Guest Spot: In our (tax free) Italian restaurant …

04/24/2016 9:00 AM |

Here’s an idea: Let’s open a pizza place, you and me. We’ll make it all fancy: red checked tablecloths, those wine bottles with straw on them, candles, pictures of Sinatra, the works.

We’ll buy the best cheese, make the best sauce and — I have an idea — let’s give away the food. For free. For, hmm, let’s say, 10 years. OK?

Not a sound business plan? Probably not. So why does Riverhead insist on giving tax breaks to any business that asks for one?

Each week you pick up this paper and each week it seems there’s a story about another tax giveaway. The Marriott, the Long Island Aquarium, Hampton Jitney, the Allied Building. You name the business, they probably got a tax break. The newest candidate for corporate welfare? The proposed Hard Cider Tasting Center on Sound Avenue.

So, what’s the logic? Why do we keep giving away the store? Well, if you listen to Riverhead’s Industrial Development Agency, they say it’s good for business. They claim if we don’t give tax breaks, business will go elsewhere. Doesn’t make any sense to me. The Marriott-to-be got a tax break last year but had already broken ground a few years before. Any chance they weren’t coming here? How about the Allied Building? Before their giveaway, they sought approvals for a building called, oddly enough, the “Allied Building” building. I’m pretty sure they were committed to Riverhead. The hard cider spot? It’s already here.

The IDA claims if we don’t keeping giving tax breaks, some businesses might leave, so last year, they gave the aquarium yet another 10-year tax break on top of the one they’d already received. Was there a risk the fish were going to pack their bags and swim to Southampton?

Tax breaks Riverhead-style are a good deal for business owners but bad for you, as almost always, new businesses that ask for them get 100 percent abatements on certain things just to open their doors. If a new business is building a structure, they usually won’t even pay sales tax on construction materials. Sewer hookups? Water connections? Free, baby.

How does it make any sense to have to fire protect, police protect, pave roads, plow roads and provide government services to folks who aren’t paying their fair share? Like at our pizza place, if you have to give the store away, maybe it’s better not to have the business. So, as we say at our pizza place, “Cui bono?” Who benefits?

Well, the IDA itself for starters, as every time they give away your taxes they collect hefty fees. Fees that pay for their politically connected legal counsel and monies that provide raises for their six-figure IDA director. Fact is, if the IDA doesn’t give away tax breaks, they don’t get paid. They’re incentivized to give away the store.

Who else benefits? The corporations getting the tax breaks, of course, but also the politicians who give away the taxes. Check any campaign finance report; the folks who get the breaks are happy to write checks to the politicians who appoint the board that gives them. It’s a mess.

Every election, the politicians say, “I’m going to build our tax base.” But is giving it away really building anything? Thirty years ago, we didn’t have Route 58 and Riverhead was solvent. Today, we have lots of shops but we’re Suffolk’s most indebted town per capita. Southampton doesn’t have our stores but they have a much higher bond rating than we do, so who’s better off? Southold may not have our Kentucky Fried Chicken but, then again, our tax increase was double theirs last year and they don’t have our traffic.

Will EPCAL be our savior? Don’t count on it. We keep hearing that developing the former Grumman site will bring our taxes down, but next time you pass by look at the sign that says, “Come here virtually tax-free.” Folks, we are awash in preserved land that doesn’t generate taxes, we’re giving away the taxes commercially, we’re bringing in tons of “affordable housing” projects that are all getting tax breaks. So, who’s going to pay the taxes? I think you know the answer.

Taxes were due Monday. Where’s your tax break, you ask? I dunno, I’m still waiting for mine. Maybe we’ll just go out for pizza.

Anthony Coates is a financial adviser and owner of Hudson Market, a café that’s opening soon in Wading River. He ran for supervisor last fall on the Democratic line.

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