June 6, 2013

Tax Free? Not Me

From Gov. Cuomo's presentation
Most of you have now heard about New York's Sonofa Governor Andrew Cuomo's Tax-Free NY proposal, which is breaking new ground in the economic development world.

Cuomo's proposal, according to the press release announcing it, aims to
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.
Yes, you read that right: completely tax free.  How are they going to do that, you ask?  Easy:
  • Tax-Free Communities: All SUNY campuses outside of New York City and designated private colleges north of Westchester will be tax free (no sales, property, or business/corporate taxes). Up to 200,000 square feet surrounding the campus will included in the tax-free community.
  • Employees Exempt from Income Taxes: Employees of businesses that open in Tax-Free NY communities will be exempt from paying income taxes.
  • Additional 3 Million Sq. Ft in Commercial Space at Private Universities: Under Tax-Free NY, 3 million sq. ft. in commercial space will be available at New York's private universities and twenty strategic state assets will also be designated tax-free.
  • Businesses Eligible for Tax-Free NY: Eligible businesses include companies with a relationship to the academic mission of the university and companies creating new jobs, including new businesses, out-of-state businesses that relocate to New York and existing businesses that expand their New York operations while maintaining their existing jobs.
In case you missed it, here is the kicker one more time:
Employees of businesses that open in Tax-Free NY communities will be exempt from paying income taxes.
Listen, I get that people are trying to find ways to grow the upstate economy. I get that job creation has lagged here in our neck of the woods (5%) compared with NYC (16%).

I also get that, for a number of years, politicians have had to play the bribery game to try and lure businesses to their town, or city or county or state.  The competition is fierce, and businesses are in the driver's seat. Taxpayers, well, we're on the hook for the incentives.  This latest deal is no exception.

For areas like Syracuse, with an already high percentage of tax-exempt properties, adding additional acreage around our three SUNY facilities -- ESF, Upstate Medical University, and OCC  -- to the non-taxed roles will make it harder for the city to provide services to businesses and residents.

People like me who work for companies that won't be moving into the tax-free "communities" the Governor is selling will continue paying income tax, while folks who work for the protected companies will not -- including those companies that will inevitably find the loopholes in these proposals.

And note that, at 6.19%, New York has the eighth highest average income tax in the country.

If this thing gets passed - and there's a full court press on to get it done before the end of the legislative session -- I guess I'll have a choice:
  • I can give up my career with my current employer and hope that I can get a job at one of the new companies where I won't have to pay income tax, (but will also most likely not have as good a salary or benefit package), or
  • I can stick it out with my current employer for the next few years until I retire, keep my benefits, and continue paying my fair share while I watch other people not pay theirs.
Is that really what we need?  Is this really how to solve the problems with Upstate's economy?