Worst Area for Taxes Requires Government Subsidizes

by Frank Parlato

Consider how stupid this is:

All told, Yahoo! will get $30 million in county and state sales and property tax breaks, credits against state income taxes and 7,200 kilowatts of half-priced electricity from the New York Power Authority (NYPA).

These giveaways – which will be subsidized by taxpayers – were what was believed to be needed to attract the giant Internet company.

It sounds like a special break for Yahoo! And it is in a sense- but only in New York State and in particular Western New York would this be a real deal.

Half-price electricity in New York only means Yahoo! Inc. will pay about the same rates for electricity that much of the rest of America pays without breaks.

According to Electric Power Monthly, New York State has the highest electrical rates for commercial and residential users in America, with the exception of Hawaii.

Aerial view of the Yahoo! center.

In the month of February, 2013, when Yahoo! struck the deal to come here with various elected officials from the governor to town of Lockport officials, people living in the State of New York paid 18.89 cents per kilowatt hour for residential use and 15.50 for commercial.  The national average was 11.61 and 10.04.

Yahoo! Inc. uses substantial amounts of electricity and therein lies a hint to the problems facing western New York.

Despite the fact that 70 percent of the profits that the New York Power Authority makes statewide comes from low cost hydropower generated in Niagara County, Niagara county residents do not use locally produced hydro power!

Neither do the businesses, unless the governor, who, in effect, controls the local hydropower by virtue of the fact that he appoints the board of directors at NYPA, decides when a business is worthy to get what he calls “low priced electricity” which is really just normal priced electricity anywhere else.

Without special intervention from the governor, new business cannot start here because of high electricity rates – and that is hard to fathom since this is where true, low-cost electricity is actually generated.

On top of high electrical rates, New York state residents pay the highest state taxes in the USA and, on top of that, Niagara County property owners pay the second highest property taxes in the U.S. in proportion to the value of their property, according to the Tax Foundation of Washington, D. C.

By giving Yahoo! $2 million off their state income tax, and 10 years of zero property taxes, the giant internet corporation will not pay the same high taxes that the average small business and homeowner will pay in the region.

The rich get richer.

In this interesting play off on the similarly sounding Niagara and Viagara – and the latter’s purpose: to make impotent men potent – at least temporarily- the great lampooner, Gerald Skrlin presents a stunning visual commentary on what is soon to be a prime example of impotence – the new and soon to be hauntingly empty train station on Whirlpool St.
Metaphorically, Viagara is taxpayers’ money which subsidized the $44 million train station which will service a mere 60 riders per day. There was no need to build a 20,000 square foot train station – since the current 800 square foot train station [which does not cost taxpayers anything] is large enough for the small numbers that ride a train in or out of Niagara Falls daily.
Like Viagara, a large dose of taxpayers’ money can make the new train station seem potent – for a time – but what goes up must come down.
Even if its creators, Senior Planner Tom DeSantis and Mayor Paul Dyster can get it [the train station] up – for a while – it was propped up by taxpayers dollars and not by any true need for a larger station to accommodate riders who aren’t there.
· Like Viagara the new train station side effects are [when taxpayers see the costs and how it empty it will be]: Headache; Flushing in the face, neck, or chest; Upset stomach, indigestion; Abnormal vision; Nasal congestion; Back pain; Muscular pain or tenderness; Nausea.

Moreover, this points out that unless New York government gives breaks to some, while taxing others to the hilt, no new start ups are possible here in this, compared to other states, unlevel playing field.

What the governor did was reduce taxes and electricity enough so that Yahoo! Inc. will pay what they might expect to pay in other states without incentives.

Of course, the secret of Yahoo!’s desire to expand in Lockport has much to do with cold weather. The Yahoo! center, with its reliance on heat generating computers, can take advantage of Niagara’s normally cold climate.

“The use of outside air-cooling for approximately 98 percent of the year eliminates the need for expensive and energy-intensive chillers to keep the servers cool,” Yahoo! said in a press release.

Yahoo officials said they would invest $170 million to expand its data center in the Town IDA Park, adding a new customer call center creating 115 more jobs. At the time of the tax breaks deal, the center currently employed 77 people. About 40 percent live in Niagara County.

It is probably about time to check up on those numbers promised by Yahoo! to determine if they are reaching the promised goals that were in effect the very reason for the tax breaks in the first place.