By Karen Beseth | Watchdog Arena
Gov. Andrew Cuomo’s ‘Start-Up NY’ program has been billed as a big jobs creator, but the numbers aren’t matching the rhetoric.
Companies that invest in certain areas known as “tax free zones” are given big tax breaks for expanding or starting new businesses, and New Yorkers were promised 2,100 new jobs over five years. The state has spent $28 million on a massive advertising campaign for the program, but so far, Start-Up NY has only created 76 of the 2,100 jobs that were promised.
One aspect of the program bothers some current business owners in the state: there are no tax breaks for existing companies that have been paying taxes and creating jobs for years, unless those companies expand into the zones specified by the state.
WPTZ reported that New York’s Department of Economic Development says only 30 companies began operating under the program in 2014 although 54 were initially approved. The companies that benefit from the program have only contributed a fraction of what was promised to the economy so far:
“According to the report, they made $1.7 million of some $91 million investments promised over five years as part of Start-Up NY. The program has established 356 tax-free zones at 62 colleges and universities that act as sponsors.”
State Assemblyman Kieran Michael Lalor is calling for the program to be shut down, and has introduced legislation to repeal the program in the Assembly. Lalor called the program an “expensive gimmick” and noted that it has cost taxpayers over $368,000 per job. He doesn’t believe the numbers justify continuing the program, according to Mid-Hudson News.
“There’s no way to justify that kind of waste. We already knew Start-Up NY would cost taxpayers, but now we aren’t even seeing any jobs,” he said.
Lalor makes a good point. New York’s economy continues to be sluggish. According to the latest “Rich States, Poor States” report by the American Legislative Exchange Council, the state ranks 34th in economic performance and dead last in economic outlook. The authors of the report ranked the data for the economic outlook of states using “equally weighted variables, including various tax rates, regulatory burdens, and labor policies.” It turns out, states don’t score points for costly promotional gimmicks.
Jonathan Williams, ALEC Vice President for State Fiscal Reform, told Watchdog Arena, “We are very skeptical of the strategy of state governments attempting to pick winners and losers through the tax code. The best tax systems keep tax rates low for all taxpayers, and avoid cronyism.”
ALEC’s recent publication on Tax Cronyism explains their position in more detail, and notes that favoritism by state governments make it more difficult for non-favored or new businesses to compete and “violates the most basic rule of fairness in the tax code.”
Lalor prefers tax cuts across the board to spur job growth, and Williams agrees. He went on to say, “Unfortunately, New York has chosen to follow the tax cronyism approach with its Start-Up NY gimmicks. It would be significantly more beneficial to simply reduce tax rates for all taxpayers in New York.”
New York’s legislators could see more job creation if they follow the advice of Lalor and Williams and scrap the gimmicks in favor of cut taxes for everyone. That’s unlikely to happen anytime soon, as it’s doubtful Gov. Cuomo would permit the repeal of his signature economic program.
This article was written by a contributor of Watchdog Arena, Franklin Center’s network of writers, bloggers, and citizen journalists.