Skeptical about campus tax-free plan
Gov. Andrew Cuomo has launched a shock-and-awe offensive to quickly and thoroughly promote his Tax Free New York initiative: a statewide tour, an advertising campaign and a flurry of press releases saying how “support is growing” for the pitch, which was first announced barely just over a week ago.
Yet there’s no bill in writing yet, which leaves the details still something of a moving target.
The reason he’s giving us all the hard-sell on this thing is clear: He wants to ram it through the Legislature, so he’s recruiting all kinds of mayors and chamber of commerce leaders to bug lawmakers now to support it, so they’ll feel the pressure when the governor finally puts a bill before them.
It reeks of Albany insider strategizing.
Knowing that, let’s distinguish between the tactics and the proposal itself, and weigh it on its merits without being swayed by the governor’s cult of personality or his campaign blitz.
Tax Free New York would let any business that sets up shop on or near state college campuses – including North Country Community College in Saranac Lake – be free of most taxes: no sales tax, no business tax, and their employees wouldn’t have to pay state income taxes for a decade.
That’s more than just bold; it’s brazen and intensely risky. There’s no way to guarantee that the payoff would equal the enormous size of the giveaway.
The income, sales and business taxes the state would forfeit pay for schools, roads, Medicaid, social services, prisons and environmental conservation, all of which are underfunded and shedding jobs already. The jobs we’d add – would they be essential local services like these are?
The governor wants to gamble with a whole lot of the state’s chips – he is, after all, a casino advocate – and we don’t think we want to take that chance.
Going back to Gov. Cuomo’s salesmanship, he’s gone a bit beyond the facts in his pitch for this plan. He has said these businesses would also be free of property taxes, but that’s not true.
“What does tax-free mean?” the governor said Thursday in Plattsburgh. “It means tax free. It means exactly what the words suggest. No political mumbo-jumbo. No business tax, no sales tax, no property tax, no franchise fee, no income tax – period.”
When interviewed afterward, however, he admitted that there would be property taxes, that this plan wouldn’t take anything away from local governments’ tax bases.
Otherwise, this could be a killer for local governments. Half or more of Saranac Lake could quickly become tax-exempt for new businesses, leaving homeowners and taxed businesses to make up the difference.
“If that was the case, I would’ve walked out of the room,” Saranac Lake Mayor Clyde Rabideau, who supports the plan, told us Friday.
So was Cuomo lying when he said “no property tax”? Not exactly. Mayor Rabideau said the governor was talking about businesses that set up on state college campuses, which are already tax-exempt.
While Gov. Cuomo wasn’t lying, he was trying to sell us something we already have.
He was untruthful when he said tax-free “means exactly what the words suggest.” There is plenty of “political mumbo-jumbo” involved.
Another downside to this plan is that it would encourage new business to locate on campuses, where they normally wouldn’t be able to go, and grab the property tax break instead of adding to the local tax base. Saranac Lake has already seen plenty of fighting over tax-exempt properties; this wouldn’t help.
Our biggest problem with the proposal, though, is not what it would do to a college town; it’s that it would only apply to college towns. A college is already a huge economic boost, providing jobs and bringing to town students from all over, providing demand for restaurants, shops and rental housing. This plan would exclude communities that are more in need, like Tupper Lake, and give an additional boost to ones that are doing better like Plattsburgh, Potsdam, Canton Watertown and Saranac Lake. That’s unfair.
And why, after all? It’s kind of random. It doesn’t sound like there would have to be any direct link between each new, tax-free business and the nearby college. You could put a high-tech factory next to a liberal arts school.
The Empire Zone program was a mess, but at least it could, theoretically, include any kind of town.
We can easily imagine further problems this plan could cause: businesses going to the wrong places as they chase tax breaks, corrupt lobbying involving colleges and their administrators, and bitterness between college towns and non-college towns.
Furthermore, we have a bigger-picture problem with giving enormous tax breaks to some businesses and not to others. It rewards those rich enough to skip around from state to state, with those who stay put making up the balance.
We do appreciate that Gov. Cuomo is trying to boost the upstate economy and change New York’s reputation as a high-tax state and a bad place to do business. But this is a gimmick, and a bad one. The governor needs to deal with the tax problem directly instead of in a roundabout way.
The reason New York’s taxes are high is simple: The state spends way too much money, much of it unwisely. Low-tax states don’t buy huge tracts of land every year or two; they don’t do special education at the incredibly expensive level we do; they don’t pay each state trooper close to $100,000 a year; they have machines instead of full-time workers handing out tickets as you enter toll roads; they (hopefully) wouldn’t tolerate double-dipping or pensions for imprisoned former state employees or $100,000 hush-money payoffs to sexual harassment victims.
Therefore, we urge our region’s representatives in Albany to reject this proposal and work instead toward smart budgeting and taxes without big breaks and loopholes.
Taxes are necessary; they should be fair, consistent and relatively painless. Many corporations, however, have made avoidance of them a top priority. Gov. Cuomo is trying to play onto that, but that’s not the kind of state we want to live in.
Instead of Tax Free New York, how about Tax Fair New York?