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Saturday, June 1, 2013

Andrew Cuomo Reinvents the Enterprise Zone. Why?

Via @WNYPlanner, we learn that New York Governor Andrew Cuomo has proposed "Tax-Free New York," a plan that would let any business opening on State University of New York (SUNY) campuses outside New York City, some private colleges upstate, some areas adjacent to SUNY campuses, and an additional 20 "strategically located state properties" be entirely tax-free. According to the proposal:
Tax-Free NY will entice companies to bring their ventures to Upstate New York by offering new businesses the opportunity to operate completely tax-free – including no income tax for employees, no sales, property or business tax – while also partnering with the world-class higher education institutions in the SUNY system.
 In effect, we are looking at a new incarnation of the enterprise zone, though thankfully without regulatory incentives to go with the fiscal incentives. Unfortunately, enterprise zones don't work very well, so the lack of regulatory exemptions is cold comfort.

Another strike against this program is that it explicitly allows companies to use it if they relocate from other states. Of course, relocation from within the state is prohibited:
Protecting Against Fraud: Tax-Free NY will include a series of provisions to protect against fraud. Businesses will have to submit certification to ESD [Empire State Development], and falsifying certifications will be a crime. The initiative will include strict provisions to guard against "shirtchanging," or when a company reincorporates under a new name and claims its existing employees are now new jobs. The initiative will also include measures to prevent self-dealing and conflicts of interest. In cases of fraud, the state will be empowered to claw-back benefits granted to the business.
 Proving once again, as Good Jobs First reported in "The Job Creation Shell Game," that states already know how to write anti-piracy language. They just don't apply it to themselves.

Finally, as Citizens for Tax Justice points out, this program would exacerbate the state's fiscal problems: "With the state budget office projecting (PDF) shortfalls ranging up to $3 billion per year in the coming years, removing entire companies from the tax rolls is hardly fiscally responsible."

Hopefully the state legislature will reject this poorly thought-out proposal.


  1. Hopefully,we can create jobs with this. I understand deficit concerns,but jobs are more important than the deficit.

    1. Unfortunately, there is little prospect that these will create net new jobs for New York, and close to zero chance that it will create net new jobs for the country as a whole.

      Jobs are certainly more important than deficits, but the federal government has far more ability to run deficits than state governments do.

  2. Como is messing with the Peace bridge connecting Canada and the USA. For 90 years there has been one way forward. Now Como wants to end this. I see chum deals.