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Tax breaks on gold bars and jets help put a '$3B hole' in NY's pockets, lawmaker says
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Catalina Gonella
Published Jan 24, 2025
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By
Catalina Gonella
Published Jan 24, 2025
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Are you looking to buy a racehorse for betting, get maintenance done on your private jet or pay initiation fees for a fraternity? You won’t have to worry about New York state sales taxes, a legislator’s new report notes.
Those tax breaks are part of what the title of the report by Democratic state Sen. Andrew Gounardes calls a “$3 Billion Hole in Our Pocket” — exemptions and carve-outs that the senator describes as “questionable, arbitrary and downright absurd.”
The report, which draws from 2024 revenue estimates from the state’s Department of Taxation and Finance, details how much revenue the state lost from each of several exemptions — such as $601 million from a long-standing exemption for sales of metal bullion (like gold bars and coins) over $1,000.
Gounardes, who chairs the Senate Standing Committee on Budget and Revenue, said the report aims to spark a conversation in the state Legislature about tax breaks, especially ones that disproportionately benefit the ultra-wealthy over middle-class or lower-income residents. But finance experts reached by Gothamist in anticipation of the report’s release stressed that many of the most consequential tax breaks in New York tax law are for mundane-sounding exemptions — like deductions for charitable donations.
Gounardes’ report comes the same week Gov. Kathy Hochul proposed a $252 billion budget proposal, the largest in state history.
“As much money as we take in and we spend out, we also leak a whole lot of money that goes to tax credits and tax expenditures and things that I think have dubious value,” Gounardes said. “Certainly, maybe at one point [they] were good public policy investments, smart tax policy investments, maybe, 10, 15, 30, 40 years ago, but we should take a look today to see if it is really worth spending all of this money on things that no longer serve a purpose.”
Many of the potentially attention-grabbing tax expenditures mentioned in the report amount to far less revenue lost than the precious metal bullion sales exemption — a decades-old policy also found in several other states’ tax codes, aiming to encourage the metals market by treating investments in metals like those in for stocks or bonds. The exemptions for fraternity initiation fees cost the state $23 million, according to the report. Exempting maintenance performed on private jets and on the sale of racehorses used for betting cost $6 million each, the report found.
Nathan Gusdorf, the executive director of the Fiscal Policy Institute think tank, told Gothamist the costliest tax exemptions are ones that may seem reasonable to most laypeople. The tax deduction for charitable contributions for example, cost New York $863 million in 2024, according to the report. The tax deduction on mortgage interest, meanwhile, cost the state $496 million, it found.
“But one reason to be concerned about them is they undermine the state's general ability to sustainably raise revenue. And to the extent the state does raise revenue through them, It raises all other taxpayers' tax rates,” he said.
In practice, those tax breaks tend to benefit the wealthiest taxpayers, Gusdorf said. He argued that’s inequitable because “you've basically picked out a select group of taxpayers and given them a tax benefit that's inconsistent with the kind of core rationale of fairness in the income tax, but it's not something that tends to immediately offend people.”
Thad Calabrese, a finance professor at NYU who specializes in public and nonprofit spending, said long-standing tax breaks are rarely scrutinized as much as spending decisions, which are reappropriated in budgets yearly.
“Part of the reason is because [a tax break] benefits a very particular small group who will then fight to protect it,” he said. And Gusdorf stressed the beneficiaries of tax breaks can “get very angry when they're threatened, and that can be frightening for legislators who might otherwise like to change things for the better.”
Tax incentives are generally intended to promote economic growth, but the state’s own analyses show examples of times such policies don’t pan out. The state’s Department of Taxation and Finance’s late-2023 report on the efficacy of its tax incentives, for instance, found a $700 million tax credit to the film industry was a net cost to taxpayers.
Gusdorf said the state’s clear need for revenue to fund the MTA this year could increase the chance that legislators will be willing to touch long-standing exemptions.
Gounardes argues the $3 billion in tax breaks highlighted in his report would be better spent on the implementation of his Working Families Tax Credit, which would expand the current Empire State Child Credit, giving families more money.
“We're always told that we can't afford it. … Well, let's claw back some of these giveaways that we've never even looked twice at,” he said. “That's how we're going to be able to find a lot of the money for these priorities.”
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Catalina Gonella
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