What to do About the Upstate Economy?

A few weeks ago, the governor proposed what he is dubbing the Tax-Free NY Program.  Understanding that his success as governor greatly depends on whether he can provide the leadership to help turn around New York’s languishing economy, Cuomo is pushing the legislature to pass what he calls “a game-changing initiative.” 

I disagree with the governor and think that this program, while it may provide some economic stimulus, is really more of the same of what has been proposed in New York in the past. And, it fails to accomplish what our state really needs, which is broad-based tax relief.

         In essence, the governor’s “Tax-Free NY” program would give a series of tax breaks to new businesses that locate in New York within a certain radius of a state university or community college. The tax breaks are substantial. The companies that operate in these tax-free zones will be able to run 100 percent tax-free — that is, there will be no income tax for employees and no sales, property, or business tax.

         In order to locate in one of these tax-free zones, the business must be a new business to the state and the business’s activity must align with the academic mission of the university or college sponsoring the tax-free zone. Finally, the businesses that locate in the tax-free zones, in order to keep these tax benefits, must maintain the new jobs that they brought to the state.

         The fact that the governor has recognized that taxes in New York are too high and that they have been detrimental to job creation, particularly in upstate New York is positive.  Indeed, in a speech the governor gave in May, he said, “New York’s reputation as the high-tax state, the tax-capital state, is a killer when it comes to economic development.”  Here, here. This is actually an evolution of thought from many in state government, particularly many in the Democratic majority in the State Assembly who feel that we don’t tax enough in New York.

         But if the governor recognizes that taxes are job killers, then why is he proposing a program that is complex, that will be available only to a few, and provides no relief to those who have been suffering under New York’s high tax burden for decades. Why not provide broad-based tax reduction that will provide everyone with relief.  It is certainly needed in light of the fact that the Tax Foundation ranked New York’s 2013 Business Climate Index dead last. We also lead the nation with the highest state and local tax burden. Our gas taxes, energy taxes, and health-care taxes are also either the highest or near the highest in the nation. 

         Our workforce, our educational institutions, our natural resources, and our geographic location are all assets that should help grow our economy. Instead of enacting complex economic-development schemes that have the potential for political manipulation, like the governor’s proposed Tax-Free NY Program, we need a bold and easily understandable economic-development strategy that will make New York the economic engine it once was. This strategy should start with broad-based tax relief, whether it is a focus on income tax, energy taxes, gas taxes, property taxes, health-care taxes, or all of the above.

William (Will) A. Barclay is the Republican representative of the 120th New York Assembly District, which encompasses most of Oswego County, including the cities of Oswego and Fulton, as well as the town of Lysander in Onondaga County and town of Ellisburg in Jefferson County. Contact him at barclaw@assembly.state.ny.us, or (315) 598-5185.