Start-Up New York Creates Unlevel Playing Field in Highest Taxed State

One of Gov. Andrew Cuomo's latest initiatives for the people of New York is called "Start-Up NY," a program that will attempt to attract out-of-state and start-up businesses by giving them a tax-free advantage over established New York businesses.

Start-Up NY will permit tax-free zones around state universities and certain colleges.

The plan authorizes Albany-appointed university "leaders" to propose creating tax-free zones and choose new businesses to have the tax-free status, subject to the governor's approval.

The juicy, press-friendly element is that the new businesses will aid, promote and work synergistically with the universities, offering employment to their graduates.

The competitive edge these new businesses will enjoy will extend to employees and various incentives will last from five to 10 years.

After that, businesses and their employees will be taxed at the same rates other businesses and individuals in New York pay, which, according to the Tax Foundation, a Washington, D.C., foundation that studies taxation policies in the U.S., are the highest in the nation.

New York State has the most "penalizing tax system, in the nation," according to the D.C. foundation.

State Assemblyman Joseph Borelli (R-Staten Island), a critic of Cuomo's plan, said by its very premise, Start-Up NY "acknowledges that New York's tax structure is crippling business and ... allows a politically connected panel to pick winners and losers."

The losers, he said, "are every one of the state's 2 million existing businesses."

It has apparently not been determined how many existing businesses will leave New York for states with lower taxes during the same period Start-Up NY affords new businesses tax-free status.

Cuomo's idea, he says, is that by letting select businesses launch tax-free businesses and allowing their employees to pay no state taxes, it will help people establish roots in New York, especially young college graduates likely to be hired as part of the university-centric plan.

"If we keep them for 10 years," he said, "they'll develop roots in the community. They [will] buy a house. Their kids will be in our school systems. But we have to get past that initial one-year/ two-year period where they're leaving now for more competitive states."

Of course the last statement is stupendous. An example of all that's wrong with government meddling. An unlevel playing field, favoring new businesses over old, is the ruse needed to hook young people. The bait to hook the fish. Once into the nest of family life, it will be hard to go to a better state where government is friendly and consequently, the quality of life is better.

But wouldn't it be better - not to mention more honest, if one really wants to keep people from going to more competitive states - to make New York a competitive state for all businesses?

To reduce taxes and to have less government meddling?

Start-Up NY will undoubtedly boast its share of success stories. These will be paraded in the press as proof that the plan is a success. What we will not see is the number of established companies that will leave New York because Start-Up NY gives new businesses an unfair advantage. What we will also not see is the continuous loss of businesses, not only mid-sized companies, but existing small businesses that New York State is losing every day because it is not competitive.

What we will also not see and have no way to track are businesses who would have come to New York if it were a competitive state, but will ignore Start-Up NY. Businesses that decide the long term advantages of moving to a low-taxed state or offshore, where their business can enjoy a low-tax environment, is better than the temporary advantage of moving to New York to take advantage of plan that expires in five or 10 years, then afterwards puts them in a penalizing tax system which, through uniquely poor, inept and corrupt governance, New York state provides for its businesses and its people.