Cuomo trying to boost upstate New York’s economy with sweet new “tax-free zones”

posted at 4:41 pm on June 5, 2013 by Erika Johnsen

Liberals’ highly selective attention in choosing when to recognize that lower taxes and fewer regulatory barriers to entry do, in fact, help to spur economic growth and create jobs, never ceases to amaze.

The state of New York is a hot mess of over-regulation and terrible anti-growth policies and New Yorkers pay the highest taxes in the country (the Mercatus Center has New York ranked as the absolute worst state in the union for personal and economic freedom, yikes). Gov. Andrew Cuomo, perhaps realizing that he needs to make a change to the deep-blue playbook dragging on growth in the upstate region, is proposing to create “tax-free” zones around universities; new and existing businesses that open up shop near the campuses will have to pay neither corporate nor property nor sales taxes for a full decade, and both owners and employees will not be subject to any state income taxes. The Financial Times reports:

“By tax-free, I mean really, really tax-free,” Mr Cuomo said last week as he toured the state to promote the plan.

The plan comprises 120m square feet of space on and around dozens of State University of New York campuses and a number of private colleges, all outside Manhattan.

It is Mr Cuomo’s latest attempt to jump-start the sluggish upstate economy by encouraging growth in the tech sector and changing New York’s reputation as a high-tax environment. …

“If you just reduced the loss of jobs, that would be a home run. We create start-up businesses. Right now we just can’t keep them,” Mr Cuomo told the Financial Times. “They get their legs under them, so to speak, then they leave for a lower-tax environment.”

Wait — so businesses that have the option of packing up and moving to a new location to save themselves money, will often do so? You don’t say. And while it’s perhaps nice that Gov. Cuomo can recognize that the state’s economically soul-crushing policies are pushing out jobs, businesses, and residents, this “tax-free zone” proposal is really just a tease about the more substantive types of changes the state should be making, and not at all a long-term nor effective fix. Says Scott Drenkard at the Tax Foundation:

This plan is interesting for a few reasons. The first is that it is an implicit acknowledgment that taxes matter for business location decisions. The second is that it is an implicit acknowledgment that New York’s tax system is indeed uncompetitive.

While both of these priors are true, this plan goes about trying to fix them in an inappropriate way. By just lowering taxes on a particular type of business operation (in this case, start-ups on campus) the administration is trying to direct the creative power of the market from the statehouse. This approach, while couched in sexy terms of promoting an “epicenter [of] nanotechnology,” is actually antithetical to what makes for innovation.

Innovation comes from many small efforts on the part of entrepreneurs, only a few of which take hold and are profitable. The whole point of a market-based economy is that people do not know what will be valuable to society until they try it. Cuomo’s plan, by contrast, takes this discovery process out of technological advancement and only gives preferences to tech companies that partner with higher education institutions. Nanotechnology is great, and so are university research programs, but economic growth and innovation come from all sectors.

I find it painfully hilarious that state and national Democrats and the Obama administration continue to insist that we add more regulations to our rulebook, that we tax wealthier individuals and businesses at higher rates, and that we issue still more government “incentives” for favored businesses; but even when they can openly admit that higher taxes are an uncompetitive drag on economic growth, they try to fix it with ineffectual band-aids like this one.


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Next – “SOMETIMES IT TAKES MORE THAN 10 BULLETS TO KILL A DEER!”

VegasRick on June 5, 2013 at 4:44 PM

Of course, those of us already here will have to pay for it.

I highly doubt, for a moment, that my NYS taxes will remain the same or be lowered.

Jabberwock on June 5, 2013 at 4:48 PM

Maybe those gun manufacturers leaving Connecticut and Colorado will be interested.

Wait.

What?

Joe Mama on June 5, 2013 at 4:48 PM

Make them permanent and it sounds like a pretty good start on the road to reform. Only problem is that business requires forethought and if you have a ten year tax moratorium, that will only encourage the start up flight that Cuomo’s trying to fight. I actually like this idea since liberals need baby steps. If this works, maybe some lower taxes in poor and immigrant neighborhoods. Then in the 5B’s.

abobo on June 5, 2013 at 4:51 PM

Liberals’ highly selective attention in choosing when to recognize that lower taxes and fewer regulatory barriers to entry do, in fact, help to spur economic growth and create jobs, never ceases to amaze.

I think you’re supposed to be impressed that they will allow it at all. In some narrow cases. Temporarily.

There Goes the Neighborhood on June 5, 2013 at 4:51 PM

If I had it my way, no corporation would pay taxes in my state.

Every employee pays taxes, every home they buy, every hamburger they buy, every paper towel they buy, every gallon of gas driving to and from work.

Why you have corporate taxes, I don’t understand. Just tax what is consumed, consumed by employed people.

Business would beg to come in and relocate, and along with them would be thousands of homes, schools, shopping centers, it would be a boom town state.

So what if the company makes a few extra millions, companies exist not because they pocket all of the profits, they continue to exist because they expand, create new business, invest, hire, sell, ship.

They would have to physically here, where not only the main office, but supporting personal and the major warehouse/manufacturing facility.

All new would not be taxed, and the existing would be incrementally reduced each year until it was zero.

right2bright on June 5, 2013 at 4:52 PM

To me it is preposterous to put tax-free zones around universities, which are centers of advocacy of higher taxes on everybody else. Why shouldn’t the universities have to suffer the effects of the policies they support?

Jack Kemp’s old “enterprise zone” idea was to inject life into depressed areas with tax incentives, and that makes much more sense (although not as much sense as just lowering the tax and regulatory burden on everyone). Colleges are rarely “depressed areas.”

Adjoran on June 5, 2013 at 4:55 PM

Get ready for the boom of bicycle stores, trendy retro clothes, used books, smoothie and vitamin shops and cell phone dealers all around campuses in New York.

Will the current ones close, change their business name and just re-open?

elowe on June 5, 2013 at 4:56 PM

Upstate New York was damned to Democratic poverty decades ago. State law and regulation make it impossible to manufacture or mine there. Agriculture is dying for the same reasons. The only viable industry is tourism for urbanites- guess what that’s done for property taxes in the favored areas.

No tax-free zone is going to produce anything more than more boutique businesses aimed at non-locals.

M240H on June 5, 2013 at 4:56 PM

Up my way big gov’t has been bragging about Coumo’s “Billion for Buffalo” projects, now they’re pushing this college tax free zone project…
Nothing get’s done around here without the heavy hand of Government. Nothing.

mjbrooks3 on June 5, 2013 at 4:56 PM

right2bright on June 5, 2013 at 4:52 PM

Corporate taxes are a stealth sales tax on consumers that also has the benefit of providing the socialists, aka, Democrats, with a populist issue with which to browbeat companies for not paying their fair share. Witness Apple’s recent circus.

With the exception of the truly stupid members of Congress, of which there are many, they all know that corporate income taxes are passed on to consumers in the prices of goods and services.

Charlemagne on June 5, 2013 at 5:02 PM

good way to get lawsuits flying around from other companies.

dmacleo on June 5, 2013 at 5:03 PM

That which the gummint giveth, the gummint can taketh away…

DublOh7 on June 5, 2013 at 5:03 PM

Down state is a ‘sugar-free’ zone.

faraway on June 5, 2013 at 5:04 PM

We create start-up businesses. Right now we just can’t keep them,” Mr Cuomo told the Financial Times. “They get their legs under them, so to speak, then they leave for a lower-tax environment.”

Cuomo,… is proposing to create “tax-free” zones around universities; new and existing businesses that open up shop near the campuses will have to pay neither corporate nor property nor sales taxes for a full decade, and both owners and employees will not be subject to any state income taxes.

So this brilliant plan will just simply delay the inevitable departure for ten years, and in the interim collect zero taxes.

Brilliant. Why couldn’t I have thought of something like that?

parke on June 5, 2013 at 5:05 PM

Nothing get’s done around here without the heavy hand of Government. Nothing.

mjbrooks3 on June 5, 2013 at 4:56 PM

That holds through in all the Northeast states. Look at CT. Thanks to the Kelo decision, New London was able to condemn a neighborhood for economic development by a private developer. The whole thing went bust and all that land stolen for eminent domain was turned into a dump. How much tax revenue from property taxes was lost as a result?

Happy Nomad on June 5, 2013 at 5:10 PM

The state of New York is a hot mess of over-regulation and terrible anti-growth policies and New Yorkers pay the highest taxes in the country (the Mercatus Center has New York ranked as the absolute worst state in the union for personal and economic freedom, yikes).

Of course, such rankings only really matter if you agree with how they are ranked. Some of the factors the Mercatus Center uses to rate “freedom” may not be the same the same idea of freedom as you might expect. For example, a lot of it is determined by what they call “Victimless Crime Freedom,” which is mostly a question of drug enforcement. If “freedom” to you is not necessarily the freedom to do illegal drugs, then the ranking of states may be completely misleading. That is one-quarter of their personal freedom index.

Victimless Crime Freedom
The most heavily weighted category in the personal freedom dimension—after direct victim costs have been calculated and constitutional factors taken into account—is the law enforcement statistics category, which consists of data on incarceration rates adjusted for violent and property crime rates, non-drug victimless crimes arrests, and the drug enforcement rate. This category is worth over one-quarter of the personal freedom index.

Plus, they take the ludicrous position of rating same-sex marriage as a matter of “freedom,” even though it’s the creation of an over-large activist government legislating their notion of morality, that will inevitably be used to penalize people who don’t think same-sex marriages are actually marriages.

Marriage Freedom
Almost all the weight of the marriage freedom category is tied to the availability of same-sex partnerships, both civil unions and marriage. The remainder is tied to waiting periods and blood test requirements. States that prohibit same-sex couples from entering private contracts that provide the benefits of marriage (whether termed “marriages” or “civil unions”) take away an important contract right from these couples.

Then there’s the emphasis on “Marijuana/Salvia Freedom.”

Marijuana & Salvia Freedom
This edition of Freedom in the 50 States uses a much more sophisticated index of medical marijuana policies than previous editions and combines this index with the other marijuana policy variables—decriminalization and legalization of the first offense of “low-level” marijuana possession, misdemeanor status for “high-level” possession or “low-level” cultivation or sale, mandatory minimum sentences for “low-level” cultivation or sale, the logarithm of the maximum possible prison term for a single marijuana offense—and using principal component analysis yields a sensible index of marijuana policies.

Given that a ranking of 50 states on all these measures will no doubt leave a number of states separated by very little distance, the ranking of the states is essentially meaningless unless you share their exact weighting of “freedom.”

There Goes the Neighborhood on June 5, 2013 at 5:10 PM

Andy,
Liz Warren would like a word with you.

Jabberwock on June 5, 2013 at 5:10 PM

How STUPID would a business need to be to open their doors trusting the government of the state of New York?

I have no doubt that ANY business opened under this ‘special treatment’ will need to make serious ongoing CASH donations to the Democratic party.

Freddy on June 5, 2013 at 5:12 PM

They are running the Buffalo ads in the Boston media market. I suspect they are trying to recruit high tech firms. Putting them around colleges gives them a source of cheap intern labor. Of course this won’t work when the free lunch ends. Lots of high techs can move easily. It’s a short-term, give away band-aid so Cuomo can look good for 2016.

rhombus on June 5, 2013 at 5:13 PM

We have some of the highest property taxes in America here in WNY (my small house in a working class town costs us nearly $5,000 a year in property taxes, and that’s low for our county), but let’s not touch them, right Cuomo? (And yes, his property tax cap is essentially meaningless when you’re already starting with our massive property tax burden.)

But focus on a select few colleges, set an expiration date, and pray that this saves NY. We’re all screwed up here. Then again, we’ve been screwed for decades. Texas is looking better and better every day…

Pope Linus on June 5, 2013 at 5:14 PM

Don’t invest in any businesses under these circumstances. It is a trap. Those who invest will find the state changing its mind in 5 years, tops. The faster the economic growth happens, the faster the taxes come flooding back.

Seriously. Imagine the outrage from liberals in NY in 5 years if there are highly successful businesses not paying taxes. Those evil rich must pay their fair share!

weaselyone on June 5, 2013 at 5:14 PM

O/T, and this deserves its own post:

Secret Man Caves Found in EPA Warehouse

“The warehouse contained multiple unauthorized and hidden personal spaces created by and for the workers that included televisions, refrigerators, radios, microwaves, chairs and couches,” the IG report said. “These spaces contained personal items, including photos, pin ups, calendars, clothing, books, magazines and videos.”

The agency has completed an inventory of the warehouse’s contents and segregated all surplus furniture. EPA has committed to conducting an agency-wide review of all warehouse and storage facility operations.

In addition to the secret rooms, the IG found an incomplete and inaccurate recordkeeping system; numerous potential security and safety hazards, including an open box of passports; and “deplorable conditions” — such as corrosion, vermin feces and “pervasive” mold.

Passports? At the EPA?

BobMbx on June 5, 2013 at 5:15 PM

(my small house in a working class town costs us nearly $5,000 a year in property taxes, and that’s low for our county)
Pope Linus on June 5, 2013 at 5:14 PM

Don’t you pay a separate school tax on top of that too? I seem to remember the property tax and school tax bills as separate when I used to live there.

rhombus on June 5, 2013 at 5:17 PM

Secret Man Caves Found in EPA Warehouse

Occupy EPA? How many rapes?

faraway on June 5, 2013 at 5:17 PM

Passports? At the EPA?

BobMbx on June 5, 2013 at 5:15 PM

You think they are going to stick around after they get indicted?

VegasRick on June 5, 2013 at 5:19 PM

More unintended consequences from the left. The price of real estate in these areas is going to artificially skyrocket.

The plan comprises 120m square feet of space on and around dozens of State University of New York campuses and a number of private colleges, all outside Manhattan.

Look for the man/men/women behind the curtain. Do any of the NY state Reps are Governor’s people own land close to these universities and colleges that may fall under this tax break? I would imagine they would be set to make a tidy profit.

weaselyone on June 5, 2013 at 5:20 PM

Don’t you pay a separate school tax on top of that too? I seem to remember the property tax and school tax bills as separate when I used to live there.

Nope, that’s combined, school tax and state/county/local/etc. Still, my brother’s very nice and much larger home in Gaithersburg MD, right outside of DC, is right around that amount, perhaps even a little lower.

You’re lucky you’re out!

Pope Linus on June 5, 2013 at 5:22 PM

Cuomo trying to boost upstate New York’s economy with sweet new “tax-free zones”

Only a food would fall for this but if they do, be sure to get the deal in a written notarized contract because New York politicians will hit you with every tax they can think of at their very first opportunity.

RJL on June 5, 2013 at 5:30 PM

In addition to the secret rooms, the IG found an incomplete and inaccurate recordkeeping system; numerous potential security and safety hazards, including an open box of passports; and “deplorable conditions” — such as corrosion, vermin feces and “pervasive” mold.

Passports? At the EPA?

BobMbx on June 5, 2013 at 5:15 PM

I read that article earlier and missed that. That’s a damn good question. Why would the EPA have a box full of passports?

HotAirian on June 5, 2013 at 5:32 PM

“They get their legs under them, so to speak, then they leave for a lower-tax environment.”

Yeah, ya stupid idiot, imagine that!

GarandFan on June 5, 2013 at 5:33 PM

What is the purpose of putting it only around colleges?

philoquin on June 5, 2013 at 5:33 PM

What is the purpose of putting it only around colleges?

philoquin on June 5, 2013 at 5:33 PM

Maybe because they are the only ones with “disposable income” due to the generous government funded student loans/grants.

Tuition and Fees: $20,000
Government: Great, here’s 50k.

weaselyone on June 5, 2013 at 5:37 PM

It sounds like Cuomo is trying to copy the “New Economic Zone” along the coast. Around Shanghai. You know, in Red China.

So, if things go south for him elsewhere in the state, is he going to use the National Guard to move in and confiscate the assets of the businesses in his “tax free” zones?

Or just figure out some way to nuke them?

Both are “on the table” if the Old Men in the Forbidden City don’t like what’s developing in their “economically liberated” areas.

(I.e., they start actually showing a profit.)

We can’t rule out the possibility that Cuomo will set this up, and then use regulations to crash any business that signs on. So afterward he can say, “See? Laissez-faire capitalism is not only evil, it doesn’t work. Now shut up and obey my Keynesian diktats.”

/No, I don’t trust this little (deleted).

clear ether

eon

eon on June 5, 2013 at 5:40 PM

We didn’t vote for him up here.

vityas on June 5, 2013 at 5:45 PM

Sounds to me that Perry is making the Dems rethink their tax policy.

Herb on June 5, 2013 at 5:47 PM

Andrew, first try cleaning up the dysfunctional, cesspool known as Albany.
-
http://politicker.com/2013/06/poll-new-yorkers-dont-want-daughters-interning-for-state-legislature/

diogenes on June 5, 2013 at 5:53 PM

More proof that left wing libtard idiots in NY absolutely know how to fix the problem but simply refuse to do so because it relinquishes their C O N T R O L of the system.

TX-96 on June 5, 2013 at 5:55 PM

Cuono’s roadkill. The NY SAFE Act will finish him off. Nothing he can do about it.

wyntre on June 5, 2013 at 6:01 PM

How is this legal? Can small businesses just outside the “zone” skue for lower taxes? And I’m sure Gov. Cuomo forgot to mention who/what gets taxed at a higher rate to pay for this.

hopeful on June 5, 2013 at 6:11 PM

or “sue”

hopeful on June 5, 2013 at 6:11 PM

Next – “SOMETIMES IT TAKES MORE THAN 10 BULLETS TO KILL A DEER!”

VegasRick on June 5, 2013 at 4:44 PM

“a dee-ah”.

slickwillie2001 on June 5, 2013 at 6:16 PM

Have some company involved with hydrological fracking set up a business next to a college in the Marcelus Shale zone of Upstate New York. See what the downstate Democrats’ reaction is.

jon1979 on June 5, 2013 at 7:25 PM

Democrat always playing a tax shell game — they suck you in with tax incentives and once you are established, they will change the rules.

Axion on June 5, 2013 at 7:35 PM

what about investments in our crumbling infrastructure????

How does this help obama pass his 100,000 teachers and tax the rich jobs plan? I fear the country is now on the wrong track and learning the wrong lessons.

New York just needs to borrow a few trillion and give it to democrat donors to make things better, to get themselves out of the ditch, while the guys with the slurpee drink their slurpee*

*oh my god, this is probably Obama’s best rhetorical thing ever and no one ever talks about it anymore. slurpees.

what a dolt.

joeindc44 on June 5, 2013 at 7:46 PM

change the rules? like in Zimbabwe? Racsisiistttt!

joeindc44 on June 5, 2013 at 7:48 PM

Will this be like California, where they change the rules after a few years – and then charge all the new businesses a retro-active tax?

It’s a trap, I tell ya!

Hill60 on June 5, 2013 at 7:52 PM

I’m glad he has something distracting him from his war on unborn babies for a few minutes. Maybe it will give Cardinal Dolan a chance to develop some courage.

I also hope some of the fool companies believe him so they don’t move down to my state, unless they plan to leave all their lib employees up there. Maybe we should forget the Mexican border fence and just build a wall around the red states to keep all the libs out.

pannw on June 5, 2013 at 7:55 PM

This is what Lib states get when they elect people into office like Herr Cuomo. Clueless hacks who are all about working the system, and have never worked in the real private sector.

Sundry NYS ‘authorities’ (officially there are over 800 of them, and at elast 650 are active ones) have their profits skimmed off the top, which are then used to prop up New York City-based authorities like the NYC housing authority. Things really started to slide in the 60′s after the public employees were allowed to unionize, and the state literally socialized a large swath of the power generation in Upstate. Combined with high taxes, what NY has done to Upstate is downright criminal. It’s a region which has had horrid economic growth in the last 20+ years, resulting in Upstate (if it were taken as a separate state) to be about neck-and-neck with Arkansas.

NY will continue to slide downward. When NYC is no longer the financial capital of the world, the state will officially be finished, as stock transactions and the banks are the only things keeping the state’s treasury from running dry every fiscal year.

franciscodanconia on June 5, 2013 at 9:42 PM

We have some of the highest property taxes in America here in WNY (my small house in a working class town costs us nearly $5,000 a year in property taxes, and that’s low for our county),
Pope Linus on June 5, 2013 at 5:14 PM

WNY has lower taxes than downstate. I lived in Grand Island and my 2800 Sq. Ft home was $5800 in property taxes in 2012. My 1400 sq. Ft home in Orange County NY has $11,000 in property taxes.

KW64 on June 5, 2013 at 11:06 PM