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Will “Tax-Free Zones” Boost New York’s Economy?


New York Governor Andrew Cuomo seems to understand these days that the blue social model is a recipe for economic decline. The FT reports that he has proposed making certain locations in upstate New York and elsewhere “tax-free” to boost the state’s lagging economy. Upstate New York in particular has fallen behind New York City, the rest of the state, and the nation as a whole in job creation, sparking Governor Cuomo’s drive to lure businesses to certain locales with a tax-free decade:

New and existing businesses that open near campuses would pay no corporate, property or sales taxes, and their owners and employees would be exempt from income taxes.

“By tax-free, I mean really, really tax-free,” Mr Cuomo said last week as he toured the state to promote the plan. […]

“If you just reduced the loss of jobs, that would be a home run. We create start-up businesses. Right now we just can’t keep them,” Mr Cuomo told the Financial Times. “They get their legs under them, so to speak, then they leave for a lower-tax environment.”

Forgive us for feeling less than encouraged. For one, as the FT notes, New York’s state legislature is dominated by reps from New York City and its suburbs. Deepening the state’s dependence on high earners in Manhattan to keep the rest of the ship afloat (namely, to pay for services like sanitation, infrastructure, and law enforcement, which of course “tax-free zones” can’t afford themselves) is not something that NYC taxpayers or their elected officials are slavering to sign into law. Second, if New York’s insanely high taxes are such an impediment to economic growth and job creation, it’s not clear to us why reducing them for all state taxpayers isn’t a more reasonable measure. And third, the governor still doesn’t seem to have put his finger on the other factor that throttles new investment and sends Brooklyn start-ups scurrying for Texas: the high cost of state government and its tangle of regulations.

Without slashing taxes across the state or paring down its incomprehensible web of regulations, Governor Cuomo is just rearranging the deck chairs on the Titanic. And he’s going to annoy those of us stuck paying the exorbitant taxes that he knows are killing the state.

It’s good to see governors in progressive states acknowledging the decline of blue, but hand-picking a limited number of locations to be tax-free for a limited period of time is probably not the solution.

[Photo of Governor Andrew Cuomo courtesy of Wikimedia Commons]

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  • bpuharic

    I’m not sure what the term ‘blue social model is a recipe for decline’ means. Are we to be happy the US, under the ‘red’ social model, is becoming a 3rd world country with political, financial and economic power concentrated in a plutocratic elite? That the strength of the nation, inherent in social mobility, is a thing of the past?

    Trickle down is an abject failure. It doesn’t work. I don’t know how to be more blunt than that. We slashed taxes on the elites and the recession of 2007 was the result. We gutted financial growth for the middle class and permanent weak demand was the result. That’s the ‘red’ social model.

    And it’s a failure.

    • Paul

      As a statistician I have had a lifelong struggle in determination of cause and effect and it is invariably difficult and hard to prove. I am happy it is so easy for you.

      • bpuharic

        One of the reasons we physical chemists have made progress while you statisticians still struggle to find out if paying people more incentivizes work, I guess.

  • wigwag

    If Governor Cuomo wants to improve the upstate economy, wouldn’t it be a better idea for his administration to stop hindering fracking in New York’s portion of the Marcellus Formation?

    Upstate New York has been left out of the fracking boom because Cuomo’s Department of Environmental Protection refuses to issue regulations that will regulate how and where companies can frack.

    The ironic thing is that companies that want to drill upstate would be delighted to pay New York’s high taxes if only they would be permitted to extract New York’s gas resources.

  • charris208

    This reminds me of the Kaesong
    Industrial Region
    in North Korea. I don’t think the
    similarity is fortuitous, similar circumstances lead to similar

  • TheCynical1

    It may be just too hard for Blue Folks to concede their unicorns and rainbows. They prefer to think the rest of us want a third-world America ruled by plutocratic elites (see one of the comments), so why would they ever take us seriously.

    • bpuharic

      In the spirit of the “De Profundis”, one waits like a watchman waits for the dawn, for a red state policy that has as a goal the growth of middle class wages, vs the standard trickle down mythology we’ve been fed for 30 years.

  • USNK2

    Property taxes in every New York county outside of NYC are so high, often higher than the mortgage payment, because of New York’s expansive Medicaid.
    So, why would any business be duped into a temporary waiver, knowing that ACA only increases Medicaid participation.

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