Skip to comments.Business Buyers Beware: Gov. Cuomo's "Tax Free" New York TV Pitch is a Con Job
Posted on 02/19/2014 2:52:41 PM PST by SeekAndFind
New York Governor Andrew Cuomo is airing TV ads around the country that offer tax-free status for 10 years to new business start-ups entering his state.
The ads' claims are deceptive because they come with a lot of government strings attached. You only get a tax cut if you put your business where the state tells you to put it, plus meet other state requirements. Critics say Cuomo's sweeping claims are not what they're cracked up to be.
Once again, not unlike President Obama's tax credit proposals, the Democrats think they can dictate the rules that produce successful businesses and lots of jobs. It did not work nationally, and it isn't going to work in New York where, after Cuomo's first three years in office, the statewide jobless rate remains over 7 percent.
In New York City, unemployment is a recession-leaning 8.1 percent.
"Will Gov. Cuomo ever stop with the tax gimmicks? Our beleaguered state economy needs more than political plans that pick winners and losers," the New York Post lectured the governor last month.
The exaggerated claims in Cuomo's "Start-Up NY" TV ads do not to reach out to major retail and wholesale firms, or medical service businesses and many other business sectors. Instead his tax cut plan focuses on high-tech and manufacturing companies that must locate their firms on or near predominantly "upstate" university campuses.
Moreover, businesses that qualify could lose their tax-free status if they do not produce the required number of jobs under Cuomo's program. "And the program Cuomo called 'bold' is limited to just 10,000 jobs -- one tenth of a percent of the private-sector jobs in New York," the Post said.
In another blistering critique last week, Americans for Tax Reform, an anti-tax lobbying group, said "Cuomo is blowing smoke" on his tax cut claims.
"A closer examination of Gov. Cuomo's proposed tax changes reveals that in most cases, they would not result in a net reduction in New York's state and local tax burden," they said.
In fact, upon closer examination of the tax plans' details, it is shifting of tax burdens, rather than reducing tax rates.
E. J. McMahon, who heads up the Empire Center for Public Policy, has testified that more than half of Cuomo's proposed "tax cuts" in property tax relief are actually "a tax shift. That is, they take a levy that is being assessed on the local level and shift it to the state level," ATR said.
Cuomo came into office by declaring that the state had to "change the perception of New York as a high tax state." And he's won some praise in certain quarters just for suggesting that the state's economic problems are the result of its oppressive, job-killing tax levels.
The non-partisan Tax Foundation's State Business Tax Climate ranks New York last out of the 50 states. It's top income tax rate for individuals is 8.82 percent, the second highest in the country.
He named a bipartisan panel led by former Gov. George Pataki, a Republican, and former State Comptroller H. Carl McCall, a Democrat, to propose a tax reform plan that has received mixed reviews.
What's missing in Cuomo's plan to get New York's job-challenged economy growing again, says Americans for Tax Reform, is a flat out reduction in the tax rates across the board.
"If Gov. Cuomo is serious about lowering the tax burden on hardworking New Yorkers, he should take steps to lower both the individual and corporate income tax rates," ATR says.
And he should entirely phase out the "Millionaires Tax" that he pushed through the legislature in 2011 which the the state Assembly's Majority Ways and Means staff said was an "unsustainable" revenue source.
Cuomo's plan calls for lowering the death tax from 16 to 10 percent, but that will still leave New York "as only one of 14 states that imposes any tax on the value of property and assets left to others as a result of dying," ATR says. Better to phase it out entirely.
In many respects, his plan is less of a tax cut to help create jobs than a political strategy to help him appeal to upstate voters, where he is weakest, in the fall election.
A Quinnipiac University poll shows him with 76 percent support in New York City, but 49 percent support among upstate voters where the state's manufacturing industry is struggling.
Cuomo should take a page out of the tax cut plan that was enacted by New Mexico's Gov. Bill Richardson who advised his party that "we have to be the party of growth and the American dream, not the party of redistribution."
Richardson, a two-term governor between 2003 and 2011, saw that the surrounding states levied income tax rates that were much lower than New Mexico's. He cut taxes across the board, slashing the top income tax rate from 8.2 percent to 4.9 percent over five years.
Not all of his tax changes and, especially, his spending policies were right by any means. But his economy grew, and Inc. Magazine gave him a four star rating for his pro-growth tax cuts. He created thousands of new jobs and balanced his budget, to boot.
But outside of New Mexico, Richardson's tax cuts were politically unpopular with liberal Democrats when he ran for president in 2008.
I recall a campaign speech he delivered at a Democratic National Committee event in Washington where he touted his tax cuts, only to hear a murmur of hisses in the room.
Barack Obama, with dreams of enacting higher income and business tax rates to bankroll his big spending plans, won the presidency. And we see the result in a sluggish economy, weak job growth, and shrinking labor force.
Cuomo is betting that his tax plan will help re-elect him in November and put him into a position to seek the White House after that.
But it's going to take a lot more than slick TV ads and devious, tax shifting gimmicks to erase New York's anti-business reputation as a high tax, high unemployment state.
Tax Free until you are established then the “Rat’s Trap” snaps on your neck and you are stuck to be milked like a cow in a holding chute....
Though Upstate NY is fine on appearance, who would move a bidnuss there?
Let the idiot lefties buy into this, the more we concentrate them, the less area they control other places.
“...change the perception of New York as a high tax state.”
Note that the REALITY THAT IT INDEED IS A HIGH TAX STATE is obviously not considered to be the problem.
He is trying to be like mac daddy where when his lips are moving he is lying.
Quick, concise translation: to bamboozle more hard-working people to come here and support our welfare state.
Only the village idiot would consider moving a business into New York.
Honestly - what business owner is just gonna move or establish a business in NY on this promise without first looking under the covers? At best - the commercials amount to campaign propaganda for Cumo to be absorbed by those already trapped within it’s borders.
If I understand correctly, NY also wants only pro-choicers in the state.
I laugh at these tax break gimmicks to get new businesses...perhaps the reason you need tax breaks to attract new businesses is that your tax rates are too high. Imagine how many businesses could be attracted if taxes were lowered for all businesses.
Reading carefully, one has to get in bed with some university “research” or other con arrangement to get the “tax brake”. Wasting money on annoying crappy lying advertising, baaaaaarf!
These TV ads run all the time around here. I tell my friends and relatives in NY “aren’t you glad millions of your tax dollars are being spent in Maryland and Virginia on stupid ads that no one believes anyway. Maybe your taxes in NY can be increased even more to pay for more ads.”
The proper thing to do, and this was done by several companies is take the tax deal, take your profits and build a new pant in the south. Two years before, the bill comes due, move you operations to South Carolina or Texas, and then there is nothing left to tax. Leave the mess in NY.
For proof of this....see Wheatstone.
Wheatstone did it in Syracuse in the 1990’s under Mario’s Enterprise Zone plan. Moved in to NY from Connecticut and split to North Carlina before the taxes caught up with them. I don’t blame Wheatstone, they did what any sane business owner would do. Actually, it a fine model of how to play it, and they ended up with a sweet place in NC to boot.
Not all liars are democrat politicians s but all democrat politicians are liars.
Saw a couple of those ads on the tube & just had to laugh.
Not surprised that they come with a couple hundred pages
of “fine print”.
Top rate of 8.3% ? CALIFORNIA is much, much worse:
(Single)  Tax Bracket (Couple)  Marginal Tax Rate
$0+ $0+ 1.00%
$7,582+ $15,164+ 2.00%
$17,976+ $35,952+ 4.00%
$28,371+ $56,742+ 6.00%
$39,384+ $78,768+ 8.00%
$49,774+ $99,548+ 9.30%
$254,250+ $508,500+ 10.30%
$305,100+ $610,200+ 11.30%
$508,500+ $1,017,000+ 12.30%