. Why should taxpayers pay for elected officials to run for office? Why should we pay for those annoying TV ads and mailers? Shouldn't the money be used for roads or tax cuts? Well, the answer is simple -- if we don't pay for elections, big money will, and as a result big money will keep getting billions of our tax dollars.
How much would public financing save? Unfortunately, we can't simply add up the almost $30 billion of tax breaks in that list above for a variety of reasons. But given that those are all real existing tax breaks, it's pretty obvious that elected officials actually working for the people who elected them would cut out the ones that are not doing any good and easily save over $1 billion a year.
So the real choice is whether we want elected officials to pay attention to voters and pass laws that are in our interest, or to be stuck paying attention to big donors and serving their needs. It's an easy choice, and one that New York's leaders need to make, soon.