How Cuomo's "Tax-Free New York" Will Hurt New York Taxpayers

Ordinary New York taxpayers, watch out.

The chief executives of GE, Goldman Sachs, and JPMorgan Chase are lining up behind a plan by the governor of New York, Andrew Cuomo, for what the governor calls “Tax-Free New York.”

Ordinary New York taxpayers, watch out.

The whole episode is newsworthy for at least two reasons. First, there’s the attempt by Cuomo, a possible Democratic presidential contender, to portray himself as a tax-cutter when he isn’t one. Second, there’s the way that business leaders go along with it. 

If Cuomo were actually proposing a broad-based tax cut in the face of what the governor himself, in justifying the bill, calls “the perception and reality of New York as a high-tax state,” plenty of New Yorkers would be cheering for him.

Alas, the governor, having already hit New Yorkers who earn more than $2 million annually with an estimated $1.9 billion-a-year tax increase, is not proposing to actually make New York “tax free” or even to cut taxes for all taxpayers. Instead the proposal that has the CEOs cheering would offer tax breaks to businesses that locate on or adjacent to a State University of New York campus. The employees of those businesses would have their wages be exempt from state income taxes for five years, and the businesses themselves would not have to pay sales tax or property tax for ten years.

 The catch is that, to qualify for the tax benefits, not only does the business have to be where the governor wants it, it has to be in a sector that the governor approves. “Certain types of businesses are prohibited from participating in this program, including retail, real estate, and professional services type businesses,” the governor’s memo in support of the bill says.

Plenty of people are willing to call this what it is. A Republican state assemblyman from Staten Island, Joe Borelli, called Cuomo’s plan “one of the most disingenuous I have ever heard.” According to the Staten Island Advance, Borelli said, “It acknowledges that New York's tax structure is crippling business and then does nothing to address it. The fundamental flaw with this proposal is that it allows Cuomo and [Assembly Speaker Sheldon] Silver appointees to pick and choose which businesses get sweetheart deals, as every other existing business in this state suffers.” The New York Post, whose conservative editorial page usually likes tax cuts, editorialized against the governor’s “Tax-Free New York” plan.

Yet the big business leaders are lining up to support it. “Tax-Free NY is the type of visionary thinking we need from our leaders,” said the CEO of JPMorgan Chase, Jamie Dimon, in a quote distributed by the governor’s office. “I applaud Governor Cuomo for taking this initiative to help spur the state's economy,” said the CEO of GE, Jeffrey Immelt. The CEO of Goldman Sachs, Lloyd Blankfein, tweeted that it is a “thoughtful, smart plan to help drive private sector investment in NY, deserves support.”

GE, Goldman Sachs, and JPMorgan Chase have the size, influence, and lobbying juice to get special deals from the state when they need or want them. They do plenty of municipal bond business with the state. Maybe the governor asked for their support, and maybe they figured any move toward tax relief, even on a small scale, can’t hurt. And maybe ten years from now SUNY campuses will be surrounded with new high-tech firms like the ones that border MIT and Stanford rather than by rural voters annoyed at Governor Cuomo for his support of gun control.

Perhaps. But in researching Governor Andrew Cuomo’s “Tax-Free New York” plan I came across a 1994 New York Times article headlined “21 Enterprise Zones Created, Including 4 in New York City.” It reported that “Under the state program, which was first established in 1986, businesses that locate in designated areas of high unemployment and poverty are eligible for a mix of tax credits, low-interest loans, reduced property taxes and discount utility bills.” Among the new zones were those in Buffalo and the Brooklyn neighborhood of East New York, which haven’t exactly been beacons of prosperity since Andrew Cuomo’s father, Governor Mario Cuomo, designated them nearly 20 years ago. In fairness, plenty of more conservative New York politicians supported enterprise zones, too — they were a favorite of Republican congressman Jack Kemp, who, like Andrew Cuomo, served in the federal department of Housing and Urban Development.

Some businessmen with the patience and capital to navigate the complexity of the state’s political process and regulations may find the tax-free New York plan a good deal for them. But others may conclude that by moving either out of state or offshore, they can find a low-tax environment that doesn’t expire in five or ten years and that doesn’t require jumping through a lot of special hoops set up by the governor.

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  • entropy||

    He was already pulling this shit when Perry was trolling him, saying he would negotiate with companies so they didn't have to pay any taxes (for a while at least). I suppose all states do that to some extent with special tax incentives.

    When I read it, it reminded me of Comcast. You've got to cancel the service (or threaten to) for them to keep you on the low intro rates. If you're a company already in NY what do you have to do, move out and then back in?

    Oh yeah, no possibility for corruption there. Special tax rates for special people. Jack up tax rates to 100% on the rich and then dole out special exemptions for the ones who play ball. We are going Banana Republic at an astonishing speed.

  • John||

    I would say New York is already there. And the contrast between Cuomo and his father are striking and I think say a lot about the general devolution of liberalism in this country. The senior Cuomo was an honest do gooder who was wrong but at least wasn't a thief. The younger one is nothing but a crook. His entire political existence is for the purpose of stealing from the public to give to himself and his supporters.

  • VG Zaytsev||

    Every time this douche is mentioned in the media it needs to be pointed out that the reinterpretation of the CRA, that led to the real estate bubble, was his handiwork.

  • VG Zaytsev||

    Every time this douche is mentioned in the media it needs to be pointed out that the reinterpretation of the CRA, that led to the real estate bubble, was his handiwork.

  • SiliconDoc||

    I just about shuddered when I read possible presidential run then realized all the libs and leftists would happily elect him.
    Is he going to prison for his snooping Wall Street computers ?
    Oh sorry, I was hallucinating.

  • VG Zaytsev||

    Every time this douche is mentioned in the media it needs to be pointed out that the reinterpretation of the CRA, that led to the real estate bubble, was his handiwork.

  • VG Zaytsev||

    Every time this douche is mentioned in the media it needs to be pointed out that the reinterpretation of the CRA, that led to the real estate bubble, was his handiwork.

  • VG Zaytsev||

    Every time this douche is mentioned in the media it needs to be pointed out that the reinterpretation of the CRA, that led to the real estate bubble, was his handiwork.

  • VG Zaytsev||

    Every time this douche is mentioned in the media it needs to be pointed out that the reinterpretation of the CRA, that led to the real estate bubble, was his handiwork.

  • VG Zaytsev||

    Every time this douche is mentioned in the media it needs to be pointed out that the reinterpretation of the CRA, that led to the real estate bubble, was his handiwork

  • Hyperion||

    Holy smokers! A seven... what do you even call that?

    Ok, we need s name for this...

    VG Zin the post? That doesn't sound right.... I need help here.

  • P.R.G.||

    And this is why Cuomo was right: you don't need a assault submit button that can submit more than seven times.

  • Tim||

    You can say that again.

  • Gbob||

    I missed what he said. Could somebody repeat that?

  • Zombie Jimbo||

    Well, Cuomo has been mentioned alot in the media.

  • Paul.||

    I don't see the problem. Isn't it the job of government to dole out special favors and goodies for favored groups? That is the central function, is it not?

  • some guy||

    That is the central and perhaps only function. I think the backlash is against the name of the program (it sounds too tea baggy), not the program itself.

  • LifeStrategies||

    The job of government officials and politicians actually seems to be to favor the rich and powerful at the expense of the rest of us...

  • Paul.||

    Mandatory composting will equalize everything.

  • some guy||

    Maybe mandatory composting is Bloomberg's solution to the Iron Mountain problem.

  • CE||

    Yeah, a tax-free job will be the next rent-control apartment. People will work til they're 80.

  • cavalier973||

    You know what would spur the state's economy more than anything? Having a "government free" New York.

  • some guy||

    In the long run, yes. In the short run there would be chaos as all those well-established companies got cut off from the government teat.

  • cavalier973||

    In the short run, we're all dead.

    No, wait...I think I said that wrong...

  • some guy||

    NYC very well may have reached the point where it could not transition to a government free "state" without destroying itself in the process. The rest of NY could probably make the transition in a weekend.

  • LarryA||

    Everyone would freak out. "OMG! I have to decide what size soft drink to order all by myself?"

  • Tim||

    "Tax Free New York" aka "New Hampshire"

  • dinkster||

    Hey don't give them ideas, I'm planning on retirement there.

  • ||

    I don't know what it is about New York that makes its politicians think they can literally do anything they want, as if they were a dictator or something.

  • John||

    They pretty much can. I can't see Cuomo losing an election. Can you? The guy is a total incompetent idiot son who makes up for it by being pathologically dishonest. He is not even charming. Yet, he won election and will win re-election forever no matter what.

  • Paul.||

    This is how I see it.

    When you're repeatedly rewarded with re-election, what, exactly, is the motivation to stop?

  • SiliconDoc||

    It obviously points to the fact that elections are now a complete sham.

    Enough power is in place that they are choice free misdirections.

  • Gbob||

    It's vile, and it's riled up the start up community here in Buffalo. Look, there are hundreds of bright young kids trying to start a business in this city. They love the climate, the people, and the city. Trying to force them out to the burbs to start a company would kill any incentive they had to stay in the region. If I wanted to live in some suburban sprawl, I could think of a dozen regions in better states to do it in.

    In the meantime, the SOB has decided to increase spending. Who has to burden the extra load if he's giving tax credits to people who play the political game? That would be the rest of us.

    Giving special grants to the serfs to work on feudal lands isn't enterprise and capitalism.

    God damn I hate living in a one party state.

  • John||

    Dear young people trying to start a business in New York,

    Fuck you pay me

    Signed/

    Andrew Cuomo.

  • cavalier973||

    It's really teeth-gnashingly sad. New York City was such a place of opportunity for so long, for anyone with a bit of gumption. The garment industry was started by immigrants who started out sewing together caps and such in their overcrowded apartments.

    Even just a few years ago, on Trump's first episode of "The Apprentice", a group of women made $1,000 in an afternoon selling lemonade on the streets of NYC. That's awesome. How can people so oriented toward entrepreneurship be so clueless as to hire overseers who make it so difficult to be an entrepreneur?

  • John||

    New York City and California were two of the greatest drivers of economic wealth in the history of the world. And liberals are in the process of killing them both. It is just infuriating. What a tragedy. Places like Manhattan or San Fransisco have been reduced to Disney land for aging white people.

  • Paul.||

    And liberals are in the process of killing them both.

    In the process of?

    California is a dead letter.

  • John||

    You just think it is dead. It still has a long ways to fall. It still looks better than Detroit. Give it time. Liberals have just become to cause misery.

  • Paul.||

    The only thing that keeps California going is beaches and climate. Never underestimate beaches and climate. Progressives can suckle the milk from that teat nearly indefinitely.

    Detroit doesn't have beaches and climate, so when the economy and political climate sucks the lifeblood from people, they leave.

  • cavalier973||

  • John||

    We can only hope that is what happens.

  • Hyperion||

    Wasn't some Libertarian going to buy an island there, in the middle of the river, and turn it into Libertopia?

  • Paul.||

    Koch Island, if I recall.

  • Hyperion||

    I can just see the liberals begging massah Obama to nuke it.

  • Inigo M.||

    That would actually happen. The island would be held up as an example of wickedness and vice. They would point out the absence of tax-fueled redistribution as evidence of hatred of the poor -- especially minorities. The lack of affirmative action and other such programs would be seen as a clear indication of racism. They could then use hate crimes legislation as a justification for a Waco-style assault on the place.

  • LarryA||

    Overheard a college near-graduate saying, "Taking a job in California is like booking a cruise on the Titanic."

  • ||

    As someone who got his start in the NYC startup world, it's kind of stunning to see how much more ridiculous the government there has gotten. It used to be that you could just ignore and avoid it, mostly, and you were fine.

  • ||

    Sez you, white man.

  • CE||

    My undocumented immigrant workers and their children are still sewing stuff in my overcrowded apartment building. How do you think I afford this monocle, top hat and walking stick?

  • cavalier973||

    They are on their way to having their own versions of monocle, top hat, and walking stick; or, they would be were it not for the snotnoggins who seek to oppress them with government "assistance".

    Frank Woolworth spent time working in a department store sans wages; the store's owner told Woolworth that the lad should be paying him for all the skills he was teaching him.

  • CE||

    The feds and Louisiana should have made New Orleans a tax free zone after Katrina. It would have been the financial capital of the world by now.

  • Inigo M.||

    It's funny to look back, but I was SURE that China would put a choke hold on Hong Kong the moment the British lease on the city expired. Instead, they wisely left it alone in all its economically-free glory. If the Chicoms can do that, why can't the U.S.?

  • Jayce||

    Chinese politicians have an understanding of "killing the goose that laid the golden eggs". Our politicians aren't quite bright enough to grasp lessons young children once learned easily.

  • cavalier973||

    If I could go back and live in any place at any time in history, it would probably be either California in the 1950's, or New York City in the 1920's. Probably the former.

  • Inigo M.||

    In 1950s California, the authorities were obsessed with rooting out any trace of communism. Fifty years later, they've actually become what they used to fear.

  • Drake||

    I thought he was working on a business-free NY and doing an excellent job of it.

  • CE||

    Hey, lighten up libertarians. Taxes are the price we pay for civilization Stop-and-Frisk, NSA surveillance programs, drone attacks, IRS audits, beverage portion size regulation, etc.

  • cavalier973||

    Cheap at twice the price.

  • Inigo M.||

    Yep. I can just imagine a future president intoning, "You see that surveillance drone up there? You didn't that!"

  • AlgerHiss||

    Forget Cumo: It’s the garbage NY voter that elects this trash.

    If you willingly live in that dreadful place, you’re an ignorant animal.

  • Anders||

    These idiots are never going to get it.

    We have offices in pretty much every major city in the US. The only folks in the Blue State Meccas like NYC, LA, Chicago, and DC are the handful that have to be there. Otherwise we'll use folks in the lower tax states.

    We started relocating people from the Blue State Meccas years ago taking all that sweet tax money away.

  • Inigo M.||

    With Cuomo as governor, Nanny Bloomberg as NYC mayor, and Anthony "Check Out My" Weiner actually getting back into politics, I'd say New York is more of a brain-free zone than a tax-free zone.

  • Eric Bana||

    Bang. Head. On. Wall.

  • nikki_burges||

    my friend's mom makes $85/hour on the internet. She has been without work for 8 months but last month her payment was $20462 just working on the internet for a few hours. Go to this web site and read more www.zen45.com

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