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New York StateWe now know more about how much Start-Up NY will cost taxpayers.

The state estimates the lost revenue will be $323 million through March 2017. The program allows businesses to pay no taxes for 10 years on property, sales or mortgages. Their employees don’t have to pay taxes.

The state’s figures are not the only costs here. Municipalities will lose property tax revenue. Development could be shifted from one town to the town that has the tax-free incentive. For example Rochester may have trouble filling up its vacant buildings because the new businesses are flocking to SUNY Brockport’s campus.

Do you honestly think this will pay for itself? Let’s say the average job pays $50,000. $323 million divided by $50,000 equals 6,460 over the next four years. But those people wouldn’t pay any taxes for 10 years. And their employers wouldn’t pay any taxes for 10 years.

Guess who pays for these new jobs? We do. Someone has to make up that $323 million.

It’s possible these jobs would have been created without the incentive if the state adopted a more even approach to reducing business costs. The state has been throwing money at businesses for a long time – with little success. It just gave a Batavia company $500,000 for an expansion and it’s not clear if the company needed the money.  It just gave Xerox $500,000 for its toner expansion in Webster, after Xerox threatened to build it elsewhere. (Right out of Xerox playbook.)

Astoundingly, Lt. Gov. Bob Duffy suggested Bausch + Lomb might be able to take advantage of Start-Up NY. The company is on the verge of axing hundreds of Rochester workers and we want to reward it?

Meanwhile, New York leads the nation in layoffs this year.


Links of the Day:


– Buffalo teachers are tired of cleaning up after students who eat school-provided breakfasts in class. They filed a grievance. (I think food belongs in a cafeteria.)

– Is Greek yogurt in schools just an industry subsidy arranged by Sen. Chuck Schumer?

Here’s where drones fly Upstate.

– How cast iron skillets are made at a small Syracuse factory.

Bubba Watson’s bizarre Rochester PGA video.

– Princeton, N.J. is requiring students to wear headgear when player soccer, lacrosse and field hockey, even though experts say it will do o good.

10 Responses to Can Start-Up Pay For Itself?

  1. August 6, 2013 at 9:09 am Tom Allen responds:

    But the employees would spend their money here … or the jobs could move to a state that already has low taxes, then they would spend 0% here … AND UR and RIT grads will have to move to NC, FL, TX,TN, etc, etc…
    Love your blog, but you read too much Keynes and not enough Friedman.

    • August 7, 2013 at 1:32 pm Lee Drake responds:

      They will also buy houses here, spending money on property tax, they will purchase goods enhancing sales tax revenues, they will enjoy services, enhancing other businesses, they will buy groceries, and gas, and furniture and appliances with the money they earn. The fact that they take a little more home each day because they are paying less NYS tax means they also will be spending more in the economy. But Rachel doesn’t care about that – it’s all about simplistic calculations based on guesses to prove that business is bad and anything NYS does to encourage business is worse.

      • How can it be right to redistribute somebody else’s wealth? What makes your judgment better than mine when it comes to what I do with the money I have worked hard to earn? State government: Stop trying to be my business partner or my boss – that isn’t your reason d’etre!

        If you want to see this state’s economy boom, put efforts in reducing taxes across the board. Start with eliminating the positions of whoever thinks up these cockamamie proposals. to waste our money.

    • August 8, 2013 at 8:05 am Rachel Barnhart responds:

      There’s no way the employees will spend enough money to equal $323M.

  2. The legitimate function of government is to protect the rights of the individual. In this case, as in so many others, the government will be VIOLATING individual rights, not protecting them. Taxpayers are being squeezed to insolvency to support government schemes and boondoggles. Can anyone wonder why businesses and residents are fleeing the state?

  3. The whole program is a stupid peace offering from Cuomo, while mostly neglecting upstate cities which Albany helped to empty out. If I was king for the day, I’d change it from SUNY campuses, to designated brownfields with clean up/reuse of as credits against tax burden, especially targeting industrial reusers. It kills two birds with one stone and while costing us tax money, takes care of potentially costly brownfields left by the businesses DC ans Albany killed or drove out.

  4. August 6, 2013 at 8:46 pm Orielly responds:

    Government LED by DEMs at its worst.

    I strongly object when SUNY’s or NYS Private schools tax dollars from NYS and then reject NYS citizens for acceptance while they admit International students. Parents who paid NYS taxes for years that support these schools and yet their kids get rejected while non US citizens are welcomed.

    SAME thing as in this case, where NYS is picking out of state businesses or start ups and using funding (taxes) from other NYS businesses to in some cases forcing them to support their competition’s establishment in this state. And giving them long term tax breaks to be competitors. The state picking out of area business to be the winners and local companies forced to support their competitors.

  5. August 7, 2013 at 1:30 pm Lee Drake responds:

    The fallacy in your assumptions is the “average $60k” figure. At the ITCMEMS facility which may become one of the startup NY sites their average salary is more than 2x that. So now you only need to generate 1/2 as many jobs. Which would you rather spend money on – unemployment assistance or getting people back to work. Because that is what this comes down to. Would you rather see employees flock to other states, or stay. Would you rather see businesses relocate to NYS or leave because they can get better incentives elsewhere. If you don’t think businesses think this way – you are wrong. Why are you anti-everything-business. You’re anti-movies, anti-pga, anti-flipflops, anti-comida, anti-uofr growth, anti-wegmans, etc. (and yes the flip flops were thrown in to see if you were paying attention). Businesses are the only ones capable of pulling upstate NY out of it’s employment and growth slump. But you don’t want to do ANYTHING to assist or help these businesses do this – in fact you would prefer that we push every business out of NYS. If we do that – who will pay any taxes ever?

  6. If NY wants to grow, it has to get out of the way, not keep shuffling the deck on who pays, playing favorites and redistributing money to the well connected. Fix the problems that cause people to flee NY, don’t simply move the chairs on the Titanic and claim that the ship isn’t sinking. The very fact that we “need” IDAs, how money is given to friends and family members of key politicians, etc should be indicative that the system itself is broken.

    It reminds me of the old hippy vans held together with bumper stickers… just need to place one more bumper sticker to hold it all together, while we ignore that the metal underneath has all rusted away. Meanwhile, we pretend nothing is fundamentally wrong.

  7. Pingback: Start-Up Smells » The Rochesterian

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