Tax-free zones just the ticket for upstate
Gov. Andrew Cuomo’s proposal for tax-free zones around State University of New York campuses
is big, bold — and could actually work. Work means getting new businesses, particularly start-ups, to invest in the distressed upstate communities where most of the schools are located, communities suffering a decades-long decline that the state has been unable to reverse with the usual economic development policies.
It means keeping those new businesses rather than see them leave the state (75 percent of collegiate-based start-up firms now do) because of New York’s high taxes, taking their jobs, and opportunities for the state’s young people, with them.
We know that universities can be laboratories of innovation and economic engines. We’ve seen it with Silicon Valley in California, the Route 128 corridor in Massachusetts and Research Triangle in North Carolina, all of which started close to and tapped the brainpower of schools like Stanford, Harvard, M.I.T., Duke and the University of North Carolina. And we’ve seen it right here at home, with the nanoscale effort around the University at Albany and, earlier, RPI’s incubator in North Greenbush.
Cuomo’s plan would offer companies that locate on or within about a third of a mile of a SUNY campus, and whose business was academically connected to the school, freedom from sales, property or corporate taxes for 10 years. Their employees would also pay no state income tax. The companies would have to be new, or from out of state, or existing ones that were expanding to create jobs — no mere shuffling of jobs within the state.
These are major advantages, enough to get the attention of any business owner; as Cuomo said, “There is no place you could go in the United States of America where you would pay less taxes than you’re paying in these communities.”
But it’s also tax money that is not being paid now, because the businesses don’t exist. And when they do start paying taxes after a decade, they’re likely to be more firmly entrenched and bigger. Meanwhile, they’ll be creating jobs for people who will be spending money, buying homes and paying property taxes in the community. And they’ll be attracting spin-off companies that will be on private land and be fully subject to taxes.
The timing of Cuomo’s proposal is also good, because the JOBS Act passed by Congress last year eased paperwork and regulatory burdens on small start-up businesses and made it easier to attract financing.
In presenting this as an upstate initiative when he proposed it last week, Cuomo showed an understanding of how intractable the region’s economic problems are and what dramatic steps are needed to solve them. At the same time, he recognized that it will be a tough sell with downstate lawmakers, who dominate the Legislature, because there’s not much in it for them.
What’s in it is more balance and overall strength for the state’s economy, which is so heavily — too heavily — dependent on New York City’s financial sector for revenue. More business and jobs anywhere in the state will eventually produce more revenue to pay for programs, services and education everywhere in the state, while easing the tax burden for all.