No abatements

“State taxpayers have no standing... to challenge state tax or spending decisions simply by virtue of their status as taxpayers.”

The above statement was the majority opinion written by Chief Justice John Roberts for the United States Supreme Court in the recent DaimlerChrysler Corp. v. Cuno case. The legal opinion might come as a surprise to those who were taught that thousands of patriots shed their blood about 200 years ago so that Americans have a say in their taxation, but never mind: the court was appointed by people we elected and it looks like we’re stuck with their interpretation of the nation’s laws.

In DaimlerChrysler Corp. v. Cuno, a group of taxpayers had sued to protest the state’s decision to grant the company some $300 million in property and investment tax benefits as an incentive to build a plant there. The problem is that tax abatements for corporations, which are becoming more and more common, have the effect of shifting an increasing percentage of the tax burden onto the back of individual taxpayers. In fact, according to the Census Bureau, “corporate income taxes collected rose 6.5 percent from 1994 to 2004, while individual income taxes collected went up 49.7 percent.”

But the case has deep resonance here in the Upper Delaware River valley at the moment, as the Millenium Pipeline Company is seeking major tax abatements in return for building a second gas line through Sullivan and contiguous counties.

Of course, the theory behind such abatements is that the locality gets some net benefit even with the tax reduction. The problem is, however, that big companies are becoming increasingly skilled at getting poor and desperate states, counties and municipalities to engage in a race to the bottom in bidding against each other for these supposed benefits. At the end of the day, with the low bidder “winning,” it is not always clear that the net benefits of hosting the corporation outweigh the costs to the localities in terms of services, reduced property values and other liabilities.

It is for this reason that taxpayers in the DaimlerChrysler Corp. v. Cuno sued the state. They lost.

The good news is that all those who live along the Millennium Pipeline, both in Sullivan County and elsewhere along the route, are in a uniquely strong negotiating position: because the new pipeline will be laid next to an existing one, there is almost certainly no alternative route that the company can choose that would be equally viable financially, regardless of tax levels. In other words, we don’t have to get into a bidding war with other counties. The only question is whether we buckle to the company’s contention that they’ll take their marbles and go home entirely if we don’t dish up the goodies they’re asking for.

We would like to request our elected representatives to do some research on the tightening balance of supply and demand for natural gas, and then to make a rational decision as to whether the company will really have to fold its hand if it doesn’t get the requested tax abatements. Our guess is that players in the natural gas industry are in no more need of subsidies from Sullivan County than ExxonMobil is of the billions in federal subsidies they have secured from their lackeys in Congress.

Who we need representing us right now are some really good poker players. Unfortunately, the one previous incident in which we had a similar need—when Governor Pataki faced down the Sullivan County Legislature in telling them that they had to approve five casinos or none—suggests that we may not be very richly endowed in this regard.

But the legislature now has a chance to redeem itself and take a no tax abatement position.


The route that goes through Sullivan County is probably the only game in town for the Millenium Pipeline Company, and if they’re not willing to build there now with natural gas at $6.50 per million BTU, they will surely be willing to do so in the not-too-distant future when it goes to $12. They do not need welfare payments from the working class of Sullivan County in order to do so.

Also in this issue:

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Dr. Punnybone

Thought Control

Letters to the Editor

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An unfair hit for Smallwood

To the editor:

Regarding the “Sam Rosenshine of Monticello” letter in this week’s edition of The River Reporter, the writer cc’d me that same letter, also submitted to the Sullivan County Democrat, a few weeks ago.

When we couldn’t find anyone by that name we notified Dan Hust of the Democrat. We were told that the actual writer, while unknown to him, has a history of sending these letters under made-up names. He confirmed this was the case with the Rosenshine letter.

As you know, the Smallwood Civic Association and its representative have taken hit after hit in the papers these past three years from real people in the Chapin Estates and others aligned with Steve Dubrovsky and Woodstone Lakes, LLC in the political arena for our campaign to keep open the boat launch and recreation area at the Toronto Reservoir dam.