For once, New York’s progressives have it right — at least when it comes to their call to end a housing-subsidy that’s proving a monumental failure.
The program is known as 421-a, and it was started in 1971 to jump-start housing back when the city’s economy was tanking.
Today, some progressives argue the tax breaks it offers are no more than giveaways for the wealthy — and they’re not entirely wrong. They want Albany to overhaul the program or let it expire in June.
“In the very different New York City of 2015, 421-a is a scam and a senseless subsidy: billions in unnecessary tax breaks for luxury condos,” says a statement from a coalition of left-leaning groups, like Make the Road NY and the Legal Aid Society.
City Councilman Jumaane Williams (D-Brooklyn) calls it “a complete debacle” and says he’s “extremely troubled” the city “wastes” $1.1 billion a year on the subsidy.
They are all right: It is a scam. In one high-profile case, a 1,000-foot luxury high-rise in one of the priciest sections of the city — 57th Street in Manhattan — enjoyed tax breaks worth an estimated $35 million. Taxes on a $100 million penthouse there were slashed this year from an estimated $379,000 to an estimated $19,000.
In some sections of the city, developers who get these breaks must also provide subsidized units. According to one report, the de Blasio administration is leaning toward keeping these tax breaks but scrapping the others.
But even this won’t work.
Think about it: A tax break used to offset the extra costs of a subsidized apartment essentially amounts to a wash. It’s also roundabout and convoluted. If Mayor de Blasio really wants to spur development of more housing, why not just simplify — and cut — real-estate taxes across the board?
Besides, some of the progressives who want the program scrapped merely want to replace it with something that offers smaller breaks and greater subsidies. Meaning even less of an incentive for developers to build more affordable housing.
New York’s pols have been trying to meet the demand for “affordable” housing for decades. They’ve yet to succeed — and they never will, until they learn that the more subsidies you offer, the longer the line grows to collect them.