Gov. Andrew M. Cuomo came to Buffalo Wednesday with a plan not just to advance the ball in Buffalo’s quest for economic renewal, but to change the game. His proposal to create tax-free “communities” around the state will not only benefit Buffalo, but upstate generally. It’s a smart plan that can bolster the economy while solving other problems and costing virtually nothing.
The concept is to leverage unused space in and around the state’s 64 SUNY campuses, 56 of which are upstate. The direct beneficiaries would be business startups, businesses from outside the state and expansions of existing businesses that create additional jobs. Qualifying businesses that locate in those zones would pay no state taxes – none – for 10 years.
In addition, employees of those business would pay no state income taxes for five years, and only on higher incomes for the following five years. While not paying income taxes, those employees would be contributing to their local economies and paying sales taxes.
Private colleges would also be able to compete for similar tax-free zones. The goal is to stem the tide of graduates who are educated in New York and then take their skills and business plans to lower-tax states such as Florida and Texas, which have no state income tax at all.
In proposing “Tax-Free New York,” Cuomo is, as he says, acknowledging both the fact and the perception of New York as a high-tax state, and working to change both. This is a bold and exciting effort in that necessary task.
Because the program targets businesses that wouldn’t otherwise have located or expanded here, the cost to the state is virtually nothing. Businesses that locate on a campus would also pay no property taxes, since that land isn’t taxable, anyway. Those locating next to a campus would likely pay some amount through a payment in lieu of taxes. Those jurisdictions would be wise to keep that amount as close to zero as possible. The point here is to expand the pie, not consume it.
This could be a game-changer for upstate. Ten years is a long time to pay what could be zero taxes to the state or localities – enough to help new businesses get up and running and put down roots. After 10 years of growth and success, those businesses will be less likely to leave when taxes do kick in. And in the meantime, of course, the state has time to continue working to dismantle the disastrous tax system that makes a program like this necessary.
Its passage will depend in good part on navigating the ancient upstate-downstate split, whose currents run through all New York initiatives. To that extent, it is important to note that some of the benefits will flow downstate and that New York City residents, whose tax payments disproportionately benefit upstate, will ultimately gain from a reinvigorated upstate economy.
Cuomo wants the Legislature to approve this measure before the end of the session on June 20. It should. Even the Buffalo Billion hasn’t produced businesses clamoring to come to Buffalo. Cuomo said he was looking for some “shock and awe” to change the state’s dynamic. This qualifies, and inexpensively. It could be just the thing.