His plan would allow private start-up companies that locate at select colleges to pay no income, property or sales tax. Cuomo believes this would spur investment and create jobs.
There are several problems with this approach. First, the rest of us will be paying the taxes these companies are avoiding. Second, the plan hurts municipalities desperate to fill vacant office space and generate property tax revenue. Third, competing businesses get no such benefits, creating an unequal playing field. Fourth, the program could invite abuse.
A report out this week claims doling out tax incentives in the name of economic development has had dubious benefits in New York State, but has cost taxpayers $7 billion. Critics say trying to lure jobs from other states is nothing but a costly shell game.
Economists across the political spectrum are extremely skeptical of Tax Free NY. The Post-Standard reports it’s unprecedented:
(Tax Foundation’s Scott) Drenkard said such targeted tax breaks make the tax system unfair and ultimately hurts, not helps, businesses.
“Carving out special tax breaks for certain favored businesses is destructive to the economic playing field,” Drenkard said. “A much better option in the long run is to go with broader tax bases and as low a tax rate as you can make while still maintaining necessary government services.”
The right-leaning Empire Center in Albany criticized the program for similar reasons.
(Syracuse University Professor John) Yinger says virtually all the research he has seen, and that he and his students have conducted, on targeted tax breaks shows they simply don’t work — especially those that hope to attract businesses in from other states.
“In New York we have a dizzying array of tax breaks with no evidence they help, and now here’s a new version,” said Yinger, who teaches courses in public budgeting and researches the effect of taxes upon behavior. “I think it would be just be another source of inequity in our tax system and would do nothing to help promote economic development. You’d do much better improving our schools and infrastructure than giving tax breaks to businesses who would be in the state anyway.”
Links of the Day:
– New York found “shocking” violations at Rochester area daycare centers.
– “In Monroe County, the media coverage of trials is a patchwork, depending to a degree on the whims of a judge.”
– ABC News profiled a tough school in Philadelphia. This could have been written in many urban schools across the country, including Rochester.
– A teacher was reprimanded for telling students they have a constitutional right not to fill out a school survey on their drug and alcohol use.
– Another sign the U.S. war on drugs is a big failure is the falling price of illegal drugs on the street.
– This is surprising. More people are cutting the cord on home Internet than television.