Ryan Says: Growing Number of Experts Blast New York Times Series Critical of Business Incentives

Dec 10, 2012, 20:01 ET from Ryan

DALLAS, Dec. 10, 2012 /PRNewswire/ -- A growing number of experts from the East Coast to the West Coast are questioning the claims in a New York Times series on business tax incentives by reporter Louise Story.  The series, headlined "As Companies Seek Tax Deals, Governments Pay High Price," ran in early December.  Ms. Story has been actively promoting her flawed analysis in media appearances on Fox News, NPR, and MSNBC.

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"There is growing evidence from many independent and unrelated sources that Ms. Story failed to accurately tabulate the incentives available, cherry picked, or manipulated examples to try to create an artificial relationship between the exemptions and cuts to other government funding issues," said G. Brint Ryan, Chairman and CEO of Ryan, a leading global tax services firm featured in The New York Times article. "This inaccurate reporting on the benefits of state and local economic incentives will make it more difficult for communities to create jobs at a time when our nation's economy remains fragile." 

The non-partisan Texas Taxpayers and Research Association (TTARA) states one of Ms. Story's errors amounts to $11.7 billion and was used to make the false claim that Texas leads the nation in tax exemptions and incentives for businesses.  "The Times contends that Texas is unique in offering certain incentives, which, in fact are basic tax exemptions common across the United States," said Dale K. Craymer, TTARA President.  For example, according to the 2012 Multistate Corporate Tax Guide, virtually all states allow similar exemptions from sales tax on raw materials used in manufacturing.

TTARA cites numerous other errors in the story in a letter sent to the editors of The New York Times. "Their conclusions are misleading and simply wrong," said Mr. Craymer.  TTARA also noted that the newspaper claimed a $267 million incentive for insurance companies but failed to point out it is more than offset by a $1.5 billion separate premium tax. 

Under the headline New York Times Article Misses the Mark on San Francisco Tax Exemption, Editor Randy Shaw of BeyondChron.org accused Ms. Story of failure to check her facts when she wrote about incentives provided to Twitter in San Francisco.  The website www.tax.com  points out errors in the description and impact of a tax exemption provided to Twitter.  Tax.com notes that The Wall Street Journal found that the $4.1 million tax exemption for Twitter allowed the city to collect more than $400 million each year in business taxes and fees.  "No one would ever know from the Times story that the Twitter tax exemption spawned the greatest wave of investment in mid-market in over fifty years, greatly boosting city revenue," said Mr. Shaw.

In Rhode Island, officials were also critical of The New York Times story.  Under the headline R.I. official: New York Times wrong on sales-tax exemption for groceries in the Providence Journal, state officials joined the national chorus of critics of the series.  

The Times' story, "United States of Subsidies," found that the top-three industries benefiting from tax subsidies in Rhode Island were food ($156 million), manufacturing ($61.6 million), and trucking ($18.4 million).  But Paul L. Dion, head of Rhode Island's Office of Revenue Analysis, states that the $156 million, which the Times cites as coming from a "Food and Food Ingredients Exemption," represents the state's lost revenue from not subjecting groceries to the state's 7% sales tax. "That's not really an incentive, in my mind," said Mr. Dion.  "To say that is an incentive for the food industry is not accurate."  Most states do not tax groceries, including all of the New England states.

A central theme of the Times' stories was that the exemptions rob governments of revenue that can be utilized to support public services.  But critics who are familiar with the issues involved say the Times got that wrong as well.  "Twitter could not possibly have caused the budgetary problems that have plagued the city's park for several years," said author Cara Griffith of www.tax.com.

"There has been a long-standing debate in Texas dating back many decades on the best and fairest way to fund our schools.  This debate began long before the tax incentives discussed in the Times article were implemented," said Mr. Ryan. "There is nothing new in questioning the effectiveness of these programs.  They deserve close scrutiny but not at the expense of fairness and accuracy."   

About Ryan
Ryan is an award-winning global tax services firm, with the largest indirect tax practice in North America and the seventh largest corporate tax practice in the United States.  Headquartered in Dallas, Texas, the Firm provides a comprehensive range of state, local, federal, and international tax advisory and consulting services on a multi-jurisdictional basis, including audit defense, tax recovery, credits and incentives, tax process improvement and automation, tax appeals, tax compliance, and strategic planning.  Ryan is a two-time recipient of the International Service Excellence Award from the Customer Service Institute of America (CSIA) for its commitment to world-class client service.  Empowered by the dynamic myRyan work environment, which is widely recognized as the most innovative in the tax services industry, Ryan's multi-disciplinary team of more than 975 professionals and associates serves over 6,500 clients in 40 countries, including many of the world's most prominent Global 5000 companies. More information about Ryan can be found at www.ryan.com.

David Margulies
The Margulies Communications Group