Gov. Andrew Cuomo’s “tax-free” program for businesses may not be so free for New Yorkers after all.
A state fiscal report shows Cuomo’s plan to allow companies and their employees to avoid all state taxes for 10 years if they come to New York is now expected to cut $323 million from the state’s projected tax revenues over three years.
According to Cuomo’s budget office report, the lost revenue would be the result of companies that would have come to New York and paid full taxes, but instead participated in the tax-free program.
Cuomo spokesmen insist that’s a “loss,” not a “cost” to New Yorkers. Cuomo said in a barnstorming tour in May to promote the program that it wouldn’t cost New Yorkers anything.
“Given New York’s reputation as being a high-tax, high-regulation state, I think it is pretty presumptuous to assume that those companies would have come here in the first place,” said Brian Sampson of the Unshackle Upstate business group. “Short of a complete overhaul of the tax systems and regulatory arena, New York has to have some tools to attract new business to the state.”
Lost revenue might have to be offset by budget cuts or taxes in future budgets, but Cuomo hopes the proposed tax-free zones will offset the loss by stimulating further growth and jobs in communities by then.
Under Cuomo’s proposal, companies such as startups spun from university research and development could apply to stay in New York or come to the state to locate on or near college campuses. The companies would be associated with an academic program, such as biomedical research, and operate on public property, which is already tax-exempt.
Neither the company nor its employees would pay state taxes, including personal income taxes, for 10 years. Cuomo has said he expects businesses will be rooted in the state by then and wouldn’t leave. As a result, they would start paying taxes, although the companies couldn’t be bound to stay in New York longer.
The report on the first fiscal quarter was released after business hours — 6:47 p.m. — Friday. However, Cuomo officials say there was no attempt to hide the new projections concerning the tax-free program. Early opposition to Cuomo’s “Tax-Free New York” proposal from some business groups and analysts was followed by the governor renaming his program “Start-Up New York.”
The report also shows an improved projected deficit for the 2014-15 fiscal year, to $1.75 billion. That’s down from a projection of $2 billion on a $135 billion budget.